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Weekly IRS Roundup April 17 – April 21, 2023

by | Apr 24, 2023 | , ,

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of April 17, 2023 – April 21, 2023.

April 17, 2023: The IRS released Internal Revenue Bulletin 2023-16, which highlights the following:

  • Announcement 2023-10: This announcement was issued pursuant to the Ticket to Work and Work Incentives Improvement Act of 1999, which requires the US Secretary of the Treasury to annually report advance pricing agreements and the Advance Pricing and Mutual Agreement Program (APMA Program). This year’s report describes the experience, structure and activities of the APMA Program during 2022.
  • REG-105954-22: This notice provides guidance related to Sections 4661, 4662, 4671 and 4672, collectively referred to as the Superfund chemical taxes. Section 4661(a) imposes an excise tax on the sale or use of “taxable chemicals” by manufacturers, producers or importers. Section 4671(a) imposes an excise tax on the sale or use of “taxable substances” by importers. The Superfund chemical taxes previously expired on December 31, 1995, but were reinstated with certain modifications, effective July 1, 2022, by Section 80201 of the Infrastructure Investment and Jobs Act.
  • Notice 2023-31: This notice announces that when proposed regulations under Section 903 (REG-112096-22) are finalized, the US Department of the Treasury and the IRS intend to extend the transition period for the single-country exception’s documentation requirement from May 17, 2023, to 180 days after the final regulations are filed. The single-country exception provides relief from the source-based attribution requirement under Section 903 for foreign withholding taxes on royalties paid for the use of intellectual property within the withholding jurisdiction.
  • REG-120080-22: This document contains proposed regulations regarding the clean vehicles credit under Section 30D. These proposed regulations will affect persons seeking to claim the credit and qualified manufacturers of clean vehicles. The IRS also issued a reminder that the proposed regulations went into effect on April 18.
  • Revenue Ruling 2023-2: This revenue ruling confirms that the basis adjustment under Section 1014 generally does not apply to the assets of an irrevocable grantor trust not included in the deceased grantor’s gross estate for federal estate tax purposes.

April 17, 2023: The IRS released Revenue Ruling 2023-9, which provides the applicable federal rates for federal income tax purposes for May 2023. The short-term federal interest rate is 4.30%, the mid-term rate will drop to 3.57% and the long-term rate will fall to 3.72%.

April 17, 2023: The IRS reminded taxpayers who need additional time to file their taxes that they can get an extension via IRS Free File.

April 17, 2023: The IRS released Tax Tip 2023-51, providing information to taxpayers regarding how to file a final federal tax return for someone who has died.

April 17, 2023: The IRS reminded last-minute tax [...]

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Weekly IRS Roundup April 10 – April 14, 2023

by | Apr 17, 2023 | , ,

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of April 10, 2023 – April 14, 2023.

April 10, 2023: The IRS released Internal Revenue Bulletin 2023-15, which highlights the following:

  • Revenue Procedure 2023-20: This revenue procedure modifies the effective date of additions to the taxable substances or chemicals list under Section 4672(a). Specifically, this revenue procedure changes the date on which substances are added to the list for purposes of refund claims under Section 4662(e).
  • Notice 2023-27: This notice announces that the US Department of the Treasury and the IRS intend to issue guidance related to the tax treatment of certain non-fungible tokens (NFTs). The guidance requests comments on the treatment of NFTs as collectibles and describes how the IRS intends to determine whether an NFT is a collectible until further guidance is issued.
  • Notice 2023-28: This notice extends temporary relief regarding deposits of the excise tax imposed on certain chemicals under Section 4661 and the excise tax imposed on certain imported chemical substances under Section 4671 (collectively, Superfund chemical taxes). The extended relief is available in connection with deposits of the Superfund chemical taxes for semimonthly periods in the second, third and fourth calendar quarters of 2023.
  • REG-120653-22: These proposed regulations implement the advanced manufacturing investment credit, a new current-year business tax credit under Section 48D to incentivize the manufacture of semiconductors and semiconductor manufacturing equipment within the United States. The regulations address the credit’s eligibility requirements, an election that eligible taxpayers may make to be treated as making a payment of tax (including an overpayment of tax) or for an eligible partnership or S corporation to receive an elective payment instead of claiming a credit, and a special 10-year credit recapture rule that applies if there is a significant transaction involving the material expansion of semiconductor manufacturing capacity in a foreign country of concern.
  • Revenue Ruling 2023-7: This revenue ruling provides the fringe benefits aircraft valuation formula. For purposes of Section 1.61-21(g) of the regulations, relating to the rule for valuing non-commercial flights on employer-provided aircrafts, the Standard Industry Fare Level (SIFL) cents-per-mile rates and terminal charge in effect for the first half of 2023 are as follows:

April 10, 2023: The IRS released Tax Tip 2023-47, providing guidance on when to file an amended income tax return.

April 10, 2023: The IRS and the Treasury issued Notice 2023-30, providing safe harbor deed language for extinguishment and boundary line adjustment clauses as required by the SECURE 2.0 Act of 2022. Section 605(d)(2) provides donors with the opportunity to amend certain conservation easement deeds to substitute the [...]

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Weekly IRS Roundup March 20 – March 24, 2023

by | Mar 27, 2023 | , ,

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of March 20, 2023 – March 24, 2023.

March 20, 2023: The IRS released Internal Revenue Bulletin 2023-12, which highlights the following:

  • Notice 2023-22: This notice advises state and local housing credit agencies that allocate low-income housing tax credits under Section 42, as well as states and other issuers of tax-exempt private activity bonds under Section 141, of the population figures to use in calculating the (1) state housing credit ceiling under Section 42(h), (2) private activity bond volume cap under Section 146 and (3) private activity bond volume limit under Section 142(k).

March 20, 2023: The IRS announced tips to avoid processing delays and refund adjustments as the April 18, filing deadline approaches. The tips include gathering all tax documents, filing electronically, using the correct filing status, double-checking names and social security numbers, answering the digital assets question and reporting all taxable income.

March 20, 2023: The IRS announced a new entry into the annual Dirty Dozen list of tax scams: promoter claims involving the Employee Retention Credit (ERC). Some third parties continue to widely advertise services that target taxpayers who may not be eligible for the ERC. The advertisements, along with the increased prevalence of websites touting how easy it is to qualify for the ERC, suggest that the abusive claims may be legitimate. The annual list of schemes is aimed at raising awareness of aggressive promoters and con artists. These schemes put people at financial risk and increase the chances of identity theft.

March 20, 2023: The IRS released Tax Tip 2023-35, providing options for taxpayers who cannot pay their tax bill by April 18. The IRS also reminded taxpayers to still file their tax returns even if they cannot pay to avoid a failure-to-file penalty.

March 21, 2023: The IRS announced that it is requesting feedback regarding the tax treatment of a non-fungible token (NFT) as a collectible under the tax law in Notice 2023-27. An NFT is a unique digital identifier that is recorded using distributed ledger technology and may be used to certify the authenticity and ownership of an associated right or asset. The guidance also requests comments on the treatment of NFTs as collectibles and describes how the IRS intends to determine whether an NFT is a collectible until further guidance is issued.

March 21, 2023: The IRS issued proposed regulations that provide guidance on the implementation of the Advanced Manufacturing Investment Credit, established by the Creating Helpful Incentives to Produce Semiconductors Act of 2022 (CHIPS Act). The credit incentivizes the manufacture of semiconductors and semiconductor manufacturing equipment within the United States.

March 21, 2023: The IRS cautioned taxpayers to watch out for scammers using email and text messages to [...]

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Weekly IRS Roundup December 26 – December 30, 2022

by | Jan 3, 2023 | ,

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of December 26, 2022 – December 30, 2022.

December 26, 2022: The IRS released Internal Revenue Bulletin 2022-52, which highlights the following:

  • Proposed Regulations 106134-22: These proposed regulations identify certain syndicated conservation easement (SCE) transactions and substantially similar transactions as “listed transactions,” which means they must be reported to the IRS.
  • Revenue Procedure 2022-43: This procedure sets out the final qualified intermediary withholding agreement (QI agreement), which began on January 1, 2023. The QI agreement allows certain people to enter into an agreement with the IRS to simplify their obligations as withholding agents and as payors for amounts paid to their account holders and allows certain people to act as qualified derivatives dealers and assume primary withholding and reporting responsibilities on all dividend equivalent payments they make.
  • Announcement 2022-28: This announcement is released in conjunction with the above proposed regulations that identify certain SCE transactions as “listed transactions.” The announcement explains that the regulations are being proposed in response to certain court decisions holding that the Administrative Procedure Act requires the IRS to identify listed transactions through notice-and-comment rulemaking and that the IRS plans to issue additional regulations related to other “listed transactions.”
  • Notice 2022-61: This notice provides guidance on the prevailing wage and apprenticeship requirements, as amended by the Inflation Reduction Act of 2022 (IRA). This notice also serves as the published guidance establishing the 60-day period with respect to the applicability of the prevailing wage and apprenticeship requirements.
  • Proposed Regulations 113839-22: This document contains proposed regulations that treat members of a consolidated group as a single US shareholder in certain cases for purposes of Section 951(a)(2)(B). The proposed regulations affect consolidated groups that own stock of foreign corporations.
  • Revenue Procedure 2022-42: This procedure provides guidance on new rules added as part of the IRA on how to enter into a written agreement with the IRS to provide periodic written reports containing specified information related to a clean vehicle manufactured. It also provides the procedures for people selling vehicles to report information to the IRS in order for the vehicle to be eligible for the credit.

December 27, 2022: The IRS and the US Department of the Treasury (Treasury) announced interim guidance on the corporate stock repurchase excise tax. Notice 2023-2 provides the interim guidance on the new 1% excise tax on a covered corporation’s repurchases of corporate stock under Section 4501. (Section 4501 was added as part of the IRA.) The notice provides an exclusive list of Section 317(b) redemption transactions that are treated as Section 317(b) redemption but are not repurchases, as well as an exclusive list of transitions that are economically similar transactions. The notice applies to stock [...]

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Weekly IRS Roundup September 26 – September 30, 2022

by | Oct 3, 2022 | , , ,

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 26, 2022 – September 30, 2022.

September 26, 2022: The IRS released Internal Revenue Bulletin 2022-39, which highlights the following:

  • REG-125693-19: These proposed regulations clarify issues that do not meet the definition of a federal tax controversy, exceptions to consideration by the IRS Office of Appeals (IRS Appeals), and procedural and timing requirements that must be met before IRS Appeals will consider an issue. The proposed regulations also provide the requirements a taxpayer must meet to receive the notice described in Internal Revenue Code (Code) Section 7803(e)(5) when the taxpayer requests consideration by IRS Appeals and the request is denied. More coverage of this issue can be found here.
  • Notice 2022-38: This notice publishes the inflation adjustment factor for the carbon oxide sequestration credit under § 45Q for calendar year 2022. This notice also informs taxpayers that 2022 will be the final calendar year for which they may claim a credit under Code Section 45Q(a)(1) and (2) for qualified carbon oxide that is captured by carbon capture equipment originally placed in service at a qualified facility before the date of enactment of the Bipartisan Budget Act of 2018.

September 26, 2022: The IRS issued Notice 2022-44, providing annual notice of the 2022 to 2023 special per diem rates for taxpayers to use when substantiating the amount of business expenses incurred while traveling away from home. Specifically, the notice addresses (1) the special transportation industry meal and incidental expenses rates, (2) the rate for the incidental expenses only deduction and (3) the rates and list of high-cost localities for purposes of the high-low substantiation method.

September 26, 2022: The IRS released Notice 2022-45, extending the deadline for amending an eligible retirement plan to reflect the Coronavirus Aid, Relief, and Economic Security Act and the Taxpayer Certainty and Disaster Tax Relief Act of 2020. Both allow for special tax treatment with respect to a coronavirus-related distribution or a qualified disaster distribution.

September 26, 2022: The IRS released Tax Tip 2022-147, highlighting five resources people can find on IRS.gov. These resources are:

  1. Taxpayer Bill of Rights
  2. How to apply for 501(c)3 status
  3. IRS tax volunteer opportunities
  4. Latest tax scams
  5. Interactive Tax Assistant

September 27, 2022: The IRS released Tax Tip 2022-148, providing the steps for becoming an IRS-authorized e-file provider.

September 27, 2022: The IRS announced that victims of storms and flooding in Alaska, which started on September 15, now have until February 15, 2023, to file various federal individual and business tax returns and make tax payments. The relief is available to anyone in an area designated by the Federal Emergency Management Agency [...]

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Weekly IRS Roundup July 11 – July 15, 2022

by | Jul 18, 2022 | , ,

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of July 11, 2022 – July 15, 2022. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

July 11, 2022: The IRS announced that the Nationwide Tax Forum will start July 19, 2022. The programing includes a keynote address by IRS Commissioner Chuck Rettig, updates on tax law, cybersecurity, ethics and more. The virtual event will take place over a five-week period from July 19 to August 18 on Tuesdays, Wednesdays and Thursdays each week. Those wanting to participate must register at least three business days in advance to guarantee access. Attendance at the webinars qualifies as continuing education (CE) for enrolled agents, certified public accountants, Annual Filing Season Program participants, California Tax Education Council (CTEC) participants and Certified Financial Planners (CFP).

July 12, 2022: The IRS issued renewed warnings for tax professionals to guard themselves against identity theft. This effort begins next week with the Security Summit’s annual summer campaign, “Protect Your Clients; Protect Yourself,” which is focused on tax professionals taking steps to prevent data theft from their offices. This will mark the seventh year that the IRS, state tax agencies and the national tax community have teamed up to raise awareness on the issue.

July 12, 2022: The IRS announced a special virtual session for those interested in becoming an IRS revenue agent. The agency plans to hire 470 revenue agents for the Small Business Self Employed (SB/SE) division. For further discussion, see our recent post.

July 12, 2022: The IRS issued Tax Tip 2022-105, reminding taxpayers that they can log into their account to check account information, including balance, payments and tax records.

July 13, 2022: The IRS reminded taxpayers to file their tax returns as soon as possible. The agency also encourages people to utilize special tools on IRS.gov to help them file and access assistance.

July 13, 2022: The IRS issued Tax Tip 2022-106, which gives points on how taxpayers should evaluate whether they have a hobby or business.

July 14, 2022: The IRS is requesting comments on Form 8874, Form 1041-QFT and Form 706-GS(T). Form 8874 is for investors seeking a credit for their equity investment; Form 1041-QFT is the return for a qualified funeral trustee to report the trust’s taxes; and Form 706-GS(T) is used to report taxes due from trust terminations subject to generation-skipping transfer tax.

July 14, 2022: The IRS issued Tax Tip 2022-107, which provides information on Individual Retirement Arrangements.

July 14, 2022: The IRS announced a free IRS/Federal Trade Commission webinar focused on scams and identity theft. The webinar will also cover how a taxpayer can add a layer of protection by applying for [...]

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Weekly IRS Roundup June 20 – June 24, 2022

by | Jun 29, 2022 | , ,

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of June 20, 2022 – June 24, 2022. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

June 20, 2022: The IRS announced that it’s on track to complete the processing of originally filed Form 1040s that were received in 2021 this week and that business paper returns also filed in 2021 will follow shortly thereafter. According to the announcement:

“IRS employees have been working tirelessly to process these tax returns as quickly as possible and help people who are waiting on refunds or resolution of an account issue,” said IRS Commissioner Chuck Rettig. “Completing the individual returns filed last year with no errors is a major milestone, but there is still work to do. We remain focused on doing everything possible to expedite processing of these tax returns, and we continue to add more people to this effort as our hiring efforts continue this summer.”

 

Rettig emphasized that adding sustained funding increases for the IRS will help the agency add more employees to process tax returns and answer phones as well as help improve technology and ensure fair enforcement of the tax laws.

 

“Taxpayers and tax professionals deserve the absolute highest-quality service from the nation’s tax system,” Rettig said. “Long-term and consistent funding for the agency is critical to ensuring the IRS is prepared for future tax seasons. It’s also critical for the IRS to be ready to answer the call for the nation during the next crisis, just as the agency did delivering three rounds of historic stimulus payments and advance Child Tax Credit payments during the pandemic.”

June 22, 2022: National Taxpayer Advocate Erin Collins released her statutorily mandated midyear report to US Congress. A highlight of the report is that concerns over continuing delays in the processing of paper-filed tax returns and the impact on taxpayer refunds are brought to light. The IRS issued a subsequent news release discussing the report.

June 23, 2022: The IRS advised taxpayers that more tax forms can now be amended electronically (with more enhancements planned for the future).

June 24, 2022: The IRS announced that it has issued frequently asked questions (FAQs) regarding the reinstated Superfund chemical excise tax. The FAQs detail what the tax is, how it is computed and who may be liable for the tax.

June 24, 2022: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).



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Weekly IRS Roundup May 16 – May 20, 2022

by | May 23, 2022 | ,

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of May 16, 2022 – May 20, 2022. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

May 16, 2022: The IRS issued an internal memorandum related to a revised definition of “Appeals Coordinated Issues” to streamline the issue coordination process and reduce confusion over terminology.

May 20, 2022: The IRS has requested comments relating to quarterly federal excise tax return reporting.

May 20, 2022: The IRS announced an increase in interest rates for the calendar quarter beginning July 1, 2022, and subsequently released Revenue Ruling 2022-11.

May 20, 2022: The IRS issued a revised set of Frequently Asked Questions (FAQs) contained in Fact Sheet 2022-29 that relate to the Child Tax Credit, as expanded by the American Rescue Plan Act of 2021 (ARPA). The IRS also provided a link, reminding taxpayers when they can rely on FAQs.

May 20, 2022: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).



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Weekly IRS Roundup October 11 – October 15, 2021

by | Oct 18, 2021 | ,

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of October 11, 2021 – October 15, 2021. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

October 12, 2021: The IRS released a notice, announcing that the US Department of the Treasury (Treasury) and the IRS intend to amend the regulations under Section 987 to defer the applicability date of certain final regulations by one additional year. The deferred regulations will apply to tax years beginning after December 7, 2022. For calendar year taxpayers, the 2016 final regulations and the related 2019 final regulations will apply to the tax year beginning on January 1, 2023. The IRS and Treasury do not intend to amend the applicability date of Treasury Regulation § 1.987-12.

October 13, 2021: The IRS published an updated Form W-8BEN-E (Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities)) and related instructions.

October 14, 2021: The IRS and Treasury published a notice and request for comments concerning assumption of partner liabilities. The rules relate to a partnership’s assumption of certain fixed and contingent obligations in connection with the issuance of a partnership interest, as well as to Section 358(h) for assumptions of liabilities by corporations from partners and partnerships and temporary regulations concerning the assumption of certain liabilities under Section 358(h). Written comments are due on or before December 13, 2021.

October 14, 2021: The IRS and Treasury published a notice and request for comments concerning Form 1127 (Application for Extension of Time for Payment of Tax Due to Undue Hardship). Written comments are due on or before December 13, 2021.

October 14, 2021: The IRS and Treasury published a notice and request for comments concerning Revenue Procedure 99-50, which permits combined information reporting by a successor business entity (i.e., a corporation, partnership or sole proprietorship) in certain situations following a merger or an acquisition. Written comments are due on or before December 13, 2021.

October 15, 2021: The IRS published draft instructions for Form 8949 (Sales and Other Dispositions of Capital Assets). The updated form reflects reporting for Section 1061, which concerns recharacterizing certain long-term capital gains of a partner who holds one or more applicable partnership interests as short-term capital gains.

October 15, 2021: The IRS published a news release, updating its process for certain frequently asked questions (FAQs) on newly-enacted tax legislation. The IRS is updating this process to address concerns regarding transparency and the potential impact on taxpayers when the FAQs are updated or revised. The IRS is also addressing concerns regarding the potential application of penalties to taxpayers who rely on FAQs by providing clarity as to their ability to rely on FAQs for penalty protection. The IRS stated that significant FAQs on newly-enacted [...]

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IRS Provides Guidance on Reliance of FAQs for Penalty Protection Purposes

by and | Oct 18, 2021 |

On October 15, 2021, the Internal Revenue Service (IRS) issued a news release and fact sheet for IRS Frequently Asked Questions (FAQs), which are typically posted on the IRS’s website. The purpose of the fact sheet is to confirm and explain the extent to which FAQs can be relied upon for purposes of avoiding civil tax penalties. (For a primer on penalties and defenses, see our prior article in the Tax Executive.)

The Internal Revenue Code and Treasury Regulations, along with relevant case law, provide rules on what can (and cannot) be relied upon for penalty protection purposes. The most common penalty defenses are reasonable basis (sometimes coupled with a disclosure requirement), substantial authority and reasonable cause. Substantial authority is an objective standard, and Treasury Regulation § 1.6662-4(d)(3)(i) contains a laundry list of such authorities. Absent from this list are IRS FAQs. Reasonable basis has generally been viewed as an objective standard as well (at least outside the US Court of Appeals for the Eighth Circuit), and satisfaction of the substantial authority standard suffices for reasonable basis purposes. Reasonable cause is a subjective standard based on consideration of all the facts and circumstances, with the most important factor being the extent to which the taxpayer took steps to determine their proper tax liability.

For many years, taxpayers and practitioners have debated the value of IRS FAQs. On the one hand, they provide much needed guidance that can be helpful to taxpayers. On the other hand, FAQs are not published in the Internal Revenue Bulletin, are not treated as precedential or binding on the IRS and may be removed or changed by the IRS at any time (without any repository available to find prior versions of FAQs). The IRS relies heavily on FAQs to provide immediate guidance to taxpayers—sometimes in the form of substantive guidance—but has historically disclaimed any ability for taxpayers to rely on its FAQs or for IRS personnel to follow its FAQs. This has led to uncertainty in the tax community as to whether (and to what extent) taxpayers can and should follow IRS FAQs for both substantive positions and penalty protection purposes.

Prior to his return to private practice earlier this year, former IRS Chief Counsel Michael Desmond noted the need for better transparency and permanency around certain IRS FAQs. That transparency and permanency has finally arrived, although the weight of its value still remains uncertain. In the new release and fact sheet, the IRS announced as follows:

FAQs are a valuable alternative to guidance published in the Bulletin because they allow the IRS to more quickly communicate information to the public on topics of frequent inquiry and general applicability. FAQs typically provide responses to general inquiries rather than applying the law to taxpayer-specific facts and may not reflect various special rules or exceptions that could apply in any particular case. FAQs that have not been published in the Bulletin will not [...]

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