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Uncategorized

Ninth Circuit Allows IRS to Overrule Common-Law Mailbox Rule

by Kevin Spencer and McDermott Will & Emery | Apr 19, 2019 | Appellate Courts, IRS Guidance, Tax Refunds, Trial Courts, Uncategorized

Most tax professionals are aware of the common-law “mailbox rule,” which provides that proof of proper mailing creates a rebuttable presumption that the document was physically delivered to the addressee. Internal Revenue Code (Code) section 7502 was enacted to codify the mailbox rule for tax purposes. Thus, for documents received after the applicable deadline, the document will be deemed to have been delivered on the date the document is postmarked. To protect taxpayers against a failure of delivery, Code section 7502 also provides that when a document is sent by registered mail, the registration serves as prima facie evidence that the document was delivered, and the date of registration is treated as the postmark date. In other words, if the Internal Revenue Service (IRS) claims not to have received a document, the presumption arises that such document was delivered so long as the taxpayer produces the registration.

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IRS Announces More LB&I Campaigns!

by K. Christy Vouri-Misso, Kevin Spencer and McDermott Will & Emery | Apr 18, 2019 | IRS Audits, IRS Guidance, Uncategorized

The Internal Revenue Service (IRS) Large Business and International (LB&I) Division continues to churn out new audit “campaigns.” For our prior coverage, please click here. The most recent set of campaigns were announced on April 16, 2019, bringing the grand total to 53 campaigns since the program’s initial release on January 13, 2017. The IRS explains that the goal of the campaigns is to “improve return selection, identify issues representing a risk of non-compliance, and make the greatest use of limited resources.”

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Second Circuit Weighs in on Tax Court’s Refund Jurisdiction

by McDermott Will & Emery, Kevin Spencer and McDermott Will & Emery | Apr 16, 2019 | Appellate Courts, Tax Reform, Tax Refunds, Trial Courts, Uncategorized

Borenstein v. Commissioner is an interesting opinion involving the intersection of canons of statutory construction and jurisdiction. Recently, the US Court of Appeals for the Second Circuit reversed the US Tax Court’s holding in Borenstein that the court lacked jurisdiction to order a refund of an undisputed overpayment made by the taxpayer. The case, which we discussed in a prior post, involved interpreting statutory provisions dealing with claims for a refund after a notice of deficiency was issued. The Tax Court’s holding was based on the application of the plain meaning rule to Internal Revenue Code (Code) Section 6512(b)(3), which limit its jurisdiction to order refunds of overpayments.

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Weekly IRS Roundup April 8 – 12, 2019

by McDermott Will & Emery | Apr 15, 2019 | IRS Guidance, Tax Refunds, Uncategorized

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of April 8 – 12, 2019.

April 8, 2019: The IRS issued a news release warning taxpayers against rushing to file their returns and recommending they file for an extension if needed.

April 9, 2019: The IRS issued a news release seeking volunteers for the taxpayer advocate panel. The application process is open through May 3, 2019.

April 10, 2019: The IRS issued corrections to final regulations (TD 9846) implementing Section 965 of the code.

April 11, 2019: The IRS released Revenue Procedure 2019-18 providing a safe harbor for professional sports teams when determining the value of player and staff-member contracts for the purpose of recognizing gain or loss on a trade, staff-member contract or draft pick.

April 11, 2019: The IRS issued corrections to proposed regulations (REG–104464–18) dealing with the amount of the deduction for foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI).

April 12, 2019: The IRS issued a news release announcing 50 million people still needed to file their 2018 returns as the deadline approaches.

April 12, 2019: IRS Commissioner Chuck Rettig released a message thanking taxpayers for filing their returns.

Special thanks to Terence McAllister in our New York office for this week’s roundup.

Tax Court Rules State Corporate Incentives Are NOT Taxable Income Under Federal Law

by Kevin Spencer and Le Chen | Apr 11, 2019 | Court Procedure Matters, Tax Reform, Trial Courts, Uncategorized

Many states and localities give incentives for business to move or transact in their locations. There has always been a question of whether these incentives are taxable income under federal income tax law. Internal Revenue Code (IRC) section 118, as amended by the Tax Cuts and Jobs Act, P.L. 115-97, provides that “[i]n the case of a corporation, gross income does not include any contribution to the capital of the taxpayer….(b) For purposes of subsection (a), the term “contribution to the capital of the taxpayer” does not include—…(2) any contribution by any governmental entity or civic group (other than a contribution made by a shareholder as such).”

In a recent case, the US Tax Court ruled that certain cash grants given by the State of New Jersey fit squarely within IRC section 118, and were not taxable to the corporate taxpayer. Brokertec Holdings, Inc. v. Commissioner, T.C. Memo. 2019-32.

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Weekly IRS Roundup April 1 – 5, 2019

by McDermott Will & Emery | Apr 8, 2019 | IRS Guidance, Uncategorized

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of April 1 – 5, 2019.

April 2, 2019: The IRS issued a news release providing tips on payment options, penalty waivers, refunds and other filing related recommendations.

April 3, 2019: The IRS issued a notice inviting individuals to apply for positions with the Taxpayer Advocacy Program (TAP) from April 8 – May 3.

April 3, 2019: The IRS issued Revenue Procedure 2019-17 providing guidance regarding qualified residential rental projects financed with tax exempt bonds under Section 142(d) of the code.

April 3, 2019: The IRS issued a news release reminding taxpayers who make quarterly payments that the first estimated quarterly payment for 2019 is due Monday, April 15.

April 4, 2019: The IRS issued a news release reminding taxpayers with foreign assets of the annual April 15 Foreign Bank and Financial Accounts (FBAR) filing deadline.

April 5, 2019: The IRS issued a news release dispelling what the agency terms five myths about tax refunds.

April 5, 2019: The IRS released Treasury Decision 9855 specifying which return to use for taxpayers who owe excise taxes under Sections 4960, 4966, 4967 or 4968 of the code.

April 5, 2019: The IRS issued final regulations authorizing the disclosure of certain expense items from business tax returns to the Census Bureau.

Special thanks to Terence McAllister in our New York office for this week’s roundup.

Weekly IRS Roundup March 25 – 29, 2019

by McDermott Will & Emery | Apr 1, 2019 | IRS Guidance, Uncategorized

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of March 25 – 29, 2019.

March 25, 2019: The IRS issued Proposed Regulations under Section 301 of the code updating existing regulations to reflect changes made by the Technical and Miscellaneous Revenue Act of 1988.

March 25, 2019: The IRS issued Proposed Regulations partially withdrawing and re-proposing 2016 proposed regulations addressing transactions where property of a corporation becomes property of a real estate investment trust (REIT) following certain corporate distributions of controlled corporation stock.

March 26, 2019: The IRS issued Notice 2019-22 announcing the phase out of the Section 30D plug-in electric drive motor vehicle credit for purchasers of eligible General Motors’ vehicles beginning April 1, 2019.

March 27, 2019: The IRS issued Announcement 2019-03 providing an annual report on advance pricing agreements and the Advance Pricing and Mutual Agreement Program.

March 28, 2019: The IRS withdrew proposed regulations (REG-143686-07) that provided guidance on the allocation and recovery of basis in corporate stock redemptions under Section 301 of the code.

March 28, 2019: The IRS issued Revenue Procedure 2019-15 providing a waiver from time requirements for individuals electing to exclude their foreign earned income who must leave a country due to war, civil unrest or similar circumstances.

March 28, 2019: The IRS issued Notice 2019-24 providing adjustments to the limitation on housing expenses under Section 911 of the code.

March 29, 2019: The IRS issued Revenue Ruling 2019-11 providing guidance to taxpayers regarding the inclusion in income of recovered state and local taxes in the current year when the taxpayer deducted state and local taxes paid in a prior year.

March 29, 2019: The IRS withdrew proposed regulations (REG-124627-11) that provided guidance on the continuity of interest requirement under Section 368 of the code.

Special thanks to Terence McAllister in our New York office for this week’s roundup.

Weekly IRS Roundup March 18 – 22, 2019

by McDermott Will & Emery | Mar 25, 2019 | IRS Guidance, Uncategorized

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of March 18 – 22, 2019.

March 18, 2019: The IRS cancelled a public hearing originally scheduled for March 20th on proposed regulations on hybrid arrangements under Sections 245A and 267A of the code.

March 19, 2019: The IRS issued Revenue Procedure 2019-14 providing issuers of qualified mortgage bonds and issuers of mortgage credit certificates the nationwide average purchase price for residences located in the United States, and the average area purchase price safe harbors for residences located in certain statistical areas.

March 20, 2019: The IRS requested comments on the treatment of distributions by foreign corporations and coordination with nonrecognition provisions. Comments should be received by May 20, 2019.

March 20, 2019: The IRS issued a news release announcing the conclusion of what it refers to as the “dirty dozen” list of tax scams.

March 21, 2019: The IRS issued Revenue Ruling 2019-09 suspending two revenue rulings from 1957 pending the completion of a study regarding the active trade or business requirement under Sections 355(a)(1)(C) and (b) of the code.

March 22, 2019: The IRS issued Proposed Regulations on new information reporting requirements for certain life insurance companies under Section 6050Y of the code.

March 22, 2019: The IRS issued Notice 2019-25 modifying and superseding Notice 2019-11. The notice increases the availability of the waiver of the addition to tax for underpayment of estimated income tax for certain individuals for 2018.

March 22, 2019: The IRS issued Notice 2019-26 updating mortality improvement rates and static mortality tables for determining the minimum funding requirements under § 430(h)(3) for 2020. The notice also updates the minimum present value under § 417(e)(3) for distributions with annuity starting dates that occur during stability periods beginning in the 2020 calendar year.

Special thanks to Terence McAllister in our New York office for this week’s roundup.

Taxpayers Already Seeking to Hold Treasury and IRS to Policy Statement

by Timothy S. Shuman and McDermott Will & Emery | Mar 20, 2019 | IRS Guidance, Uncategorized

On March 5, 2019, the US Department of Treasury (Treasury) issued a policy statement on the tax regulatory process. We previously wrote an article for Law360 on the policy statement, which can be accessed here. In our article, we noted the disclaimer language in the policy statement that “is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or inequity by any party against the United States, its departments, agencies, or entities, it officers, employees, or agents, or any other person.” We further noted that this same limiting language can be found in Executive Orders issued by the President of the United States, and that courts have generally rejected attempts to rely on such orders containing this language, although it might be possible to analogize the positions in the policy statement to the Internal Revenue Service’s (IRS) statements in CC-2003-014, which instructs IRS employees not to take positions contrary to IRS published guidance.

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Weekly IRS Roundup March 11 – 15, 2019

by McDermott Will & Emery | Mar 18, 2019 | IRS Guidance, Tax Refunds, Uncategorized

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of March 4 – 8, 2019.

March 11, 2019: The IRS cancelled a public hearing scheduled for March 14 on proposed regulations on changes to the foreign tax credit under Section 904 of the Code.

March 12, 2019: The IRS issued Notice 2019-10 requesting comments on possible changes to rules regarding the excise tax treatment of fuel used in a motor vehicle to operate auxiliary equipment via a power take-off.

March 12, 2019: The IRS issued a notice listing the names of individuals losing US citizenship (within the meaning of section 877(a) or 877A) pursuant to Section 6039G of the Code.

March 12, 2019: The IRS announced that a private letter ruling pilot program addressing whether stock distributions are tax free under Section 355 would be extended indefinitely.

March 13, 2019: The IRS issued Revenue Ruling 2019-06 providing tables of covered compensation under Section 401(1)(5)(e) of the Code.

March 13, 2019: The IRS issued a news release providing information on up to $1.4 billion of unclaimed income tax refunds from 2015. The unclaimed refunds potentially affect up to 1.2 million taxpayers who did not file 2015 returns.

March 13, 2019: The IRS issued a news release detailing the rise in the use of IRS FreeFile to prepare and electronically file returns. The IRS states 1.4 million taxpayers took advantage of FreeFile as of March 8, a 5 percent increase from the same time last year.

March 14, 2019: The IRS issued Notice 2019-21 providing guidance on the corporate bond monthly yield curve, spot segment rates under Section 417(e)(3) and the 24 month average segment rates under Section 430(h)(2).

March 15, 2019: The IRS released Revenue Ruling 2019-08 providing monthly tables of prescribed rates under numerous Code sections including the applicable federal rate for April.

Special thanks to Terence McAllister in our New York office for this week’s roundup.