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Weekly IRS Roundup December 11 – December 15, 2023

by Evan Walters | Dec 20, 2023 | IRS Guidance, Tax Reform, Tax Refunds

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

December 11, 2023: The IRS released Internal Revenue Bulletin 2023-50, which includes the following:

Proposed regulations that would update regulations under Internal Revenue Code (Code) §§ 267 and 707 to apply an entity approach to partnerships for purposes of applying loss limitation rules to related persons. The proposed regulations are intended to conform the existing regulations to current law. Comments and requests for a public hearing must be received by February 26, 2024.
Proposed regulations that relate to the calculation of foreign currency gains and losses under Code § 987. The proposed regulations include a current rate election, which would treat all balance sheet items as marked items and would require that income, gain, loss and deduction with respect to a qualified business unit be translated at a yearly average exchange rate. The proposed regulations also include an annual recognition election, which would trigger all items of income, gain, loss and deduction on an annual basis. Comments and requests for a public hearing must be received by February 12, 2024.

December 11, 2023: The IRS issued Notice 2023-80, which announces the intention to issue proposed regulations that address the application of the foreign tax credit (FTC) and dual consolidated losses in relation to the Global Anti-Base Erosion (GloBE) Model Rules. The notice also (i) extends the temporary relief period described in Notice 2023-55 for determining whether a foreign tax is eligible for an FTC pursuant to §§ 901 and 903 and (ii) addresses application of the temporary relief with respect to partnerships and their partners.

December 11, 2023: The IRS urged taxpayers to take certain important actions to help them file their 2023 federal income tax return for the upcoming filing season, including (i) making quarterly payments by January 16, 2024, if required, (ii) gathering 2023 tax documents, (iii) considering whether to file electronically and choosing direct deposit to expedite tax refunds, and (iv) reviewing energy-related credits. The IRS also reminded taxpayers that they can now view their IRS account transcripts online and should not rely on receiving refunds by a certain date.

December 13, 2023: The IRS announced plans for a new leadership structure at the agency that will feature a single deputy IRS Commissioner and four new IRS chief executive positions to cover taxpayer service, compliance, information technology and operations.

December 13, 2023: The IRS published Tax Tip 2023-126, which states that business taxpayers can electronically file any Form 1099 series information returns for free with the IRS Information Returns Intake System.

December 14, 2023: The US Department of the Treasury and the IRS issued proposed regulations on the § 45X advanced manufacturing production credit. The proposed [...]

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IRS Releases Several Transfer Pricing Directives

by Lowell D. Yoder and McDermott Will & Emery | Jan 17, 2018 | IRS Audits, IRS Guidance, Transfer Pricing Resource, Uncategorized

The Internal Revenue Service (IRS) Large Business and International (LB&I) Division recently released several directives (LB&I Directives) geared toward transfer pricing. LB&I acknowledges that significant LB&I resources are devoted to transfer pricing issues, and such issues make up a substantial portion of the LB&I inventory. It appears that these directives are aimed at ensuring that LB&I resources are utilized in the most efficient and effective manner on transfer pricing issues. A link to each LB&I Directive and a short summary is provided below.

Interim Instructions on Issuance of Mandatory Transfer Pricing Information Document Request (IDR) in LB&I Examinations

This LB&I Directive advises LB&I examiners that it is no longer necessary to issue the mandatory transfer pricing information document request (IDR) to taxpayers that have filed Form 5471, Information Return of U.S. Person with Respect To Certain Foreign Corporations, or Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business, or engaged in cross-border transactions. An update to Part 4.60.8 of the Internal Revenue Manual will be made in the future to further explain this change. (more…)

IRS Required to Obtain Supervisory Approval to Assert Penalties

by McDermott Will & Emery and McDermott Will & Emery | Dec 21, 2017 | Appellate Courts, Court Procedure Matters, IRS Guidance, Trial Courts, Uncategorized

We have written several times about penalty defenses, including substantial authority, issues of first impression and tax reporting disclosures. Additionally, we previously covered the 2016 case of Graev v. Commissioner, where a divided US Tax Court (Tax Court) held that supervisory approval was not necessary before determining a penalty in a deficiency proceeding because the statutory language of Internal Revenue Code (Code) Section 6751(b)(1) couched such approval in terms of a proposed penalty assessment. For those not well-versed in procedural tax lingo, an “assessment” is merely the formal recording of a tax liability in the records of the Internal Revenue Service (IRS). In cases subject to the deficiency procedures—i.e., where taxpayers have a right to contest the IRS’s position in the Tax Court—no assessment can be made until after the Tax Court’s decision is final. (more…)