IRS Reminds Taxpayers of Upcoming Deadline to File for 2019 Tax Refunds

The Internal Revenue Service (IRS) issued a news release reminding taxpayers to submit their 2019 income tax returns by July 17, 2023, to claim their refunds. Internal Revenue Code Section 6511 provides the period in which a taxpayer may request a refund or credit:

Claim for credit or refund of an overpayment of any tax imposed by this title in respect of which tax the taxpayer is required to file a return shall be filed by the taxpayer within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of such periods expires the later, or if no return was filed by the taxpayer, within 2 years from the time the tax was paid.

Practice Point: There is a misconception that the IRS will automatically refund an overpayment to a taxpayer, however, that is not typically the case. Indeed, you may have an overpayment sitting in an account for a specific tax year (e.g., 2020) but the IRS will not typically provide notice of the overpayment. Many times, the only way to know whether you have a credit balance on an account is to request a transcript of the account (e.g., Form 945, 1040 or 1120) for a specific tax year. It’s good practice to request a transcript for a tax year before the period outlined in IRC Section 6511 has expired. That way you can file a claim for a refund before the period expires. If you don’t, the IRS can (and routinely does) take the overpayment.




President Biden Announces IRS Chief Counsel Nominee

On June 2, 2023, US President Joe Biden announced that he has picked Marjorie Rollinson as the Internal Revenue Service (IRS) Chief Counsel, the top attorney position at the IRS. Rollinson has had a distinguished career in tax service, both in the public and private sectors, and would be the first woman to serve in the role if confirmed by the US Senate. She began her career at Ernst & Young (EY) in 1987, became a partner in 1997 and was eventually named Deputy Director of the National Tax Department where she also led the International Tax Technical Committee.

In 2013, she left EY and joined the Office of Chief Counsel as the Technical Deputy Associate Chief Counsel in the Office of the Associate Chief Counsel International. In 2016, she was named Associate Chief Counsel International where she oversaw 100 tax lawyers responsible for issuing published guidance and providing technical guidance.

Practice Point: The Chief Counsel position has been vacant since Michael Desmond stepped down on January 20, 2021. It took nearly a year for the Senate to confirm his appointment. Senate Finance Committee Chairman Ron Wyden made a statement that he hopes the Senate will be able to process the nomination quickly given the complexity and demands of leading the IRS’s legal team.




Weekly IRS Roundup May 30 – June 2, 2023

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of May 30, 2023 – June 2, 2023.

May 30, 2023: The IRS released Internal Revenue Bulletin 2023-22, which highlights the following:

  • Notice 2023-39: This notice describes proposed amendments to Section 148 that the US Department of the Treasury (Treasury) and the IRS intend to issue regarding an exception to arbitrage investment restrictions applicable to bonds on which the interest is excludable from gross income under Section 103(a) (tax-exempt bonds). Specifically, the forthcoming proposed regulations will amend Section 1.148-11(d)(1)(i)(F) regarding whether certain perpetual trust funds created and controlled by states that are pledged as credit enhancements to guarantee tax-exempt bonds will be treated as replacement proceeds of the guaranteed bonds for purposes of the arbitrage investment restrictions on tax-exempt bonds under Section 148.
  • Revenue Procedure 2023-23: This procedure provides the 2024 inflation-adjusted amounts for Health Savings Accounts as determined under Section 223, as well as the maximum amount that may be made newly available for excepted benefit health reimbursement arrangements provided under Section 54.9831-1(c)(3)(viii) of the Pension Excise Tax Regulations.
  • Notice 2023-40: This notice sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates used under Sec. 417(e)(3)(D) and the 24-month average segment rates applicable for May 2023. This notice also provides the 30-year Treasury rates, as reflected by the application of Sec. 430(h)(2)(C)(iv).
  • Notice 2023-38: This notice provides the general rules taxpayers must satisfy to qualify for the domestic content bonus credit amounts and the related recordkeeping and certification requirements. The guidance also describes a safe harbor regarding the classification of certain components in representative types of qualified facilities, energy projects or energy storage technologies.

May 30, 2023: The IRS released Tax Tip 2023-73, reminding taxpayers that the extended deadline to file their 2019 tax returns for unclaimed refunds is July 17, 2023. Taxpayers usually have three years to file; however, the deadline was postponed due to the COVID-19 pandemic.

May 30, 2023: The IRS requested comments on Form 1041, U.S. Income Tax Return for Estates and Trusts, related Schedules D, I, J and K-1, and Form 1041-V. Comments should be received on or before July 31, 2023.

May 30, 2023: The IRS reminded taxpayers living and working abroad to file their 2022 federal income tax return by the June 15 deadline. This applies to both US citizens and resident aliens abroad, including those with dual citizenship.

May 31, 2023: The Treasury and the IRS announced guidance for applicants investing in solar- and wind-powered electricity generation facilities. Notice 2023-17 established the Low-Income Communities Bonus Credit Program back in February 2023 and provided initial guidance for potential applicants. The proposed regulations request comments on certain definitions [...]

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Weekly IRS Roundup May 22 – May 26, 2023

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of May 22, 2023 – May 26, 2023.

May 22, 2023: The IRS released Internal Revenue Bulletin 2023-21, which highlights the following:

  • Notice 2023-36: This notice from the US Department of the Treasury (Treasury) and the IRS invites recommendations for the 2023-2024 Priority Guidance Plan. The Priority Guidance Plan is used to identify and prioritize tax issues that should be addressed through regulations, revenue rulings, revenue procedures, notices and other published administrative guidance.
  • Announcement 2023-15: This announcement provides the revocation of IRC 501(c)(3) organizations for failure to meet the code section requirements. Contributions made to the organization by individual donors are no longer deductible under Section 170(c).
  • REG-124064-19: These proposed regulations related to Section 367(d), Rules for Certain Repatriations of Intangible Property, would (in certain instances) terminate the continued application of certain tax provisions after the previous transfer of intangible property to a foreign corporation when the intangible property is repatriated to certain US persons.

May 22, 2023: The IRS announced that interest rates will remain the same for the calendar quarter beginning July 1, 2023. Revenue Ruling 2023-11 establishes the interest rates as follows:

  • Overpayments: 7%
  • Overpayments for corporations: 6%
  • Corporate overpayments for portions exceeding $10,000: 4.5%
  • Underpayments: 7%
  • Large corporate underpayments: 9%

May 23, 2023: The IRS released Tax Tip 2023-70, reminding taxpayers that requesting an Identity Protection PIN can help stop identity thieves from filing fraudulent tax returns. An Identity Protection PIN is a six-digit number used to prove taxpayers’ identities when filing their federal tax returns.

May 24, 2023: The IRS released Tax Tip 2023-71, providing guidance on how taxpayers can best prepare to request an appeal after the IRS rejects an offer in compromise. After the IRS rejects an offer in compromise, taxpayers have 30 days to request an appeal of the decision.

May 25, 2023: The IRS renewed an alert for businesses to watch out for the telltale signs of misleading claims by aggressive promoters that misrepresent who can qualify for the Employee Retention Credit. The alert reminds taxpayers that businesses improperly claiming the credit must pay it back, possibly with penalties and interest.

May 25, 2023: The IRS released Notice 2023-43, which provides guidance with respect to Section 305 of the SECURE 2.0 Act of 2022. Section 305 provides for the expansion of the Employee Plans Compliance Resolution System, currently set forth in Revenue Procedure 2021-30. This notice provides interim guidance in advance of any updates to Revenue Procedure 2021-31 and is not intended to be comprehensive.

May 25, 2023: The IRS released Tax Tip 2023-72, announcing that improvements to IRS phone service and online options are coming as a result of the Inflation [...]

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The Government Flexes Its Summons Muscles

Two recent decisions confirmed the broad administrative summons authority of the Internal Revenue Service (IRS). In the first, the US Supreme Court resolved a circuit conflict regarding notice requirements for third-party IRS summonses. In the second, the US Court of Appeals for the Third Circuit confirmed the primacy of the Internal Revenue Code (IRC) over state law insurance and privacy laws.

Polselli v. Internal Revenue Service[1]

Mr. Polselli owed over $2 million to the IRS, was not forthcoming with payment and, moreover, appeared to be hiding assets with accommodating parties. The IRS assigned a revenue officer to track down where his assets might be. The investigation pointed to several potential repositories of relevant financial information, including a law firm, the taxpayer’s wife and a company through which Mr. Polselli had made one tax payment of $300,000. The officer issued summonses under the authority of IRC section 7602 to three banks where the law firm, the wife and the company had accounts. The officer did not give notice to any of the third parties prior to issuing the summons. After learning of the summonses from the banks, the third parties moved to quash.

The precise question was whether the third parties were entitled to notice under IRC section 7609(a)(1) and thereby had standing to move to quash the summonses or whether the exception to the notice requirement under IRC section 7609(c)(2)(D)(i), where a summons is “issued in aid of the collection of an assessment made [against the delinquent taxpayer],” applied, thus resulting in lack of standing and ultimately lack of jurisdiction. The petitioners relied upon a Ninth Circuit decision that narrowed the scope of the IRC section 7609(c)(2)(D)(i) exception to those circumstances where the delinquent taxpayer had proprietary interest in the information sought by the summons. The Sixth, Seventh and Tenth Circuits found no such limitation on the exception in part because the statute did not contain one.

The Supreme Court unanimously rejected the Ninth Circuit’s application of IRC section 77609(c)(2)(D)(i) and found the petitioners had no standing to quash. At the risk of oversimplification, the Supreme Court opened the American Heritage Dictionary of 1969, looked up the word “aid” and determined, consistent with other relevant parts of the statute, that Congress intended to use the ordinary meaning of the word “aid,” i.e., help or assist. Was the effort to locate the taxpayer’s financial connections and maneuvers through the petitioners’ bank records intended to “help” in the goal of collecting the $2 million? Yes. Implicit in this conclusion is a requirement that there is some evidence that third parties have a financial connection with the taxpayer, as opposed to the IRS randomly picking bank accounts. However, the Court declined to opine on any such requirement as that question was not specifically argued. It did note the Government’s admission that some financial connection must exist to establish “aid” in the collection of the assessment.

United States v. State of Delaware Dept. of Insurance [2]

This case centers on the intersection [...]

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