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

November 19, 2019: The IRS published final regulations that affect United States persons with direct or indirect ownership interests in certain foreign corporations. The regulations provide rules regarding the attribution of ownership of stock or other interests for purposes of determining whether a person is a related person with respect to a controlled foreign corporation under section 954(d)(3). In addition, the final regulations provide rules for determining whether a controlled foreign corporation is considered to derive rents in the active conduct of a trade or business for purposes of computing foreign personal holding company income.

November 19, 2019: The IRS posted Large Business and International active compliance campaigns. The campaigns include: (1) Costs that Facilitate an IRC 355 Transaction; (2) Form 1120-F Delinquent Returns Campaign; (3) IRC 199 – Claims Risk Review; (4) IRC 457A – Deferred Compensation Attributable; (5) Nonresident Alien Individual (NRA) Tax Credits; and (6) Post Offshore Voluntary Disclosure Program (OVDP) Compliance.

November 19, 2019: The IRS added section 7122-related (offers in compromise) questions and answers on whether Form 8821 allows a taxpayer to appoint a third party to represent them before the IRS on an offer in compromise (negative) and on whether a spouse’s income must be included on Form 433-A (OIC), Collection Information Statement for Wage Earners and Self-Employed Individuals, even if the spouse doesn’t owe taxes (affirmative).

November 19, 2019: The IRS issued interim guidance to update the process by which the IRS accepts requests for confirmation that the government received a filed FinCEN Form 114 (formerly TD F 90-22.1), Report of Foreign Bank and Financial Accounts (FBAR). The IRS will no longer accept verbal verification requests. All requests must be submitted in writing.

November 20, 2019: The IRS issued a news release on its annual report for 2019, including recommendations to the IRS on new and continuing issues in tax administration. The 2019 Public Report includes recommendations on over 20 issues, which cover a broad range of topics and concerns, including guidance relating to the Tax Cuts and Jobs Act.

November 20, 2019: The IRS published questions and answers about the new qualified business income deduction (the section 199A deduction) that may be available to individuals, including many owners of sole proprietorships, partnerships and S corporations, and some trusts and estates. This deduction, created by the 2017 Tax Cuts and Jobs Act, allows non-corporate taxpayers to deduct up to 20% of their qualified business income, plus 20% of qualified real estate investment trust dividends and qualified publicly traded partnership income.

November 21, 2019: The IRS’s National Taxpayer Advocate blog posted highlights of the Taxpayer First Act and its impact on the Taxpayer Advocate Service and taxpayer rights.

November 21, 2019: The IRS published a notice of public hearing on proposed regulations regarding the timing of income inclusion under section 451.  The public hearing is being [...]

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Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of November 11–15, 2019.

November 11, 2019: The IRS released Delegation Order 30-9 announcing the delegation of authority to withhold cases from IRS Appeals and deny requests for Appeals review in cases designated for litigation. The delegation order is effective November 7, 2019.

November 12, 2019:  The IRS announced a significant increase in enforcement actions for syndicated conservation easement transactions.

November 14, 2019: The IRS issued a News Release regarding a Revenue Procedure that updates the rules for using the optional standard mileage rates in computing the deductible costs of operating an automobile for business, charitable, medical or moving expense purposes. The guidance also provides rules to substantiate, under section 274(d) and Treas. Reg. § 1.274-5, the amount of an employee’s ordinary and necessary travel expenses reimbursed by an employer using the optional standard mileage rates. The IRS noted that for any taxable year during the suspension period ending January 1, 2026, a taxpayer is not permitted to claim miscellaneous itemized deductions, including unreimbursed employee travel expenses using the standard mileage rates.

November 15, 2019: The IRS issued Proposed Regulations that set forth proposed requirements for group health plans and health insurance issuers in the individual and group markets to disclose cost-sharing information upon request. In addition, plans and issuers would be required to make such information available on an internet website and, if requested, through non-internet means. The proposed regulations also include proposals to require plans and issuers to disclose in-network provider negotiated rates, and historical out-of-network allowed amounts through two machine-readable files posted on an internet website, thereby allowing the public to have increased access to health insurance coverage information. The proposed regulations are scheduled to be published in the Federal Register on November 27, 2019. Public comments regarding the contemplated rules must be received by January 14, 2020.

November 15, 2019:  The IRS announced steps to conduct special compliance efforts for individual and business taxpayers to ensure fairness in the tax system.  The IRS indicated the goal is to help resolve tax compliance issues by meeting face-to-face with taxpayers with ongoing tax issues. The IRS will focus these efforts in areas where there have been a limited number of revenue officers available due to declining IRS resources.

November 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 Robbie Alipour and Jenni Saperstein 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 October 28 – November 1, 2019.

October 30, 2019: The IRS issued an Action on Decision in which it recommended nonacquiesence in a franchise transfer case Greenteam Materials Recovery Facility PN v. Commissioner, T.C. Memo 2017-2012, which held that certain partnerships’ contracts qualified as franchises under section 1253 and were therefore entitled to capital-gains treatment. The IRS stated that both case law and the plain language of section 1253 provide that the sale or exchange of a franchise that is not otherwise a capital asset under section 1221 is not treated as the sale or exchange of a capital asset under section 1253(a) merely because the transferor does not retain any significant power, right, or continuing interest in the franchise.

October 31, 2019: The IRS and the Department of the Treasury issued an advanced notice of proposed rulemaking (ANPRM) announcing their intent to issue “more streamlined and targeted” proposed regulations regarding the treatment of certain interests in corporations as stock or indebtedness. The ANPRM indicates that the proposed regulations would substantially modify the funding rule and eliminate the per se application of the funding rule. Therefore, a debt instrument would not be treated as funding a distribution or economically similar transaction solely due to temporal proximity. The proposed regulations instead would apply the funding rule to a debt instrument only if its issuance has a sufficient factual connection to a distribution to a member of the taxpayer’s expanded group or an economically similar transaction. Thus, a debt instrument issued without such a connection to a distribution or similar transaction would not be treated as stock. The proposed regulations would apply only to tax years beginning on or after the date those rules are finalized. Public comments regarding the contemplated rules must be received by February 3, 2020.

October 31, 2019: The IRS released a Treasury Decision that removes the section 385 documentation regulations, which set forth minimum documentation requirements that ordinarily must be satisfied for certain related-party interests in a corporation to be treated as indebtedness for federal tax purposes. According to the Treasury Decision, it was “determined that the burdens imposed on taxpayers by the [documentation rules] outweigh the regulations’ intended benefits.” But Treasury and the IRS, however, continue to evaluate documentation-related issues, and may subsequently propose a substantially simplified and streamlined version with a prospective effective date.

November 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 Robbie Alipour and Jenni Saperstein in our Chicago office for this week’s roundup.