Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of March 2 – 6, 2020.
March 2, 2020: The US Treasury Department and the IRS released tax year 2018 statistics to the public, including both individual income tax returns (Form 1040’s) filed through mid-November of 2019 and filings by charitable organizations through December of 2019. The Treasury Department reported that overall average adjusted gross income (AGI) rose by 5.7% relative to the same period the prior year.
March 6, 2020: The IRS issued final regulations that correct TD 9890, which provides guidance on certain due diligence and reporting rules applicable to persons making certain US source payments to foreign persons and guidance on certain aspects of reporting by foreign financial institutions on US accounts. The correction updates the table of contents entries for Example 4 in Treas. Reg. § 1.1441-6(b)(2)(iv)(D).
March 2, 2020: The IRS issued a revenue procedure providing an exemption from the information reporting requirements under IRC section 6048 for certain US individuals with respect to their transactions with, and ownership of, certain tax-favored foreign retirement trusts and nonretirement savings trusts. The revenue procedure also establishes procedures for eligible individuals to request an abatement of penalties that have been assessed or a refund of penalties that have been paid pursuant to IRC section 6677 for the individuals’ failure to comply with information reporting requirements.
March 4, 2020: The Statistics of Income Division of the IRS released Publication 5398, which reports the AGI percentiles by state for the 2017 tax year. In 2017, the AGI cutoff for the top 1 percent of the US income distribution was $516,714; the average AGI for this group of taxpayers was $1,625,221, with labor income, capital income and business income as their three primary sources of income.
March 6, 2020: The IRS changed the date of a public hearing on proposed regulations under IRC section 274, regarding expenditures related to entertainment, amusement or recreation activities. The public hearing, which was originally scheduled for April 7, 2020, has been rescheduled for April 29, 2020. The IRS requests that comments be received by April 13, 2020.
March 6, 2020: The IRS released Instructions to Schedule D of Form 1040, advising taxpayers who are eligible to roll over gain from empowerment zone assets for 2018 (potentially due to recent legislation restoring the empowerment zone rollover for 2019 and retroactively extending it to 2018) to file an amended return using Form 1040-X. The IRS explained how taxpayers may determine if they are eligible to postpone their gain and, if so, how such taxpayers may report their position to the IRS.
March 6, 2020: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).
Special thanks to Jenni Saperstein in our Chicago office for this week’s roundup.