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Weekly IRS Roundup June 22 – June 26, 2020

By McDermott Will & Emery on Jun 29, 2020
Posted In Court Procedure Matters, IRS Guidance, Settlements, Tax Reform

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of June 22 – June 26, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here. June 24, 2020: The IRS issued final regulations permitting a regulated investment company (RIC) that receives qualified real estate investment trust (REIT) dividends to report dividends the RIC pays to its shareholders as section 199A dividends. June 25, 2020: The IRS Office of Chief Counsel announced a limited settlement offer to certain taxpayers with pending docketed US Tax Court cases involving syndicated conservation easement transactions. The settlement offer requires a concession of the income tax benefits claimed by the taxpayer and imposes penalties. June 26, 2020: The IRS will begin to reopen Taxpayer Assistance Centers starting on June 29, 2020. In-person appointments will be available for...

Section 965 Statutes of Limitations for Partnerships

By Andrew R. Roberson, Kevin Spencer and Robbie Alipour on Jun 29, 2020
Posted In IRS Audits, IRS Guidance, Tax Reform

On May 26, 2020, the Internal Revenue Service (IRS) issued PMTA 2020-08 to provide guidance on the period of limitations for Internal Revenue Code (IRC) section 965, transition tax-related adjustments of partnerships. Typically, pursuant to IRC section 6501, the IRS has three years to assess a tax liability for a tax year. However, IRC section 6501(e)(1)(C) states that if the taxpayer omits from gross income an amount properly includible in income under IRC section 951(a), the tax may be assessed at any time within six years after the return was filed. Moreover, this special six-year limitation on assessment applies to the entire tax liability reportable on that return. Because special assessment and adjustment rules apply to partnerships, the IRS issued guidance on how the rules are applicable to certain partnerships and partners with section 965-related items. For a deferred foreign income corporation’s (DFIC) last taxable year beginning before January 1,...

IRS Targets Private Foundations That May Be Used by Wealthy Taxpayers in Tax Planning

By Andrew R. Roberson, Kevin Spencer and Brian Moore on Jun 26, 2020
Posted In IRS Audits, IRS Guidance, Tax Reform, Tax Refunds

In remarks at the NYU Tax Controversy Forum on June 18, 2020, Internal Revenue Service (IRS) officials indicated that the agency is analyzing the use of private foundations for tax planning. Ms. Tamera Ripperda, who is the commissioner of the Tax Exempt and Government Entities (TEGE) Division and previously served as the industry director for the Global High Wealth in the Large Business and International (LB&I) Division, said the agency is focusing on cross-division collaborations to target high-income, high-wealth taxpayers. The TEGE Division has trained more than 400 LB&I agents this year on the use of private foundations in tax planning for high-net-worth individuals. Additionally, the divisions are using data analytics to identify linkages between LB&I and TEGE cases. Commissioner Ripparda stated that TEGE has identified more than 1,000 private foundations “that have linkages or that are interwoven into these global high-wealth enterprises,”...

Weekly IRS Roundup June 15 – June 20, 2020

By McDermott Will & Emery on Jun 23, 2020
Posted In IRS Guidance, Trial Courts

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of June 15 – June 20, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here. June 19, 2020: The US Tax Court announced that the Court will resume receiving mail effective July 10, 2020. Any items currently being held by the United States Postal Service or any private delivery service will be delivered to the Court on that day. June 19, 2020: The IRS issued proposed regulations that provide guidance for the deduction of qualified transportation fringe (QTF) and commuting expenses. As part of the Tax Cuts and Jobs Act (TCJA), taxpayers are not allowed deductions for QTF expenses or for certain commuting expenses. These proposed regulations address the elimination of the QTF deduction. The proposed regulations also provide guidance to determine the amount of QTF parking expense that is...

The Next Normal — Tax Responses to COVID-19

By Andrew R. Roberson on Jun 18, 2020
Posted In IRS Guidance

The coronavirus (COVID-19) pandemic has thrown our personal and professional lives into a constant state of change, as we deal with social distancing, e-learning, remote working, and Zoom. In this American Bar Association article, Andrew R. Roberson, a partner in US and International Tax at McDermott Will & Emery, describes how the constant change or “next normal” rings true in the tax world as well, both for taxpayers and practitioners, as we all adapt to today’s challenges. Access the full article.

Weekly IRS Roundup June 8 – June 12, 2020

By McDermott Will & Emery on Jun 15, 2020
Posted In IRS Guidance

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of June 8 – June 12, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here. June 9, 2020: The IRS published a reminder for taxpayers that estimated tax payments for tax year 2020, originally due April 15 and June 15, are now due July 15. Any individual or corporation that has a quarterly estimated tax payment due has until July 15 to make that payment without penalty. June 11, 2020: The IRS released Notice 2020-46 to address that cash payments employers make to charitable organizations that provide relief to victims of the COVID-19 pandemic in exchange for sick, vacation, or personal leave which their employees forgo will not be treated as compensation. Additionally, the employees will not be treated as receiving the value of the leave as income and cannot claim a deduction for...

Tax Court Records Accessible Again

By Andrew R. Roberson and Kevin Spencer on Jun 11, 2020
Posted In Court Procedure Matters, IRS Guidance

When the US Tax Court (Tax Court) shut down in March, the public was unable to request copies of Tax Court records. That changed effective June 1, 2020, as non-parties may now call and request copies of court records which will then be sent via email. The cost for copy requests is $0.50 per page, with a per-document cap of $3.00. The Tax Court’s press release on this subject can be found here. Practice Point: It can be extremely beneficial to taxpayers and their advisors to see arguments being made by other taxpayers and the Internal Revenue Service in cases with similar legal issues. The ability to now directly call the Tax Court to request briefs or other filings in a docketed case, and to receive such documents electronically, is significant. Moreover, the cap of $3.00 per document may provide an incentive to request documents where the price per page, without a cap, was previously financially burdensome.

Tax Court Holds That Form 870-AD Is Not a Binding Settlement Agreement

By Andrew R. Roberson, Kevin Spencer and Brian Moore on Jun 10, 2020
Posted In IRS Appeals, IRS Audits, IRS Guidance, Settlements, Trial Courts

A recent US Tax Court Memorandum Opinion held that a settlement agreement embodied in Internal Revenue Service (IRS) Form 870-AD does not preclude the IRS from reopening an audit and issuing a notice of deficiency. In Howe v. Commissioner, T.C. Memo 2020-78, the Tax Court held that equitable estoppel did not bind the Commissioner to an agreement in Form 870-AD. Only settlements that comply with Internal Revenue Code (IRC) sections 7121 and 7122 are binding on both the taxpayer and government, and an IRS Form 870-AD does not comply with those provisions. Further, the Court held that equitable estoppel did not bar the IRS from asserting a larger deficiency against the taxpayer because, even if true, the alleged failures to follow internal IRS procedures would not rise to the level of affirmative misconduct. An IRS revenue agent initially began an audit of the 2008 tax return for the taxpayer, who was CEO and majority shareholder of a healthcare company, in...

Weekly IRS Roundup June 1 – June 5, 2020

By McDermott Will & Emery on Jun 8, 2020
Posted In IRS Guidance, Tax Reform

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of June 1 – June 5, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here. June 2, 2020: The IRS reminded taxpayers who live and work abroad that they have until July 15, 2020, to file their 2019 federal income tax return and pay any tax due. Typically, the deadline for such returns is June 15. June 3, 2020: The IRS issued Notice 2020-42 to provide temporary relief from the physical presence requirement in Treasury Regulations § 1.401(a)-21(d)(6) for participant elections required to be witnessed by a plan representative or a notary public, including a spousal consent required under IRC § 417. June 4, 2020: The IRS issued Notice 2020-39 and updated the Qualified Opportunity Zones frequently asked questions (FAQs). Notice 2020-39 answers questions regarding relief from certain...

Tax Court Holds IRS Chief Counsel Attorneys May Make Initial Penalty Determination

By Andrew R. Roberson, Kevin Spencer and Brian Moore on Jun 8, 2020
Posted In Appellate Courts, IRS Appeals, IRS Guidance

In general, section 6751 requires that a supervisor give written approval before penalties can be asserted against a taxpayer. In Koh v. Commissioner, T.C. Memo. 2020-77, authored by the US Tax Court’s (Tax Court) most recent addition—Judge Travis Greaves—the Tax Court affirmed that an attorney from Internal Revenue Service (IRS) Chief Counsel may be authorized to assert such penalties in an answer to a Tax Court petition. In Koh, the IRS sent the taxpayer a notice of deficiency that included a determination related to penalties under section 6662(j). The taxpayer filed a petition with the Tax Court contesting the IRS’s determination. In its answer, the IRS Chief Counsel attorney asserted that the taxpayer was liable for accuracy-related penalties under section 6662(b)(1) or (2), in the alternative to the section 6662(j) penalties assessed in the original deficiency notice. The taxpayer sought partial judgment on the pleadings on the grounds that IRS Chief...

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