Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of November 18 – 22, 2019.
November 19, 2019: The IRS published final regulations that affect United States persons with direct or indirect ownership interests in certain foreign corporations. The regulations provide rules regarding the attribution of ownership of stock or other interests for purposes of determining whether a person is a related person with respect to a controlled foreign corporation under section 954(d)(3). In addition, the final regulations provide rules for determining whether a controlled foreign corporation is considered to derive rents in the active conduct of a trade or business for purposes of computing foreign personal holding company income.
November 19, 2019: The IRS posted Large Business and International active compliance campaigns. The campaigns include: (1) Costs that Facilitate an IRC 355 Transaction; (2) Form 1120-F Delinquent Returns Campaign; (3) IRC 199 – Claims Risk Review; (4) IRC 457A – Deferred Compensation Attributable; (5) Nonresident Alien Individual (NRA) Tax Credits; and (6) Post Offshore Voluntary Disclosure Program (OVDP) Compliance.
November 19, 2019: The IRS added section 7122-related (offers in compromise) questions and answers on whether Form 8821 allows a taxpayer to appoint a third party to represent them before the IRS on an offer in compromise (negative) and on whether a spouse’s income must be included on Form 433-A (OIC), Collection Information Statement for Wage Earners and Self-Employed Individuals, even if the spouse doesn’t owe taxes (affirmative).
November 19, 2019: The IRS issued interim guidance to update the process by which the IRS accepts requests for confirmation that the government received a filed FinCEN Form 114 (formerly TD F 90-22.1), Report of Foreign Bank and Financial Accounts (FBAR). The IRS will no longer accept verbal verification requests. All requests must be submitted in writing.
November 20, 2019: The IRS issued a news release on its annual report for 2019, including recommendations to the IRS on new and continuing issues in tax administration. The 2019 Public Report includes recommendations on over 20 issues, which cover a broad range of topics and concerns, including guidance relating to the Tax Cuts and Jobs Act.
November 20, 2019: The IRS published questions and answers about the new qualified business income deduction (the section 199A deduction) that may be available to individuals, including many owners of sole proprietorships, partnerships and S corporations, and some trusts and estates. This deduction, created by the 2017 Tax Cuts and Jobs Act, allows non-corporate taxpayers to deduct up to 20% of their qualified business income, plus 20% of qualified real estate investment trust dividends and qualified publicly traded partnership income.
November 21, 2019: The IRS’s National Taxpayer Advocate blog posted highlights of the Taxpayer First Act and its impact on the Taxpayer Advocate Service and taxpayer rights.
November 21, 2019: The IRS published a notice of public hearing on proposed regulations regarding the timing of income inclusion under section 451. The public hearing is being held on Tuesday, December 10, 2019, at 10:00 am.
November 22, 2019: The IRS issued final regulations addressing the effect of recent legislative changes to the basic exclusion amount allowable in computing Federal gift and estate taxes. The final regulations will affect donors of gifts made after 2017 and the estates of decedents dying after 2025.
November 22, 2019: The IRS published a correction to TD 9613, regrading reduced 2009 estimated income tax payments for individuals with small business income.
November 22, 2019: The IRS released an issue snapshot on certain bonds subject to section 147(d) (regarding rehabilitation requirement for financing acquisitions of existing property) that: (1) covers when a violation of the rehabilitation expenditure exception under Section 147(d)(2) occurs; and (2) provides audit tips for detecting such violations.
November 22, 2019: The IRS published a notice of the tier 2 tax rates for calendar year 2019 as required by section 3241(d). Tier 2 taxes on railroad employees, employers, and employee representatives are one source of funding for benefits under the Railroad Retirement Act.
November 22, 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 in our Chicago office for this week’s roundup.