Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of January 23, 2023 – January 27, 2023.
January 23, 2023: The IRS released Internal Revenue Bulletin 2023-4, which highlights the following:
- Proposed Regulation 114666-22: This proposed regulation modifies the participant election rules in Section 1.401(a)-21(d), providing an alternative to in-person witnessing of spousal consents required to be witnessed by a notary public or plan representative. The proposed regulation also clarifies that certain rules for the use of an electronic medium for participant elections also apply to spousal consents.
January 23, 2023: The IRS is requesting comments concerning Form 5227, Split-Interest Trust Information Return, which is used to report the financial activities of a split-interest trust described in Section 4947(a)(2) and determine whether the trust is treated as a private foundation and thus subject to excise taxes. Written comments should be received by March 24, 2023.
January 23, 2023: The IRS announced the beginning of the 2023 tax filing season, with a focus on improving customer service. The IRS also urged taxpayers to file their returns electronically with direct deposit to expedite refunds and avoid delays. The deadline for most people to file tax returns this year is April 18, 2023, however, storm victims in Alabama, California and Georgia have until May 15, 2023.
January 23, 2023: The IRS is requesting comments related to proceeds of bonds used for reimbursement. This regulation clarifies when the allocation of bond proceeds to reimburse expenditures previously made by an issuer of the bond is treated as an expenditure of the bond proceeds. Written comments should be received by March 24, 2023.
January 23, 2023: The IRS released Tax Tip 2023-06, which provides information about the adoption tax credit for families with adoption-related expenses. Taxpayers must complete Form 8839 to claim the credit and attach it to their tax return.
January 24, 2023: The IRS reminded taxpayers that they must answer a digital asset question and report all digital asset-related income when filing their 2022 federal income tax return. This is the same procedure as fiscal year 2021. The term “digital assets” has replaced “virtual currencies,” which was a term used in previous years. The question appears at the top of Forms 1040, Individual Income Tax Return; 1040-SR, U.S. Tax Return for Seniors; and 1040-NR, U.S. Nonresident Alien Income Tax Return.
January 24, 2023: The IRS reminded taxpayers to choose their tax preparer carefully. Taxpayers are ultimately responsible for all the information on their income tax return, regardless of who prepares it. Anyone who is paid to prepare federal tax returns must have a valid Preparer Tax Identification Number.
January 24, 2023: The IRS released Tax Tip 2023-07, urging taxpayers to avoid common mistakes when filing their tax returns by carefully reviewing them. Some of the most common mistakes include missing social security numbers, misspelled names, inaccurate information and math errors.
January 24, 2023: The IRS announced that Exempt Organizations Technical Guide, TG 58 Excise Taxes on Self-Dealing under IRC 4941, has recently been revised to incorporate Chief Counsel Advisory (CCA) 202243008. CCA 202243008 concluded that interest accrued on a self-dealing loan during years with a closed statute is included in the loan balance when computing the amount involved for Section 4941 self-dealing excise taxes in years with an open statute.
January 25, 2023: The IRS released Tax Tip 2023-08, reminding taxpayers that backup withholding payment deadlines are approaching. Form 945, Annual Return of Withheld Federal Income Tax, is due January 31, unless the payer made deposits on time and in full then the last day to file is February 10. Form 1099-NEC, Nonemployee Compensation, is due January 31. Many of the other Form 1099s are due February 28 for paper filers and March 31 for electronic filers.
January 25, 2023: The IRS announced that businesses can file Form 1099 series information returns using a new online portal called Information Returns Intake System. The electronic filing service is free and does not require any special software.
January 26, 2023: The IRS is requesting comments concerning the collection of information required to obtain the benefit of using revisions to Federal Housing Administration loan limits to determine average area purchase prices. Revenue Procedure 2022-17 provides issuers of qualified mortgage bonds and issuers of mortgage credit certificates with (1) the nationwide average purchase price for residences, and (2) average area purchase price safe harbors for residences located in statistical areas in each state, the District of Columbia, Puerto Rico, the Northern Mariana Islands, American Samoa, the Virgin Islands and Guam.
January 26, 2023: The IRS is requesting comments concerning the IRS Taxpayer Burden Surveys to be fielded between June 1, 2023, and May 31, 2025. The Taxpayer Burden Surveys allow the Research, Applied Analytics and Statistics Division to update and validate the IRS Taxpayer Burden Model, which is used to provide estimates for consolidated taxpayer segments. Comments should be received by March 27, 2023.
January 26, 2023: The IRS urged employers to be aware of the January deadline to file Form W-s and other wage statements. Timely filing prevents late-filing penalties for employers and helps employees file their income tax returns.
January 26, 2023: The IRS announced that it is accepting tax returns for the 2023 filing season. The IRS also released Tax Tip 2023-09, informing taxpayers that IRS Free File, a program that makes brand name software and electronic filing available to most taxpayers for free, is also ready for use.
January 27, 2023: The IRS announced the nationwide kickoff of the Earned Income Tax Credit (EITC) Awareness Day outreach campaign, which helps Americans take advantage of the tax credit. Taxpayers may claim the EITC if they have low to moderate income. The credit amount may change if taxpayers have children, dependents, are disabled or meet other criteria.
January 27, 2023: The IRS released Revenue Procedure 2016-30, which permits a taxpayer under the jurisdiction of the Large Business and International (LB&I) Division to request that the IRS examine specific issues relating to tax returns before those returns are filed. This revenue procedure also provides the framework within which a taxpayer and the IRS may work together to resolve (after examination) issues accepted into the program. If the taxpayer and the IRS can resolve the examined issues before the affected tax returns are filed, then the IRS and the taxpayer can memorialize the agreement by executing an LB&I PreFiling Agreement.
January 27, 2023: The IRS released Revenue Procedure 2023-9, which provides new rules and conditions for implementing the optional safe harbor method of accounting for real estate developers to determine when common improvement costs may be included in the basis of individual units of real property in a development project held for sale to determine the gain or loss from sales of those units (the Alternative Cost Method).
January 27, 2023: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).
Upcoming Webinars for Tax Practitioners:
- January 31, 2023; 2:00 pm (EST): Estate and Gift Tax
- February 1, 2023; 10:00 am (EST): Streamlined Filing Procedures for U.S. Citizens Abroad
- February 7, 2023; 2:00 pm (EST): Practical Considerations – Foreign Tax Credit
- February 9, 2023; 2:00 pm (EST): K2/K3 with a Focus on the Foreign Tax Credit – Individuals