Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of August 19 – 23, 2019.

August 20, 2019: The IRS released a proposed regulation that provides corrections to proposed rules that would provide an exception to the unified plan rule for defined contribution multiple employer plans where the employer fails to satisfy qualification requirement or to provide information to determine compliance.

August 22, 2019: The IRS released a proposed regulation that provides special valuation rules for employers and employees to use in determining the amount to include in an employee’s gross income for personal use of an employer-provided vehicle. Notice 2019-08 was issued to implement amendments made to tax code Section 280F, by the 2017 tax act, Pub. L. No. 115-97. In an effort to be consistent with the substantial increase in the dollar limitation on depreciation deductions under Section 280F(a), the proposed regulations would increase, effective for the 2018 calendar year, the maximum base fair market value of a vehicle for use of the fleet-average or vehicle cents-per-mile valuation rule to $50,000. The IRS also stated that to comply with Notice 2019-34, it expects that the inflation-adjusted maximum fair market value for a vehicle for purposes of the fleet-average and vehicle cents-per-mile valuation rules will be included in an annual notice.

August 22, 2019: The IRS issued a notice in which it stated that forthcoming regulations will provide that a domestic partnership or S corporation may apply the rules in Proposed Treasury Regulations Section 1.951A-5, in their entirety, for taxable years that ended before June 22, 2019. The IRS also stated in its notice that a domestic partnership or S corporation will not be liable for penalties for failures under tax code Section 6698, Section 6699, Section 6722, or similar provisions because of a failure to act consistently with Proposed Treasury Regulations Section 1.951A-5 before June 22, 2019. However, to qualify for relief, the domestic partnership or S corporation must provide notice to each partner or shareholder.

August 22, 2019: The IRS released a Treasury Decision in which it released corrections to T.D. 9866, containing final regulations on determining the amount of global intangible low-taxed income (GILTI) included in the gross income of certain US shareholders of foreign corporations, including US shareholders that are members of a consolidated group.

August 23, 2019: The IRS issued a notice in which it stated that the nondiscrimination relief for closed defined benefit plans provided for in Notice 2014-5 is extended to plan years beginning before 2021 if certain conditions outlined in its Notice 2019-49 are satisfied. Notice 2014-5 permits a DB/DC plan that includes a closed defined benefit plan and that satisfies certain conditions set forth in the notice to demonstrate satisfaction of the nondiscrimination in amount requirement of Treasury Regulations Section 1.401(a)(4)-1(b)(2) on the basis of equivalent benefits even if the DB/DC plan does not meet any of the existing eligibility conditions for testing on that basis under [...]

Continue Reading

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of August 12 – 16, 2019.

August 12, 2019: The IRS issued a news release announcing that John Moriarty has been selected as the new associate chief counsel, Income Tax and Accounting. The Income Tax and Accounting (ITA) Division in Washington, DC, provides legal advisory services regarding fundamental rules of the federal tax system, including a wide variety of income tax and tax accounting issues. Mr. Moriarty has served as deputy associate chief counsel (ITA) since April 2012. In 2017, he served as acting associate chief counsel, Passthroughs and Special Industries for 11 months. He has helped guide ITA through implementation of the recent Tax Cuts and Job Act. Prior to joining the Office of Chief Counsel, Moriarty was a tax attorney with several private-sector organizations.

August 12, 2019: The IRS released a revision to its Internal Revenue Manual that would provide additional guidance to better explain who can bind Corporations and Consolidated Groups in the statute extension process and examples of how to enter the information on the statute extension forms.

August 13, 2019: The IRS released a revision to its Internal Revenue Manual that would clarify actions examiners must take to analyze and document Currency Transaction Report data during an audit. Financial institutions, including casinos, must report each receipt and each withdrawal of currency exceeding $10,000 by filing a FinCEN Currency Transaction Report (CTR), the IRS explained. The guidance is effective immediately.

August 13, 2019: The IRS released a revision to its Internal Revenue Manual that would provide for updated acceptable Form 4506, Request for Copy of Tax Return, series revisions. Forms 4506 must have an acceptable revision date in order to process, the IRS stated. Instructions for third party-transcript requests were also added.

August 14, 2019: The IRS issued a revenue ruling in which it stated that an individual’s failure to cash a distribution check in the current year does not permit the individual to exclude the amount of the designated distribution from gross income under tax code Section 402(a) and does not alter the employer’s withholding obligations under Section 3405 or Form 1099-R reporting obligations under Section 6047(d). The ruling also noted that Treasury and the IRS continue to analyze issues that arise in other situations involving uncashed checks from eligible retirement plans described in Section 402(c)(8)(B), including situations involving missing individuals with benefits under those plans.

August 16, 2019: The IRS issued a revenue ruling in which it released the prescribed rates for federal income tax purposes for September 2019, including the applicable federal rates (AFR) under tax code Section 1274(d); the adjusted applicable federal rates (adjusted AFR) under Section 1288(b); the adjusted federal long-term rate and the long-term tax-exempt rate under Section 382(f); the appropriate percentages for determining the low-income housing credit under Section 42(b)(1); and the federal rate for determining the present value of an annuity, an interest for life or [...]

Continue Reading

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of August 5 – 9, 2019.

August 5, 2019: The IRS issued a notice of withdrawal of directive LB&I-04-0118-005, which provided guidance on transfer pricing issue election for cost-sharing arrangement stock based compensation. For further coverage of this issue, see our recent post.

August 6, 2019: The IRS released a revenue procedure that provides simplified procedures for insurance companies to obtain automatic consent to change their method of accounting. The revenue procedure applies to any insurance company that changes its method of computing life insurance reserves to comply with Section 807, as amended by the 2017 tax act, Pub. L. No. 115-97, for the first taxable year beginning after December 31, 2017, and provides that adjustments under Section 481(a) are taken into account. The IRS also included insurance companies that change their methods of capitalizing and amortizing specified policy acquisition expenses to comply with Section 848, as amended by the 2017 tax act, for the first taxable year beginning after December 31, 2017. The IRS also stated that the provisions of Revenue Procedure 2015-13 apply to an insurance company covered by the scope of Revenue Procedure 2019-34.

August 7, 2019: The IRS released corrections to proposed regulations that provide several corrections to proposed regulations regarding the limitation on dividends received deduction available for former controlled foreign corporations.

August 7, 2019: The IRS released corrections to temporary regulations regarding the limitation on dividends received deduction available for former controlled foreign corporations.

August 7, 2019: The IRS released corrections to the preamble of final regulations regarding the limitation on dividends received deduction available for former controlled foreign corporations.

August 9, 2019: The IRS released proposed regulations that would provide guidance on classifying cloud transaction as either a provision of services or as a lease of property for international provisions of the tax code and that would modify the rules for classifying transactions involving computer programs by applying the rules to digital content transfers. The proposed regulations would provide a definition of cloud transaction, as a transaction through which a person obtains non-de minimis on-demand network access to computer hardware, digital content, or other similar resources. The proposed regulations would broaden the scope of existing Regulations Section 1.861-18 to apply to all transfers of digital content.

August 9, 2019: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

 Special thanks to Alex Ruff in our Chicago office for this week’s roundup.

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of July 29 – August 2, 2019.

July 30, 2019: The IRS issued a list of answers to frequently asked questions in which it addressed questions regarding basis adjustments and the 50% of gross income test in the context of investments in Opportunity Zones as governed provided for within Section 1400Z-2.

July 31, 2019: The IRS issued a news release noting that it has issued a revenue procedure allowing a taxpayer to make a late election, or to revoke an election, for bonus depreciation under section 168(k) for certain property acquired by the taxpayer after September 27, 2017, and placed in service by the taxpayer during its taxable year that includes September 28, 2017.

August 1, 2019: The IRS issued amendments to the preamble for regulations issued to limit the charitable contribution deduction when receiving state and local tax credits. The correction was made by updating an Internal Revenue Bulletin citation for Notice 2019-12 to include the page number after the official publication. The notice provides a safe harbor for individuals who itemize deductions and makes a payment to a tax code Section 170(c) entity in return for a state or local tax credit to treat the portion of such payment that is or will be disallowed as a charitable contribution deduction under Section 170 as a payment of state or local tax for purposes of Section 164.

August 1, 2019: The IRS released proposed regulations providing corrections to previously issued proposed rules under tax code Section 958 (providing proposed regulations regarding the treatment of domestic partnerships for purposes of determining amounts included in the gross income of their partners with respect to foreign corporations) and under Section 951A (providing proposed regulations under GILTI provision 1.951A-2 regarding income subject to a high rate of foreign tax).

August 2, 2019: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

 Special thanks to Alex Ruff in our Chicago office for this week’s roundup.