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IRS Provides Some Relief from Tax Payment (But Not Filing) Deadlines Due to COVID-19

by , and | Mar 19, 2020 | ,

On March 13, 2020, President Trump issued an emergency declaration that directed Secretary Mnuchin to provide appropriate relief from tax payment deadlines to Americans who have been adversely affected by the COVID-19 pandemic. In response to this direction, the IRS issued Notice 2020-17. The Notice declares that all taxpayers have been affected by the emergency and gives all taxpayers an extension of time until July 15, 2020, to make certain income tax payments that would otherwise have been due on April 15, 2020 (however, at this time, tax returns must still be filed by the April 15 deadline absent an extension).

We outline the specifics.

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The Tax Impact of Recent Federal Actions Relating to COVID-19

by | Mar 18, 2020 | ,

On March 13, 2020, President Trump signed a Proclamation on Declaring a National Emergency Concerning the Novel Coronavirus Disease (COVID-19) Outbreak under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (the “Stafford Act”).

By invoking the Stafford Act, the President provides the Internal Revenue Service (IRS) and US Department of the Treasury (the “Treasury”) significant authority to offer tax relief to those in federally designated disaster areas. While it is not uncommon for a state or locality to be designated as an emergency or disaster area, the severity of the COVID-19 outbreak has required a national response. The President’s declaration has led the Federal Emergency Management Agency (FEMA) to declare an emergency in every state, territory and certain tribal lands. A list of each declaration is available on FEMA’s website and will be updated as more specific forms of relief are authorized.

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Weekly IRS Roundup November 4 – 8, 2019

by | Nov 11, 2019 | , , ,

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of November 4–8, 2019.

November 4, 2019: The IRS posted a new Large Business and International active compliance campaign on Section 965 transition tax as enacted under the 2017 TCJA. The IRS stated that the goal of the campaign is to promote compliance with Section 965. The treatment stream will include conducting examinations as well as providing technical assistance to teams on Section 965, with a focus on identifying and addressing taxpayer populations with potential material compliance risk. The IRS anticipates that returns selected as part of the Section 965 campaign will also be risked and, if appropriate, examined for other material issues, especially issues related to TCJA planning.  For our coverage of this campaign, see here.

November 6, 2019: The IRS issued a Revenue Procedure and a News Release announcing the tax year 2020 annual inflation adjustments for more than 60 tax provisions, including the tax rate schedules and other tax changes. The tax year 2020 adjustments are generally used on tax returns filed in 2021.

November 8, 2019: The IRS published Proposed Regulations providing guidance relating to the life expectancy and distribution period tables that are used to calculate required minimum distributions from qualified retirement plans, individual retirement accounts and annuities, and certain other tax-favored employer-provided retirement arrangements. The life expectancy tables and applicable distribution period tables were developed based on mortality rates for 2021 and would provide longer life expectancies than the tables in the existing regulations. Public comments regarding the contemplated rules must be received by January 7, 2020.

November 8, 2019: The IRS released a Revenue Procedure providing the list of automatic changes to which the automatic change procedures in Revenue Procedure 2015-13, as clarified and modified by other listed guidance. The revenue procedure is effective for a Form 3115 filed on or after November 8, 2019, for a year of change ending on or after March 31, 2019. It supersedes the previous list in Rev. Proc. 2018-31.

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



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IRS Issues Transition Tax Compliance Campaign

by , and | Nov 6, 2019 | , , , ,

On November 4, 2019, the Internal Revenue Service (IRS) announced a new Large Business and International (LB&I) compliance campaign regarding Section’s 965 transition tax under the Tax Cuts and Jobs Act (TCJA). This is one of several dozen compliance campaigns that LB&I has announced since the initial 13 campaigns were identified in 2017, and is part of LB&I’s larger goals of improving return selection, identifying issues representing a risk of noncompliance and making the greatest use of limited resources. We have written at length regarding the IRS’s campaigns. Click here for prior coverage of the IRS’s campaigns. This announcement comes just over a month after the Treasury Inspector General for Tax Administration (TIGTA) issued a report questioning the effectiveness and efficiency of campaign issue selection. We wrote about the TIGTA report here. The IRS is presumably heeding TIGTA’s recommendation and is focused on Section 965 because of the substantial dollars associated with compliance. A list of all campaigns can be found here (the newest campaign is found under the tab “IRC 965”).

Section 965 was part of tax reform in the TCJA. It generally imposes a transition tax on a US shareholder’s pro rata share of accumulated earnings and profits of certain foreign corporations, as if those earnings had been repatriated to the US. The new campaign will focus examinations on US-based multinational companies’ 2017 and 2018 returns to ensure compliance with the transition tax in Section 965. The campaign will also provide technical assistance to IRS teams working on Section 965 issues, with a focus on identifying and addressing taxpayer populations with potential material compliance risk.

Practice Point: Multinational taxpayers should be mindful of this new campaign and aware of any compliance issues they may face. Taxpayers should be aware that returns selected for the transition tax campaign will also be examined for other material issues, especially those related to TCJA planning.



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Weekly IRS Roundup September 16 – 20, 2019

by | Sep 23, 2019 | , , ,

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 16 – 20, 2019.

September 16, 2019: The IRS issued a news release about time-limited settlement offers made to eligible taxpayers under audit who participated in certain micro-captive insurance transactions.

September 17, 2019: The Treasury and the IRS released a Chief Counsel Notice advising Chief Counsel attorneys about the prior Policy Statement on the Tax Regulatory Process issued by the Treasury and the IRS on March 5, 2019. We previously wrote about the Policy Statement here. The Chief Counsel Notice advises that any matter implicating any aspect of the Policy Statement must be coordinated with the Office of Associate Chief Counsel (Procedure & Administration).

September 17, 2019: The IRS issued a notice expanding the emergency housing and compliance monitoring relief that is provided in Rev. Proc. 2014-49, 2014-37 I.R.B. 535, and Rev. Proc. 2014-50, 2014-37 I.R.B. 540 to Butte, Los Angeles and Ventura counties in California due to the California wildfires.

September 17, 2019: The IRS set September 24, 2019, as the Federal Register publication date for final and proposed regulations on increase of benefit and expansion of qualifying property for additional first year depreciation deduction.

September 18, 2019: The IRS released a revenue ruling prescribing various rates for federal income tax purposes for October 2019: (1) applicable federal rates for purposes of section 1274(d); (2) adjusted applicable federal rates for purposes of section 1288(b); (3) adjusted federal long-term rate and the long-term tax-exempt rate described in section 382(f); (4) appropriate percentages for determining the low-income housing credit described in section 42(b)(1); and (5) the federal rate for determining the present value of an annuity, an interest for life or for a term of years, or a remainder or a reversionary interest for purposes of section 7520.

September 19, 2019: The IRS issued final regulations amending the rules relating to hardship distributions from section 401(k) plans. The final regulations reflect statutory changes affecting section 401(k) plans, including changes made by the Bipartisan Budget Act of 2018. The regulations affect participants in, beneficiaries of, employers maintaining and administrators of plans that include cash or deferred arrangements or provide for employee or matching contributions.

September 2019: The IRS released a Statistics of Income Bulletin focusing on gift taxes. The article provides data on donors, donees, and types and amounts of gifts given during 2010 to 2016.

Special thanks to Robbie Alipour in our Chicago office for this week’s roundup.



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Watch Your Mailbox: IRS Letters Warning of Cryptocurrency Non-Compliance on Their Way

by | Jul 30, 2019 | ,

On July 26, 2019, the Internal Revenue Service (IRS) issued a press release informing the public that it is sending more than 10,000 letters to taxpayers with potentially unreported (or misreported) virtual currency transactions. The letters will inform them of the possible reporting requirements that may apply to these transactions and advise them of the need to correct past errors. (more…)



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More IRS “Campaigns?! IRS Announces Six More Examination Campaigns

by and | Jul 23, 2019 | , , ,

On July 19, 2019, the Internal Revenue Service (IRS) Large Business & International (LB&I) division announced the approval of six new campaigns. As in the past, the IRS stated that “LB&I’s goal is to improve return selection, identify issues representing a risk of non-compliance, and make the greatest use of limited resources.” This brings the total number of campaigns to 59! LB&I’s campaign announcements and approved campaigns are available on the IRS’s website.

The six new LB&I campaigns are listed below, verbatim by title and description.

S Corporations Built in Gains Tax
C corporations that convert to S corporations are subjected to the Built-in Gains tax (BIG) if they have a net unrealized built-in gain and sell assets within 5 years after the conversion. This tax is assessed to the S corporation. LB&I has found that S corporations are not always paying this tax when they sell the C corporation assets after the conversion. LB&I has developed comprehensive technical content for this campaign that will aid revenue agents as they examine the issue. The goal of this campaign is to increase awareness and compliance with the law as supported by several court decisions. Treatment streams for this campaign will be issue-based examinations, soft letters, and outreach to practitioners. (more…)



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Law360: Myers May Make It Easier to Find Equitable Relief in Tax Court

by | Jul 18, 2019 | , , ,

Laura L. Gavioli, PC, recently wrote an article for Law360 on a US Court of Appeals for the District of Columbia Circuit’s decision that may provide an equitable avenue for hearing of late-filed petitions in US Tax Court. The Law360 article, “Myers May Make It Easier to Find Equitable Relief in Tax Court,” can be accessed here.



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Taxpayer First Act: Changes to the IRS Appeals Process

by and | Jul 2, 2019 | ,

The enactment of the Taxpayer First Act, H.R. 3151 (116th Cong.) (TFA) brings with it several changes to the procedures and operations of the Internal Revenue Service (IRS). The TFA touches on the following subjects:

  • Establishing the IRS Independent Office of Appeals
  • Improving customer service
  • Changes to enforcement
  • Modernization of the Office of the National Taxpayer Advocate and the IRS
  • Cybersecurity and identity protection, technological changes, and expanded use of electronic systems
  • IRS hiring and disclosure changes
  • Provisions relating to exempt organizations
  • Changes to the penalty for failure to file
  • Determination of budgetary effects
  • Other miscellaneous provisions

This post does not discuss each subject, but rather focuses on changes to the IRS Appeals process. (more…)



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Taxpayers Should Prepare for the Next Penalty Battleground

by , and | May 31, 2019 | , , ,

The IRS is using a new tool from its arsenal to enforce compliance for tax refund and credit claims: the Internal Revenue Code Section 6676 penalty. Taxpayers and their advisers need to be aware of the mechanics of this penalty and how best to avoid it being sustained.

Andrew R. Roberson, Kevin Spencer and Evan Walters authored a comprehensive article on IRC Section 6676. They discuss:

  • The origins of IRC Section 6676
  • How to contest the penalty and privilege concerns
  • What taxpayers who are considering filing—or have already filed—refund claims should keep in mind now that the penalty is the IRS’s favorite new compliance tool

Read the article here.



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