FinCEN Archives - TAX CONTROVERSY 360

Weekly IRS Roundup February 17 – 21, 2020

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of February 17 – 21, 2020.

February 18, 2020: The IRS issued a revenue ruling providing various prescribed rates for federal income tax purposes for March 2020, including various applicable federal rates (AFRs) for purposes of IRC section 1274(d) and adjusted AFRs for purposes of IRC section 1288(b) and section 382(f). The revenue ruling also contains the federal rate to determine the present value of annuities and other future interests for purposes of IRC section 7520.

February 19, 2020: The IRS issued a revenue procedure establishing a safe harbor under which the IRS will treat partnerships as properly allocating, in accordance with IRC section 704(b), the credit for carbon oxide sequestration under IRC section 45Q. In a related news release, the IRS stated that the safe harbor is similar to the safe harbors developed for partnerships receiving the wind energy production tax credit and the rehabilitation credit. The safe harbor will be effective for transactions entered into on or after March 9, 2020, and provides rules that allow for prior transactions to qualify for similar treatment.

February 19, 2020: The IRS published final regulations that correct TD 9885, the base erosion and anti-abuse regulations that were published on December 6, 2019. The amendments restructure the sentence addressing “a principal purpose” of avoiding a base erosion payment; the amendments also correct Treas. Reg. § 1.6038A-2(g) to say that returns must be included “on or after” June 7, 2021.

February 19, 2020: The IRS issued a notice providing guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under IRC section 417(e)(3), and the 24-month average segment rates under IRC section 430(h)(2). The notice also provides guidance as to the interest rate on 30-year Treasury securities under IRC section 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under IRC section 431(c)(6)(E)(ii)(I).

February 19, 2020: The IRS issued a news release reporting that the J5 tax chiefs—leaders from five international tax organizations, including the IRS’ Criminal Investigations unit—met in Sydney this past week to review the J5’s progress in their fight against transnational crime. The J5 was formed upon the OECD’s suggestion and has recently engaged in a globally coordinated “day of action” against an international financial institution suspected of facilitating money laundering and tax evasion.

February 19, 2020: The Treasury and the Financial Crimes Enforcement Network (FinCEN) released a final rule to reflect inflation adjustments to its civil monetary penalties. The updated penalty adjustment table is listed in 31 CFR Section 1010.821, and it includes civil monetary penalties for various types of violations, including penalties for violations of Bank Secrecy Act requirements.

February 20, 2020: The IRS released draft instructions to Form 8978, Partner’s Additional Reporting Year Tax, to reflect changes to the audit procedures of partnerships under the 2015 BBA. [...]

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Weekly IRS Roundup December 23 – 27, 2019

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of December 23 – 27, 2019.

December 20, 2019: The Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a notice further extending the time for certain FBAR filings, citing the 2016 notice of proposed rulemaking that has not yet been finalized. Taxpayers whose filing due dates were previously extended by Notice 2018-1 will now have until April 15, 2021, to file. For all other taxpayers with an FBAR filing obligation, the filing due date remains April 15, 2020.

December 23, 2019: The IRS released proposed regulations that modify how to determine the source of income from sales of inventory produced within the United States and sold without the United States, or vice versa. The regulations also propose new rules regarding how to determine the source of income from sales of personal property (including inventory) by nonresidents, where the sales are attributable to an office or other fixed place of business that the nonresident maintains in the United States. The regulations also modify the rules that determine whether foreign source income is effectively connected with the conduct of a trade or business within the United States. The IRS has requested that written or electronic comments, as well as requests for a public hearing, be received by February 28, 2020.

December 27, 2019: The IRS released final regulations relating to withholding and reporting tax on certain US source income paid to foreign persons. The final regulations provide guidance on the due diligence and reporting rules applicable to persons making certain US source payments to foreign persons, as well as guidance on certain aspects of reporting by foreign financial institutions on US accounts. The final regulations are scheduled to be published in the Federal Register on January 2, 2020.

December 27, 2019: The IRS published an issue snapshot regarding the impact of the Tribal Social Security Fairness Act on tribal council members’ worker status. The issue snapshot addresses whether an Indian tribe’s decision—or lack thereof—to enter into a section 218A agreement and to elect social security coverage for its tribal council members will affect those workers’ classification for other purposes of the IRC, such as income tax and retirement plan participation.

December 27, 2019: The IRS published an issue snapshot explaining that under the TCJA, a corporation with a fiscal year that includes January 1, 2018, will pay federal income taxes using a blended tax rate, as opposed to a flat 21% tax rate. The IRS stated that fiscal year corporations may want to consider filing an amended return if they previously filed an income tax return that did not reflect the blended rate.

December 27, 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 Jenni Saperstein in our Chicago office for this week’s roundup.