By a vote of 84-15 (with one senator not voting), the Senate has finally confirmed Michael Desmond to be the next Chief Counsel of the Internal Revenue Service. Mr. Desmond is highly regarded in the tax community. We wish him well in his new post.
See links below for our prior coverage of Mr. Desmond’s nomination and the role of Chief Counsel.
As we discussed in a prior post and in our article for Law360, the Supreme Court is poised to decide in Kisor v. Wilkie whether to overrule the Auer deference doctrine. This doctrine, which originated in the 1945 Seminole Rock case, generally affords controlling deference to an agency’s interpretation of its own ambiguous regulations. To date, the petitioner has filed its brief, several amici have filed briefs and the government has filed its brief (links to these documents can be found here). Argument is currently scheduled for March 27, 2019, and an opinion is anticipated by the end of June 2019.
The government’s brief, filed on February 25, 2019, acknowledges that Auer deference raises serious concerns. Specifically, the government states that the basis for the doctrine is unclear, the doctrine is in tension with the Administrative Procedures Act (APA) and overly broad deference to agency interpretations can have harmful practical consequences. However, relying on principles of stare decisis, the government advocates for maintaining Auer deference subject to certain prerequisites that would limit the doctrine. These prerequisites include applying deference only after all traditional tools of construction have been exhausted and only if the agency’s interpretation has reasonably interpreted any ambiguity. In deciding whether to defer to the agency’s interpretation, a reviewing court should look at whether the interpretation: (1) was issued with fair notice to regulated parties, (2) is not inconsistent with the agency’s prior views, (3) rests on the agency’s expertise and (4) represents the agency’s considered view (i.e., not merely the views of “mere field officials or other low-level employees”). Presumably these limits would curtail the application of Auer deference in circumstances where the agency’s interpretation is first widely known only because of a litigating position.
Practice Point: The Supreme Court’s decision in Kisor v. Wilkie will be important for taxpayers and their representatives in light of the substantial regulatory guidance issued in the wake of tax reform. We will continue to follow this case and provide updates after argument is held and the case is decided.
Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of February 18 – 22, 2019.
February 19, 2019: The IRS issued a news release promoting online resources for answering taxpayer questions, in light of high call volume during the period following Presidents Day.
February 19, 2019: The IRS issued a news release reminding farmers and fishermen to file Form 1040 and remit all taxes owed by March 1, 2019, if they had elected to forgo making quarterly estimated tax payments.
February 19, 2019: The IRS acquiesced to the decision only in Jacobs v. Commissioner, 148 TC No. 24 (2017), dealing with whether the Boston Bruins’ pre-game meals at away game hotels were de minimis fringe benefits under section 132(e)(2) of the Code.
February 21, 2019: The IRS issued a news release urging taxpayers to file reports of large cash transactions electronically, in lieu of filing a paper Form 8300.
February 22, 2019: The IRS released final regulations amending compliance monitoring regulations for the low-income housing credit of section 42 of the Code.
February 22, 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 Le Chen in our DC 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 February 11 – 15, 2019.
February 11, 2019: The IRS issued a news release promoting online resources for answering taxpayer questions, in anticipation of high call volume over the Presidents Day weekend.
February 12, 2019: The IRS issued a news release announcing the release of the National Taxpayer Advocate’s 2018 Annual Report to Congress, which reported on, among other things, the effect of the shutdown on IRS operations and the need to modernize the IRS’s IT systems.
February 12, 2019: The IRS issued a news release promoting its “Where’s My Refund?” online tool as a way for taxpayers to check on the status of their tax refunds.
February 13, 2019: The IRS released Revenue Procedure 2019-13, providing a safe harbor method of accounting for determining depreciation deductions for passenger automobiles that qualify for the 100% additional first-year depreciation deduction under section 168(k) of the Code, but that are also subject to depreciation limitations under section 280F of the Code.
February 13, 2019: The IRS issued a news release outlining various payment options available to taxpayers who owe additional tax after filing.
February 14, 2019: The IRS issued Notice 2019-16, providing baseline interest rates referenced in various provisions of the Code dealing with employee benefits.
February 14, 2019: The IRS issued a news release reminding taxpayers that they will be asked to verify their identities when calling the IRS for assistance.
February 15, 2019: The IRS released Revenue Ruling 2019-07, providing various prescribed rates for federal income tax purposes for March 2019.
February 15, 2019: The IRS issued a news release promoting online resources for obtaining prior-year tax records, in anticipation of high call volume over the Presidents Day weekend.
February 15, 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 Le Chen in our DC office for this week’s roundup.
On Jan. 25, 2019, U.S. House of Representatives Rules Committee Chairman James P. McGovern, D-Mass., issued regulations governing staff deposition authority in the 116th Congress, pursuant to his authority under H. Res. 6. In passing H. Res. 6, the newly empowered House Democratic majority drastically increased House committees’ investigative power by allowing committee staff to conduct depositions without members present — a stark departure from precedent. This change was a dramatic first step in the House Democratic majority’s efforts to ramp up oversight of both the executive branch and the private sector.
Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of February 4 – 8, 2019.
February 4, 2019: The IRS released final instructions for Form 1065, US Return of Partnership Income, incorporating changes made by the Tax Cuts and Jobs Act.
February 5, 2019: The IRS issued a news release postponing certain tax deadlines for taxpayers affected by the earthquake that occurred in Alaska on November 30, 2018.
February 6, 2019: The IRS released final instructions for Form 1041, US Income Tax Return for Estates and Trusts, and supporting schedules, incorporating changes made by the Tax Cuts and Jobs Act.
February 6, 2019: The IRS released final instructions for Form 8991, dealing with the base erosion and anti-abuse tax (BEAT) of section 59A of the Code, enacted as part of the Tax Cuts and Jobs Act.
February 7, 2019: The IRS issued a news release providing guidance on identifying and avoiding unethical tax return preparers.
February 8, 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 Le Chen in our DC office for this week’s roundup.
On the February 6, 2019, the White House announced that President Donald Trump has renominated Mark Van Dyke Holmes, Courtney Dunbar Jones, Travis Greaves and Emin Toro to 15-year terms on the United States Tax Court. President Trump nominated each candidate in 2018, but the Senate was not able to confirm their appointments prior to the end of the last 2018 session—requiring the candidates to be renominated. We reported the initial nominations in “President Trump Announces Intent to Nominate Emin Toro to Tax Court” and “President Trump to Nominate Greaves to Tax Court; Senate Confirms Copeland and Urda.”
If confirmed by the Senate, these candidates would fill the three current vacancies on the full 19-judge court. Mark Van Dyke Holmes is currently serving as a senior tax court judge while awaiting confirmation. In addition, Courtney Dunbar Jones currently serves as a senior attorney in the IRS Office of Chief Counsel; Travis Greaves currently serves as a deputy assistant attorney general for appellate and review for the Department of Justice, Tax Division; and Emin Toro is currently a partner in the Washington, DC office of Covington & Burling LLP.
We are hopeful for a speedy confirmation process this time.
Each New Year, many of us look back on the previous year’s activities, and determine what we want to accomplish in the coming year – lose weight, start exercising, read more tax articles, etc. The Internal Revenue Service (IRS) Large Business & International (LB&I) Division memorialized its New Year’s resolutions for 2019 in Publication 5319. So, for taxpayers with more than $10 million in assets, you may want listen up and see what the IRS has in store for 2019!
LB&I’s goals come during a time of significant reduction in workforce and increase in responsibilities. LB&I experienced a significant reduction in workforce between October 2017 and October 2018, reducing its workforce by a net of 344 employees (down from 4,868 to 4,524) spread across several positions. This included 18 individuals in leadership, 218 revenue agents and 25 tax examiners. With the exception of tax law specialists, which remained at 24, every other position saw a reduction in personnel. This reduction in personnel comes at critical point for LB&I, as it undoubtedly spent much of its time and resources last year working on guidance necessary to implement the substantial changes made by the Tax Cuts and Jobs Act enacted in late 2017. It will continue to be responsible for training and compliance related to those changes. (more…)
On March 2, 2018, President Trump nominated Michael Desmond to be the Chief Counsel of the Internal Revenue Service (IRS). Unfortunately, the Senate did not get around to confirming him. On January 16, 2019, President Trump renominated Mr. Desmond, and the US Senate Committee on Finance has scheduled a hearing for February 5th to consider his renomination.
The Chief Counsel is the top legal advisor to the IRS Commissioner on all matters pertaining to the interpretation, administration and enforcement of the Internal Revenue laws. The Chief Counsel also provides legal guidance and interpretive advice to the IRS, Treasury and to taxpayers. Mr. Desmond clerked for Judge Ronald S.W. Lew of the United States District Court for the Central District of California. From 1995 through 2000, he served as a trial attorney in the Tax Division at the Department of Justice, and from 2005 through 2008 he served as tax legislative counsel at the Department of the Treasury, Office of Tax Policy.
Mr. Desmond has a strong reputation in the tax community, and we hope that his nomination is acted on immediately.
Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of January 28 – February 1, 2019.
January 28, 2019: The IRS issued Revenue Ruling 2019-04, providing various prescribed rates for federal income tax purposes for February 2019.
January 28, 2019: The IRS issued a news release announcing the opening of the 2019 tax-filing season and providing information to taxpayers about filing and refunds.
January 29, 2019: The IRS issued a news release reminding employers about filing deadlines for wage statements and independent contractor forms.
January 30, 2019: The IRS issued Notice 2019-13, providing baseline interest rates referenced in various provisions of the Code dealing with employee benefits.
February 1, 2019: The IRS issued a corrected version of final regulations providing guidance on the deduction for qualified business income under section 199A of the Code, enacted as part of the Tax Cuts and Jobs Act.
February 1, 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 Le Chen in our DC office for this week’s roundup.
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