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Weekly IRS Roundup December 27 – December 31, 2021

by McDermott Will & Emery | Jan 6, 2022 | IRS Guidance, Tax Reform, Tax Refunds

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of December 27, 2021 – December 31, 2021. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

December 27, 2021: The IRS published a news release reminding employers and self-employed individuals who chose to defer paying part of their 2020 social security tax obligation that a payment is due on January 3, 2022.

December 27, 2021: The IRS published a news release announcing that Illinois victims of severe storms, straight-line winds and tornadoes beginning December 10, 2021, now have until May 16, 2022, to file various individual and business tax returns and make tax payments.

December 28, 2021: The IRS and the US Department of the Treasury published final regulations relating to the foreign tax credit, including the disallowance of a credit or deduction for foreign income taxes with respect to dividends eligible for a dividends-received deduction; the allocation and apportionment of interest expense, foreign income tax expense and certain deductions of life insurance companies; the definition of a foreign income tax and a tax in lieu of an income tax; the definition of foreign branch category income and the time at which foreign taxes accrue and can be claimed as a credit. The regulations also contain clarifying rules relating to foreign-derived intangible income (FDII). The final regulations affect taxpayers who claim credits or deductions for foreign income taxes or claim a deduction for FDII.

December 28, 2021: The IRS published a news release announcing that Alabama victims of severe storms and flooding beginning October 6, 2021, now have until February 28, 2022, to file various individual and business tax returns and make tax payments.

December 28, 2021: The IRS published a news release announcing that Arkansas victims of severe storms and tornadoes beginning December 10, 2021, now have until May 16, 2022, to file various individual and business tax returns and make tax payments.

December 29, 2021: The IRS released instructions for Forms 1099-MISC and 1099-NEC, Miscellaneous Information and Nonemployee Compensation. The changes reflect, among other things, the addition of a Foreign Account Tax Compliance Act (FATCA) filing requirement checkbox.

December 30, 2021: The IRS published a notice and request for comments concerning Notice 2021-57, funding relief for multiemployer defined benefit pension plans under the American Rescue Plan Act of 2021 (ARPA). Certain provisions of ARPA permitted plan sponsors to: (1) elect to delay designating a plan as being in endangered, critical or critical and declining status under Section 432(b)(3), as applicable, or to delay updating the plan’s funding improvement plan or rehabilitation plan, as applicable; (2) elect to extend the plan’s funding improvement period under Section 432(c)(4) or the rehabilitation period under Section 432(e)(4), as applicable and (3) spread certain investment losses and other experience losses related to [...]

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Weekly IRS Roundup September 13 – 17, 2021

by McDermott Will & Emery | Sep 20, 2021 | IRS Guidance, Tax Reform, Tax Refunds

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 13, 2021 – September 17, 2021. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

September 13, 2021: The IRS issued a news release concerning resources available to help small businesses learn their employer tax responsibilities and to help their employees.

September 13, 2021: The IRS postponed various tax filing and payment deadlines for victims of Hurricane Ida in parts of Pennsylvania. Victims now have until January 3, 2022, to file various individual and business tax returns and make tax payments.

September 14, 2021: The US Department of the Treasury (Treasury) and the IRS published a notice and request for comments concerning the interest rates and appropriate foreign loss payment patterns for determining the qualified insurance income of certain controlled corporations under IRC § 954(f). Written comments should be received on or before November 15, 2021.

September 14, 2021: The IRS issued a news release reminding employers about a valuable tax credit available to them for hiring long-term unemployment recipients and other groups of workers facing significant employment barriers.

September 15, 2021: The Treasury and the IRS published a notice and request for comments concerning forms related to foreign account tax compliance act registration (FATCA), including Forms 8966, 8957, 8966-C, 8809-I and 8508-I. Written comments should be received on or before November 15, 2021.

September 16, 2021: The IRS issued a news release reminding taxpayers who asked for an extension to file their 2020 return that they should file on or before October 15, 2021, to avoid the penalty for filing late.

September 16, 2021: The IRS published a practice unit concerning the limitation of exchange gain or loss on payment or disposition of debt instrument.

September 16, 2021: The Treasury and the IRS published a notice and request for comments on Revenue Procedure 99-17 that prescribes the time and manner for dealers in commodities and traders in securities or commodities to elect to use the mark-to-market method of accounting under IRC § 475(e) or IRC § 475(f). Written comments should be received on or before November 15, 2021.

September 16, 2021: The Treasury and the IRS published a notice and request for comments on Revenue Procedure 2003-33, which provides qualifying taxpayers with an extension of time—pursuant to Treasury Regulations Section 301.9100-3—to file an election described in IRC § 338(a) or IRC § 338(h)(10) to treat the purchase of a corporation’s stock as an asset acquisition. Written comments should be received on or before November 15, 2021.

September 17, 2021: The Treasury and the IRS published a notice and request for comments on forms used by business entity taxpayers, including Forms 1065, 1066, 1120, 1120-C, 1120-F, 1120-H, 1120-ND, 1120-S, [...]

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Weekly IRS Roundup September 7 – September 11, 2020

by McDermott Will & Emery | Sep 14, 2020 | IRS Guidance, Tax Reform

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 7, 2020 – September 11, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

September 4, 2020: The IRS published Competent Authority Arrangements between the United States and the Republic of Serbia and the United States and the Commonwealth of the Bahamas. Each country previously signed an intergovernmental agreement (IGA) to implement the Foreign Account Tax Compliance Act (FATCA). The new arrangements establish procedures for IGA-related automatic exchange obligations and for the exchange of information.

September 9, 2020: The IRS publishing news release reminding self-employed individuals, investors, retirees and others with income not subject to withholding that third-quarter estimated tax payments for 2020 are due September 15.

September 9, 2020: The IRS announced that, as part of a larger effort to reach underserved communities, it is taking a number of aggressive steps to expand information and assistance available to taxpayers in additional languages, including providing the Form 1040 in Spanish for the first time.

September 10, 2020: The IRS published a notice and request for comments concerning United States gift (and generation-skipping transfer) tax return (Form 709). Form 709 is used by individuals to report transfers subject to the gift and generation-skipping transfer taxes and to compute these taxes. The IRS uses the information to collect and enforce these taxes, verify that the taxes are properly computed and compute the tax base for the estate tax. Comments are due on or before November 9, 2020.

September 10, 2020: The IRS published a notice and request for comments concerning Form 15254 (Request for Section 754 Revocation) which is a new form for a partnership to submit a revocation request from an election to adjust the basis of partnership property. Comments are due on or before November 9, 2020.

September 10, 2020: The IRS published a practice unit focusing on audit techniques for examiners assigned foreign earned income exclusion cases.

September 10, 2020: The IRS published a news release urging individuals who owe taxes but have not yet filed for 2019 to act now to avoid larger penalties that, by law, start after September 14.

September 11, 2020: The IRS released Internal Revenue Bulletin 2020-38, dated September 14, 2020, containing the following highlights: (1) Announcement 2020-15 (Exempt Organizations); (2) Announcement 2020-16 (Exempt Organizations); (3) Notice 2020-65 (Administrative, Employment Tax); (4) Notice 2020-68 (Employee Plans); (5) Revenue Procedure 2020-40 (Employee Plans); and (6) TD 9907 (Income Tax).

September 11, 2020: 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 in our Chicago office for this week’s [...]

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Weekly IRS Roundup January 13 – 17, 2020

by McDermott Will & Emery | Jan 21, 2020 | IRS Audits, IRS Guidance, Tax Reform, Uncategorized
Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of January 13 – 17, 2020.

January 13, 2020: The IRS published an information letter relating to the testamentary transfer to a trust of US Series EE savings bonds purchased by and issued to a decedent. The IRS stated that if the bonds were transferred to the trust because of a death, and if the transferor were either an accrual method taxpayer or a cash method taxpayer who reported interest annually, then the increase in value of the bonds in the year of death up to the date of death must be reported on the decedent’s final return. The IRS provided alternative guidance to cash method transferors that did not annually report their interest.

January 13, 2020: The Chief Counsel’s Office informally advised that for capital contributions where a partnership return is accepted as filed, the IRS may adjust the basis of an affected item at the partner level without opening a partnership-level examination. The Office explained that though the IRS cannot change any partnership-item components of outside basis without opening a TEFRA proceeding, the partnership itself can adjust the overall computation of outside basis, accepting all the partnership-item components as filed, as well as any nonpartnership-item components of outside basis.

January 13, 2020: The IRS updated their FATCA (Foreign Account Tax Compliance Act) IDES (International Data Exchange Services) Technical FAQs page. The update addresses taxpayers that receive an “Invalid Certificate” alert when uploading their digital certificates to the IDES system. The IRS provided a variety of explanations for the error, including that the digital certificate itself may be invalid and that there may be communication errors with the certificate authority.

January 13, 2020: The IRS supplemented the 2019 Instructions for Form 1042-S, which addresses a foreign person’s US source income subject to withholding. The changes reflect the proposed regulations that reduced a taxpayer’s burden with respect to certain requirements under FATCA. The Instructions’ Tax Rate Table was also adjusted to include the revised backup withholding tax rate of 24%, as required by the TCJA.

January 16, 2020: The IRS issued a news release announcing that it will return sequestered funds to businesses that were affected by a recent OMB determination regarding the Balanced Budget and Emergency Deficit Control Act of 1985, as amended. The IRS explained that it will restore any amounts sequestered since 2013 under section 168(k)(4), further stating that taxpayers need not take any action because the IRS has a complete list of all affected taxpayers.

January 17, 2020: The IRS issued a news release announcing that the agency is open to considering relief from double taxation resulting from the application of the repatriation tax under section 965 where there is no significant reduction in the resulting tax by application of foreign tax credits. The IRS explained that it would only be appropriate to provide relief in unique circumstances, such as where [...]

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Weekly IRS Roundup January 6 – January 10, 2020

by McDermott Will & Emery | Jan 13, 2020 | IRS Guidance, Uncategorized
Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of January 6 – January 10, 2020.

January 6, 2020: The IRS issued a News Release confirming that the 2019 tax filing season will be open for individual filers—and that the IRS will begin accepting and processing 2019 tax year returns—on January 27, 2020. The IRS explained that though taxpayers may prepare returns through the IRS’ Free File program before that date, the IRS will begin processing these returns when their systems open on January 27. The IRS also noted that the deadline to file 2019 tax returns and to pay any tax owed is April 15, 2020.

January 8, 2020: The Acting National Taxpayer Advocate released her 2019 Annual Report to Congress, highlighting challenges such as the implementation of the Taxpayer First Act, inadequate taxpayer service and limited funding of the agency. Also released was the third edition of the National Taxpayer Advocate’s Purple Book, which presents 58 legislative recommendations designed to strengthen taxpayer rights and improve tax administration. Among other issues, the Report emphasized that the IRS is struggling to meet its stated Mission because it is underfunded, and stressed that the IRS should use the Taxpayer First Act as an opportunity to identify taxpayer needs and preferences and to develop initiatives to meet them.

January 9, 2020: The IRS issued a News Release reminding taxpayers that signing up for direct deposit is the fastest way to receive their federal tax refund. The IRS explained that by using direct deposit, a taxpayer could split their refund into up to three financial accounts, including Individual Retirement Accounts.

January 9, 2020: The IRS issued a News Release announcing the launch of the Gig Economy Tax Center on IRS.gov, citing the various resources that will make it easier for taxpayers to find information about the tax implications for both the companies that provide the services and for the individuals who perform them. The IRS touted the Center’s necessity, given that many gig workers do not receive a W-2 or a Form 1099 but must still pay taxes on that income.

January 10, 2020: The IRS issued proposed regulations that revise the applicability dates for previously proposed regulations under section 382(h), delaying the applicability of those proposed rules and providing transition relief for eligible taxpayers. The proposed regulations were initially published in September 2019 and would revise the rules in §§1.382-2 and 1.382-7, affecting the determination of the net built-in gains and losses and recognized built-in gains and losses under section 382(h) that, in turn, affect the limitation under section 382 on net operating losses and disallowed business interest expense under section 163(j).

January 10, 2020: The IRS released a supplement to the 2019 instructions for Form 1042-S, Foreign Person’s US Source Income Subject to Withholding. The instructions now reflect proposed regulations that would reduce taxpayers’ burdens with respect to certain requirements under FATCA. The [...]

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When the IRS Says It’ll ‘Meet You in Paris’: Recent Trends & Developments in Outbound US Exchange-of-Information Techniques

by McDermott Will & Emery | Oct 3, 2019 | IRS Guidance, Uncategorized
The Internal Revenue Service is looking for your international tax data—that is, if the IRS doesn’t already have it. With the rollout of the Foreign Account Tax Compliance Act (FATCA) and other automatic exchange-of-information (EOI) procedures, the IRS is now receiving—and making use of—a large amount of international tax information about US taxpayers. In an article recently published in Tax Executive magazine, Laura Gavioli outlines the major ways the IRS is seeking international tax information, including treaty requests, MLATs, and letters of request. The article also offers a number of best practices in dealing with these requests and common defenses to them—all with the goal of making your next international tax information request go smoothly.

Read the full article.

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The LB&I Campaigns Keep Coming!

by Kevin Spencer and McDermott Will & Emery | Oct 31, 2018 | IRS Audits, IRS Guidance, Uncategorized
The Internal Revenue Service (IRS) Large Business and International (LB&I) Division continues to churn out new audit “campaigns.” The most recent announcement on October 30, 2018, identifies five new campaigns, which were identified through LB&I data analysis and suggestions from IRS employees. With the addition of these new campaigns, LB&I has now identified 50 campaigns since the program’s initial release on January 13, 2017.

The five new LB&I campaigns are listed verbatim by title and description.

Individual Foreign Tax Credit Phase II

Section 901 of the Internal Revenue Code alleviates double taxation through a dollar-for-dollar credit against U.S. tax on foreign-sourced income in the amount of foreign taxes paid on that income.

Individuals who meet certain requirements may qualify for the foreign tax credit. This campaign addresses taxpayers who have claimed the credit but do not meet the requirements. The IRS will address noncompliance through a variety of treatment streams, including examination. (more…)

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Weekly IRS Roundup July 30 – August 3, 2018

by McDermott Will & Emery | Aug 7, 2018 | IRS Guidance, Uncategorized
Presented below is our weekly roundup for July 30 – August 3, 2018 on significant IRS guidance and relevant tax matters.

July 31, 2018: In Notice 2018-58, the IRS stated that it intends to issue regulations clarifying new rules governing section 529 contributions.

July 31, 2018: The IRS published three new frequently asked questions (Certifications and Period Reviews FAQs 14-16) regarding Foreign Account Tax Compliance Act (FATCA) compliance for qualified intermediaries and qualified derivatives dealers related to account documentation review.

August 1, 2018: The IRS issued proposed regulations addressing the one-time section 965 “transition tax” imposed on US shareholders of certain foreign corporations.

August 1, 2018: Final regulations granted taxpayers a single non-automatic 30-day extension to file Form W-2.

August 2, 2018: A report published by the Treasury Inspector General for Tax Administration (TIGTA) made eight recommendations to the IRS for improving security over taxpayer data.

August 3, 2018: The IRS released proposed regulations under section 168(k), providing guidance regarding the additional first-year depreciation deduction for certain property placed in service between September 28, 2017 and December 31, 2022. The proposed regulations address the interaction of section 168(k) and certain partnership tax rules as well as other topics.

Special thanks to Kevin Hall in our DC office for this week’s roundup.

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Weekly IRS Roundup July 23 – 27, 2018

by McDermott Will & Emery | Jul 31, 2018 | IRS Guidance, Uncategorized
Presented below is our weekly roundup for July 23 – 27, 2018 on significant IRS guidance and relevant tax matters.

July 20, 2018: The IRS has updated its FAQ list for the Foreign Account Tax Compliance Act (FATCA) including new questions and answers regarding the IRS’s updated processing system and certifications for compliance.

July 23, 2018: In Publication 5118, the IRS released the July updated version of the FATCA Online Registration User Guide. This includes, among other additions, changes to enable for financial institutions to submit certifications of pre-existing accounts and periodic certifications.

July 27, 2018: The IRS issued TD 9836 containing final regulations regarding the substantiation and reporting rules for cash and noncash charitable contributions. The regulations provide guidance to individuals, partnerships and corporations.

July 27, 2018: The IRS released their weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandum and Chief Counsel Advice).

Special thanks to Christy Vouri-Misso and Greg Berson in our DC office for this week’s roundup.

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IRS Criminal Investigation Division Expects Official “Stand Up” of National Coordinated Investigation Units in January

by Kevin Spencer and McDermott Will & Emery | Oct 30, 2017 | IRS Guidance, Uncategorized
In early August 2017 (as we previously reported), the Chief of the Internal Revenue Service’s (IRS) Criminal Investigation Division (CID), John D. Fort, announced that CID would be forming new National Coordinated Investigation Units over the next few months. In a recent conference, Fort has confirmed that these units will be fully operational in January, and they are already sending out referrals to field offices.

The units are intended to modernize CID’s investigative tools to rely more upon data analytics to harvest leads from information received through the Swiss Banking Program, the Foreign Account Tax Compliance Act (FATCA) and the Panama Papers investigation, among other sources. The effort is also clearly intended to maximize the Division’s resources in light of budgetary concerns.

Fort also noted that CID has increasingly focused on tax evasion issues related to cryptocurrencies, and that the use of cryptocurrencies in money laundering operations has become much more mainstream in the last few years. We have also observed a number of developments in this area. For example, the Department of Justice Tax Division is currently engaged in an IRS “John Doe” summons enforcement action against a Bitcoin clearinghouse, seeking the names of Coinbase’s customers who engaged in certain types of potentially reportable transactions. See United States v. Coinbase, Inc., 3:17-cv-01431-JSC (N.D. Cal.).

Practice Point: The new National Coordinated Investigation Units have the potential to reinvigorate and sharpen CID’s investigative efforts in the United States and for taxpayers abroad. Particularly in the area of undeclared offshore accounts, voluntary disclosure is strongly advisable; the world is getting smaller and smaller. Also, CID’s heightened focus upon Bitcoin and other cryptocurrencies may have far-reaching effects beyond criminal investigations. For example, as we have seen historically with the UBS and Jenkens & Gilchrist “John Doe” summons enforcement cases, among others, these summons proceedings can hold open statutes of limitations for assessment in civil audits as well.

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