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Weekly IRS Roundup October 2 – October 6, 2023

by | Oct 16, 2023 | ,

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of October 2, 2023 – October 6, 2023.

October 2, 2023: The IRS released Internal Revenue Bulletin 2023-40, which includes the following:

  • Revenue Ruling 2023-18 provides the October 2023 applicable federal rates.
  • Notice 2023-64 provides interim guidance on the new corporate alternative minimum tax (CAMT) and indicates that proposed regulations are forthcoming. The notice describes rules for:
    • Determining a taxpayer’s applicable financial statement and adjusted financial statement income (AFSI), including rules applicable to tax consolidated groups and certain foreign corporations
    • AFSI adjustments for the depreciation of Section 168 property, the amortization of qualified wireless spectrum, the treatment of certain taxes and to prevent certain duplications and omissions
    • Determining the applicable corporation status, the CAMT foreign tax credit and financial statement net operating losses.
  • Notice 2023-66 updates the corporate bond monthly yield curve, the corresponding spot segment rates for September 2023 used under § 417(e)(3)(D), the 24-month average segment rates for September 2023 and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv).
  • Revenue Procedure 2023-30 provides specifications for the private printing of red ink substitutes for the 2023 revisions of certain information returns.
  • Revenue Procedure 2023-31 refers filers to applicable publications, forms, instructions or other guidance, including postings on IRS.gov, for procedures related to seeking a hardship waiver or administrative exemption from requirements to file Forms 8955-SSA and 5500-EZ electronically.

October 3, 2023: A public meeting of the Electronic Tax Administration Advisory Committee will be held on November 15, 2023.

October 5, 2023: The IRS warned high-income taxpayers to avoid promotions involving inflated deductions for art donations. The IRS indicated that schemes involving abusive art donations are on its radar and that multiple investigations are underway.

October 6, 2023: The IRS released proposed regulations addressing so-called “Killer B” transactions. These transactions, at a high level, are structured to repatriate foreign subsidiary earnings through triangular reorganizations. The proposed regulations would formalize and modify guidance set forth in Notices 2014-32 and 2016-73.

October 6, 2023: The IRS issued proposed regulations, Revenue Procedure 2023-33 and frequently asked questions on the transfer of new and previously owned clean vehicle credits from a taxpayer to an eligible entity for vehicles placed in service after December 31, 2023. This guidance addresses how taxpayers can elect to transfer new and previously owned clean vehicle credits to dealers who are eligible to receive advance payments of either credit, how dealers can become eligible entities to receive advance payments of new or previously owned clean vehicle credits and how to recapture the credit.

October 6, 2023: 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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IRS Strengthens Its Large Partnership Audit Teams

by | Sep 26, 2023 | ,

Back in October 2021, the Internal Revenue Service’s (IRS) Large Business and International (LB&I) division announced the Large Partnership Compliance (LPC) program. This new audit program adopted features of the Large Corporate Compliance (LCC) program, such as its audit selection method. Similar to the LCC’s audit selection process, the LPC’s audit selection process has two general steps. The first step subjects large partnership returns to a basic automated review of certain key threshold criteria (e.g., gross assets and gross receipts). The second step further refines the pool through data analytics and artificial intelligence tools, which have been recently enhanced by enforcement funds from the Inflation Reduction Act of 2022. LB&I personnel, specifically those in the Pass-Through Entity office, review the preliminary audit pool and make the final call for selection.

Accompanying LPC technological improvements in the audit selection process, the LB&I announced a new pass-through entity work unit: “The new work unit will be housed in the IRS Large Business and International (LB&I) division” and “will leverage Inflation Reduction Act funding to disrupt efforts by certain large partnerships to use pass-throughs to intentionally shield income to avoid paying the taxes they owe.” (See IR-2023-176 (September 20, 2023).) New hires in this unit will focus on those with financial services experience. (See IR-2023-172 (September 15, 2023) (reporting plans to hire 3,700 agents “well versed in the financial services industry”).) This announcement came on the heels of an earlier announcement that by the end of September 2023, the LPC will begin audits of 75 of the largest US partnerships, including hedge funds, real estate investment partnerships and publicly traded partnerships. (See IR-2023-166 (September 8, 2023).)

Practice Point: Because of the significant resources devoted to the LPC program, these audits promise to be thorough and will be conducted by an LB&I exam team primed to find substantial audit adjustments. To successfully navigate these audits, partnerships should work to ensure that the IRS examination team sticks to the timeline, respond timely to all reasonable requests for information, and be prepared to assert all applicable privileges, such as the attorney-client privilege, Internal Revenue Code Section 7525 privilege, and work product where appropriate. We anticipate that aggressive IRS examination teams will try to obtain this information over a partnership’s initial objections on these grounds. It’s never too late to prepare for an IRS examination, and if you are a large partnership, it’s in your best interest to consult with your tax team now!



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Weekly IRS Roundup September 18 – September 22, 2023

by | Sep 25, 2023 | , ,

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 18, 2023 – September 22, 2023.

September 18, 2023: The IRS released Internal Revenue Bulletin 2023-38, which includes the following:

September 18, 2023: The IRS published Tax Tip 2023-111, describing different types of third-party representatives.

September 19, 2023: The IRS published Tax Tip 2023-112, describing how taxpayers can be certain they are communicating with the IRS as opposed to scammers purporting to represent the IRS.

September 19, 2023: The IRS reminded individuals and businesses in parts of Alabama, California and Georgia that their 2022 federal income tax returns and tax payments are due October 16, 2023. The original due date for these returns was postponed because of natural disasters.

September 19, 2023: The IRS has selected eight new members for the Electronic Tax Administration Advisory Committee (ETAAC), which is a public forum for the discussion of electronic tax administration issues. ETAAC members work closely with the Security Summit, a joint effort of the IRS, state tax administrators and the nation’s tax industry to fight identity theft and refund fraud.

September 20, 2023: The IRS published Tax Tip 2023-113, discussing the expanded tax credit for contractors who build energy-efficient homes.

September 20, 2023: The IRS announced plans to establish a special area that will focus on large or complex pass-through entities. The new work unit will be housed in the IRS Large Business and International (LB&I) division.

September 22, 2023: The IRS is requesting comments on Revenue Procedure 2004-47, which permits taxpayers who failed to make a reverse qualified terminable interest property (QTIP) election on an estate tax return to file certain documents with the Cincinnati Service Center directly to request relief in lieu of requesting a private letter ruling. Comments are invited on:

  • Whether the collection of information is necessary for the proper performance of the agency’s functions, including whether the information has practical utility
  • The accuracy of the agency’s estimate for the burden of the information collection
  • Ways to enhance the quality, utility and clarity of the information to be collected
  • Ways to minimize the burden of the information collection on other forms of information technology
  • Estimates for capital or startup costs and costs of operation, maintenance and purchase of services to provide information.

September 22, 2023: The IRS released its weekly list of written [...]

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Weekly IRS Roundup September 11 – September 15, 2023

by | Sep 19, 2023 | , ,

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 11, 2023 – September 15, 2023.

September 11, 2023: The IRS released Internal Revenue Bulletin 2023-37, which includes the following:

  • Revenue Ruling 2023-16 provides the applicable federal rates for September 2023.
  • Revenue Ruling 2023-17 sets forth the underpayment and overpayment interest rates under Code Section 6621 for the calendar quarter beginning October 1, 2023.
  • Revenue Procedure 2023-29 provides the applicable percentage table used to calculate the premium tax credit under Code Section 36B.
  • Notice 2023-62 announces a two-year administrative transition period with respect to the requirement under Code Section 603 that catch-up contributions made on behalf of certain eligible participants be designated as Roth contributions. The notice also requests comments for further guidance with respect to Code Section 603.
  • Announcement 2023-25 and Announcement 2023-26 revoke tax-exempt classification for specified organizations.
  • Announcement 2023-28 corrects citations in Revenue Procedure 2023-27.

September 12, 2023: The IRS released Notice 2023-64, which provides interim guidance on the corporate alternative minimum tax (CAMT). The notice lists financial statements that meet the definition of an applicable financial statement, provides general rules for determining “financial statement income” and includes guidance on when corporations are subject to the CAMT. Notice 2023-64 supplements and clarifies Notice 2023-07 and Notice 2023-20.

September 12, 2023: The IRS released Revenue Procedure 2023-31, providing guidance on Form 8955-SSA, Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits, and Form 5500-EZ, Annual Return of A One-Participant (Owners/Partners and Their Spouses) Retirement Plan or A Foreign Plan, which must be filed for plan years beginning on or after January 1, 2024. Revenue Procedure 2023-31 supersedes Revenue Procedure 2015-47.

September 12, 2023: The IRS published Tax Tip 2023-110, advising taxpayers to look out for scammers posing as charities and to ensure their donations are going to legitimate charitable organizations.

September 13, 2023: The IRS extended tax relief to individuals and businesses impacted by Hurricane Idalia in 28 counties in Georgia. As a result, affected individuals filing personal income tax returns on extensions expiring October 16, 2023, calendar-year partnerships and S corporations whose extensions expire on October 16, 2023, and calendar-year corporations whose 2022 extensions expire on November 15, 2023, now have until February 15, 2024, to file returns and pay related taxes.

September 14, 2023: The IRS announced an immediate moratorium through at least the end of the year on processing new claims for the Employee Retention Credit (ERC). The moratorium is in response to promoters who have aggressively marketed the credit to businesses without regard for their eligibility. Hundreds of criminal cases related to ERC claims are being worked, [...]

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Weekly IRS Roundup September 4 – September 8, 2023

by | Sep 14, 2023 | , ,

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 4, 2023 – September 8, 2023.

September 5, 2023: The IRS released Internal Revenue Bulletin 2023-36, which includes proposed regulations implementing the Mental Health Parity and Addiction Equity Act of 2008.

September 5, 2023: The IRS released Tax Tip 2023-108, outlining basic tax advice for entrepreneurs who want to start a new business. The Tax Tip addresses business structures, selecting a tax year, employer identification numbers and reminds taxpayers to investigate applicable state tax requirements.

September 5, 2023: In light of September being National Preparedness Month, the IRS reminded taxpayers to develop an emergency preparedness plan and outlined steps for mitigating losses during a disaster.

September 5, 2023: The IRS issued Fact Sheet 2023-20 to explain how pass-through entities that are electronically filing Schedules K-2 and K-3 should report negative amounts, which are not permitted for certain line items. The Fact Sheet cautions that the IRS has not opined on whether it is legally appropriate to use negative values.

September 6, 2023: The IRS released Tax Tip 2023-109, providing advice to taxpayers who are still considering a tax return preparer.

September 6, 2023: The IRS extended tax relief to individuals and businesses impacted by Hurricane Idalia in South Carolina. As a result, affected individuals filing personal income tax returns on extensions expiring on October 16, 2023, calendar-year partnerships and S corporations whose extensions expire on October 16, 2023, and calendar-year corporations whose 2022 extensions expire on November 15, 2023, now have until February 15, 2024, to file returns and pay related taxes.

September 6, 2023: The IRS announced that the application period for the 2024 Compliance Assurance Process (CAP) program is now open and will run from September 6 to October 31, 2023. The IRS will inform applicants if they’re accepted into the program in February 2024. The CAP program enables taxpayers and the IRS to resolve issues before filing tax returns. To apply, applicants must (1) have assets of $10 million or more, (2) be a US publicly traded corporation with a legal requirement to prepare and submit US Securities and Exchange Commission Forms 10-K, 10-Q and 8-K, and (3) not be under investigation by, or in litigation with, any government agency that would limit the IRS’s access to current tax records.

September 6, 2023: The IRS reminded taxpayers who pay estimated taxes that the deadline to submit their third quarter payments is September 15, 2023.

September 8, 2023: The IRS announced it will be dedicating greater resources to wealthy taxpayers. As part of this effort, the IRS will ensure audit rates do not increase for those earning less than $400,000 a year and will add new fairness safeguards for those claiming the Earned Income Tax Credit. The IRS [...]

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Weekly IRS Roundup August 21 – September 1, 2023

by | Sep 5, 2023 | , ,

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for August 21, 2023 – September 1, 2023.[1]

August 21, 2023: The IRS released Tax Tip 2023-102, warning tax professionals to be prepared for a variety of schemes aimed at stealing sensitive information, including phishing and attacks on cloud-based applications.

August 23, 2023: The IRS published Revenue Procedure 2023-29, providing the applicable percentage table used to calculate the premium tax credit under Section 36B.

August 24, 2023: The IRS reminded employers and employees that employers who have educational assistance programs can use those programs to help pay student loan obligations for their employees.

August 24, 2023: The IRS released Tax Tip 2023-103, outlining the Heavy Highway Vehicle Use Tax and reminding truckers that the tax payment due date is the last day of the month following the month the vehicle was first used on public highways. Truckers must also file Form 2290, Heavy Highway Vehicle Use Tax Return, by such date.

August 25, 2023: The IRS published Revenue Ruling 2023-17, which provides guidance on the overpayment and underpayment rate of tax under Section 6621. The ruling includes a table of interest rates spanning from 1975 through the present.

August 25, 2023: The IRS published Notice 2023-62, which provides guidance on particular issues involving catch-up contributions to retirement plans that are eligible to be designated as Roth contributions.

August 25, 2023: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

August 28, 2023: The IRS released Tax Tip 2023-104, explaining that eligible teachers and administrators can claim a tax deduction for part of the cost of technology, supplies and training to the extent those expenses are not reimbursed.

August 29, 2023: The IRS issued proposed regulations that would require brokers to report sales and exchanges of digital assets by customers. The proposed regulations contemplate the creation of new Form 1099-DA.

August 29, 2023: The IRS released Tax Tip 2023-105, listing miscellaneous resources for military spouses who run businesses or do gig work.

August 30, 2023: The IRS issued proposed regulations, frequently asked questions and Publication 5855, which all relate to the increased tax credit or deduction amounts for clean energy facilities and projects if taxpayers satisfy certain prevailing wage and registered apprenticeship requirements.

August 30, 2023: The IRS announced that starting January 1, 2024, Form 8300, Report of Cash Payments Over $10,000, must be filed electronically. (See also FS-2023-19 (August 19, 2023).)

August 30, 2023: The IRS announced tax relief for individuals and businesses in parts of Florida affected by Hurricane Idalia. Currently, [...]

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Weekly IRS Roundup August 14 – August 18, 2023

by | Aug 22, 2023 | , ,

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of August 14, 2023 – August 18, 2023.

August 14, 2023: The IRS published Internal Revenue Bulletin 2023-33, which includes:

  • Revenue Procedure 2023-26, describing a program that provides an opportunity for fast-track processing of certain requests for letter rulings under the jurisdiction of the Associate Chief Counsel (Corporate), replacing the pilot program described in Revenue Procedure 2022-10, 2022-6 I.R.B. 473.
  • Proposed regulations that would amend the definition of short-term, limited-duration insurance, which is excluded from the definition of individual health insurance coverage under the Public Health Service Act, and provide guidance as to the requirements for hospital indemnity or other fixed indemnity insurance to be considered an excepted benefit in the group and individual health insurance markets. The proposed regulations would also clarify the tax treatment of certain benefit payments in fixed amounts received under employer-provided accident and health plans.
  • Revenue Ruling 2023-14, providing that, if a cash-method taxpayer receives cryptocurrency tokens as rewards for staking cryptocurrency native to a proof-of-stake blockchain, the fair market value of the rewards received should be included in the taxpayer’s gross income in the taxable year in which the taxpayer gains dominion and control over the rewards.

August 14, 2023: The IRS released Tax Tip 2023-100, providing information to organizations applying for tax-exempt status, including that Form 1023 must now be submitted electronically, every tax-exempt organization needs an employer identification number, certain churches and ancillary organizations do not need to apply to be tax-exempt, different rules may apply depending on whether the organization is a private foundation or a public charity and charitable organizations must make certain information available to the public.

August 15, 2023: The IRS published Revenue Ruling 2023-16, which sets forth the applicable federal rates for September 2023.

August 15, 2023: The IRS released Tax Tip 2023-101, informing taxpayers that, as part of their right to the finality of tax matters, they are entitled to know the maximum amount of time they have to challenge the IRS’s position on a matter, the maximum amount of time the IRS has to audit a particular tax year or collect a tax debt, when the IRS has finished an audit, that the IRS generally has three years from the date taxpayers file their returns (with exceptions) to assess any additional tax for that tax year and that the IRS generally has 10 years from the assessment date to collect unpaid taxes.

August 15, 2023: The IRS reminded eligible contractors who build or substantially reconstruct qualified new energy-efficient homes that they might qualify for a tax credit of up to $5,000 per home under Code Section 45L. The credit amount depends on the type of home, the home’s energy efficiency and the date when someone buys or leases [...]

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Weekly IRS Roundup August 7 – August 11, 2023

by | Aug 14, 2023 | ,

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of August 7, 2023 – August 11, 2023.

August 7, 2023: The IRS published Internal Revenue Bulletin 2023-32, which includes:

  • Notice 2023-53, setting forth updates on the corporate bond monthly yield curve and the corresponding spot segment rates for July 2023 used under Code Section 417(e)(3)(D); the 24-month average segment rates applicable for July 2023; and the 30-year Treasury rates, as reflected by the application of Code Section 430(h)(2)(C)(iv).
  • Proposed regulations that would rescind the moral objection exemption to providing contraceptive services in health plans subject to the Patient Protection and Affordable Care Act and establish a new individual contraceptive arrangement that individuals enrolled in plans or coverage sponsored, arranged, or provided by objecting entities may use to obtain contraceptive services at no cost directly from a provider or facility that furnishes contraceptive services.
  • Final regulations that authorize the assessment and collection of erroneous refunds of various credits in the normal course of processing employment tax returns.
  • Announcement 2023-22, revoking tax-exempt status for certain organizations.
  • Notice 2023-55, providing temporary relief in defining a “foreign income tax” for purposes of Code Sections 901 and 903 for 2022 and 2023 tax years.
  • Revenue Ruling 2023-13, listing the applicable federal rates for August 2023.

August 7, 2023: The IRS reminded eligible contractors who build or substantially reconstruct qualified new energy-efficient homes that they might qualify for a tax credit of up to $5,000 per home under Code Section 45L. The credit amount depends on the type of home, the home’s energy efficiency and the date when someone buys or leases the home.

August 8, 2023: The IRS released part four of a five-part “Protect Your Client; Protect Yourself” summer series from the Security Summit, a public-private partnership that works to protect the tax system against tax-related identity theft and fraud. This publication provides information to help protect sensitive taxpayer data.

August 8, 2023: The IRS released Tax Tip 2023-99, explaining the various ways in which scammers may impersonate the IRS, including by mail, electronically and even in person.

August 8, 2023: The IRS’s Large Business and International Division announced a compliance campaign focused on taxpayers who may have inflated their reported cost of goods sold to reduce their taxable income.

August 9, 2023: The IRS warned businesses and tax professionals to be aware of a range of compliance issues associated with employee stock ownership plans (ESOPs). The IRS indicated that it is aware of promoted arrangements using ESOPs that are potentially abusive. Such arrangements may include schemes where a business creates a “management” S corporation whose stock is wholly owned by an ESOP for the sole purpose of diverting taxable business income to the ESOP. The S [...]

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Weekly IRS Roundup July 31 – August 4, 2023

by | Aug 9, 2023 | ,

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of July 31, 2023 – August 4, 2023.

July 31, 2023: The IRS released Revenue Ruling 2023-14, holding that a cash-method taxpayer who receives cryptocurrency units as validation rewards for staking cryptocurrency native to a proof-of-stake blockchain must include the fair market value of the validation rewards in its gross income for the tax year in which the taxpayer gains dominion and control over the validation rewards.

July 31, 2023: The IRS released Tax Tip 2023-97, identifying tax considerations for couples who are separating or divorcing. These considerations include updating tax withholdings by completing a new Form W-4, recognizing alimony payments as income (or deducting) and excluding child support payments from income (or not deducting).

August 1, 2023: The IRS warned tax professionals to be on the lookout for phishing texts and emails and cloud-based attacks intended to steal taxpayer information.

August 2, 2023: The IRS announced that taxpayers will be able to submit all correspondence to the IRS and respond to IRS notices electronically. Further, taxpayers will be able to e-file 20 additional tax forms starting in 2024. By the 2025 filing season, an additional 150 non-tax forms will be available in digital, mobile-friendly formats, and the IRS will digitally process all paper-filed tax and information returns.

August 3, 2023: The IRS released Tax Tip 2023-98, explaining that in most cases, revenue officers will contact taxpayers through appointment letters (Letter 725-B) to schedule a meeting and generally will not make unannounced visits. IRS.gov will be updated to reflect the new policy. Unannounced visits may still be made to serve summonses and subpoenas and in cases involving the seizure of assets where such assets are at risk of being placed beyond the reach of the government.

August 3, 2023: The IRS released proposed regulations that would prevent employee benefit plans and issuers from using nonquantitative treatment limitations to place greater limits on access to mental health and substance use disorder benefits as compared to medical/surgical benefits. Written comments on the proposed regulations are due October 2, 2023.

August 3, 2023: The IRS released proposed regulations that would identify certain monetized installment sale transactions and substantially similar transactions as listed transactions that must be reported to the IRS.

August 3, 2023: The IRS issued Notice 2023-59, which provides the requirements for home energy audits for taxpayers who want to claim the Energy Efficient Home Improvement Credit. The credit amount is equal to 30% of the total amount that taxpayers pay throughout the year for qualified energy efficiency improvements, residential energy property expenditures and home energy audits. The notice provides specific requirements for claiming the Home Energy Improvement Credit and details the process for conducting the home energy audit.

August 4, 2023: The IRS issued
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