Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of August 17, 2020 – August 21, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.
August 19, 2020: The IRS requested comments from large corporate taxpayers currently utilizing the procedures under Revenue Procedure 94-69 to disclose changes in tax positions after the opening of an examination. The IRS is considering obsoleting Revenue Procedure 94-69, which is available to a small group of large corporate taxpayers. Revenue Procedure 94-69 provides special procedures for taxpayers that are subject to the (former) Coordinated Examination Program to show additional tax due or make disclosures to avoid the imposition of accuracy-related penalties for negligence, disregard of rules or regulations or substantial understatement of income tax under sections 6662(b)(1) and (b)(2). Comments are due by October 19, 2020.
August 19, 2020: The IRS published a practice unit concerning the taxability of distributions from an S corporation that either (1) does not have accumulated earnings and profits (AE&P), or (2) makes distributions from sources other than AE&P; that is, nondividend distributions made from the accumulated adjustments account, other adjustments account or a shareholder-level previously taxed income account from before 1983 to the extent it still exists. The practice unit also addresses what items to consider to determine the taxability of nondividend distributions, liquidating distributions and sale-or-exchange redemption distributions.
August 19, 2020: The IRS published a practice unit concerning the last-in first-out (LIFO) pooling method and taxpayers who may elect to compute opening and closing inventories for goods using LIFO.
August 20, 2020: The IRS published a memorandum concerning guidance for Taxpayer Advocate Service (TAS) employees on the types of cases accepted into TAS under Criteria 9 – Public Policy. The Taxpayer Advocate is adding four cases that fit the policy; (1) organizations where the IRS automatically revoked their tax-exempt status for failure to file an annual return or notice for three consecutive years; (2) cases involving any tax account-related issue referred to TAS from a Congressional office, including limited Economic Impact Payment (EIP) issues; (3) cases involving revocation, limitation or denial of a passport; and (4) cases that have been referred to a Private Collection Agency for collection of a federal tax debt.
August 20, 2020: The IRS published corrections to Treasury Decision 9614, which was published in the Federal Register on Tuesday, March 19, 2013. Treasury Decision 9614 contained final regulations that apply to transfers of certain property by a domestic corporation to a foreign corporation in certain nonrecognition exchanges, or to distributions of stock of certain foreign corporations by a domestic corporation in certain nonrecognition distributions. The corrections are effective on August 20, 2020.
August 21, 2020: The IRS announced it has temporarily stopped mailing notices to taxpayers with balances due. The IRS has suspended the mailing of three notices—the CP501, the CP503 and the CP504—that go to taxpayers who have a balance due on their taxes.
August 21, 2020: The IRS released Internal Revenue Bulletin 2020-35, dated August 24, 2020, containing the following: (1) REG-132434-17 (Administrative); (2) Notice 2020-55 (Administrative, Excise Tax); (3) Notice 2020-61 (Employee Plans); (4) Notice 2020-62 (Employee Plans); (5) Notice 2020-63 (Income Tax); and (6) Announcement 2020-13 (Income Tax).
August 21, 2020: The IRS released for publication in the federal register final regulations under sections 245A and 954 that limit the deduction for certain dividends received by US persons from foreign corporations under section 245A and the exception to subpart F income under section 954(c)(6) for certain dividends received by controlled foreign corporations (CFCs). The package contains final regulations under section 6038 regarding information reporting to facilitate administration of the final regulations. The guidance relates to changes made to the applicable law by the Tax Cuts and Jobs Act (TCJA). The regulation finalizes proposed regulations published on June 18, 2019, and removes temporary regulations published on the same date.
August 21, 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 Robbie Alipour in our Chicago office for this week’s roundup.