Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of February 13, 2023 – February 17, 2023.
February 13, 2023: The IRS released Internal Revenue Bulletin 2023-7, which highlights the following:
- Revenue Procedure 2023-9: This procedure 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 real property development project held for sale to determine the gain or loss from sales of those units (the Alternative Cost Method).
February 13, 2023: The IRS announced that interest rates will remain the same for the second quarter of 2023. As of April 1, 2023, the rates will be as follows:
- Overpayments: 7%
- Overpayments for corporations: 6%
- Corporate overpayments for portion exceeding $10,000: 4.5%
- Underpayments: 7%
- Large corporate underpayments: 9%
Revenue Ruling 2023-4 contains the complete explanation of the calculations.
February 13, 2023: The IRS announced a new pilot phase for the Compliance Assurance Process (CAP) program called “Bridge Plus.” CAP is a cooperative pre-filing program for large corporate taxpayers. Taxpayers will be required to provide book-to-tax reconciliations, credit utilization and other supporting documentation shortly after their audited financial statement is finalized. An IRS team will then risk-assess the documents to determine if the taxpayer is suitable for the “Bridge Plus” phase.
February 13, 2023: The US Department of the Treasury (Treasury) and the IRS announced guidance to establish a program that would provide solar and wind power to certain low-income areas under the Inflation Reduction Act of 2022. Notice 2023-17 establishes the Low-Income Communities Bonus Credit Program and provides initial guidance for potential applicants for allocations of calendar year 2023 capacity limitation.
February 13, 2023: The IRS and the Treasury announced guidance on the Qualifying Advanced Energy Product Credit. Notice 2023-18 establishes the Section 48C(e) program to allocate $10 billion in credits ($4 billion of which may only be allocated to projects located in certain energy communities census tracts). The notice also provides initial program guidance. The goal of the program is to expand US manufacturing capacity and quality jobs for clean energy technologies (including production and recycling), reduce greenhouse gas emissions in the US industrial sector and secure domestic supply chains for critical materials (including specified critical minerals) that serve as inputs for clean energy technology production.
February 13, 2023: The IRS released Tax Tip 2023-18, reminding people that the Earned Income Tax Credit is a major tax benefit for millions of low- and moderate-income workers. Taxpayers can check their eligibility and how much they qualify for here.
February 14, 2023: The IRS released Tax Tip 2023-19, providing resources and suggestions for choosing a tax professional. Taxpayers are ultimately responsible for all the information on their income tax return, regardless of who prepares it.
February 15, 2023: The IRS released Revenue Ruling 2023-5, which provides the applicable federal rates for federal income tax purposes for March 2023. The short-term federal interest rate is 4.50%, the mid-term rate is 3.7% and the long-term rate is 3.74%.
February 15, 2023: The IRS released Tax Tip 2023-20, reminding taxpayers about the IRS Free File program. The program allows people who make less than $73,000 to file their federal tax return for free. Many states also offer no cost filing for their state tax return.
February 16, 2023: The IRS urged taxpayers to avoid the rush of the peak period for filing taxes and to use online tools to get answers quickly and avoid phone delays. Traditionally, President’s Day is the peak period for IRS phone line activity.
February 16, 2023: The IRS released Tax Tip 2023-21, reminding taxpayers to spend a few minutes reviewing income tax withholding early in the year. This helps set a taxpayer up for success all year long. The Tax Withholding Estimator on IRS.gov makes it easy to determine the amount to withhold.
February 16, 2023: The IRS announced that taxpayers who receive certain notices requiring them to send information to the IRS now have the option of submitting their documentation online through IRS.gov rather than mailing them. The new option will help reduce time and effort in resolving tax issues. The option applies to the following nine notices:
- CP04: Relating to Combat Zone Status
- CP05A: Information Request Related to a Refund
- CP06 and CP06A: Relating to the Premium Tax Credit
- CP08: Relating to the Child Tax Credit
- CP09: Relating to Claiming the Earned Income Tax Credit
- CP75: Relating to the EITC
- CP75a: Relating to the EITC
- CP75d: Relating to the EITC and other credits
February 17, 2023: The IRS released its latest executive column in A Closer Look. The article, The 2023 Tax Season Has Begun—IRS Offers Tips to Accurately File Your Return, features IRS Wage and Investment Commissioner and Chief Taxpayer Experience Officer Ken Corbin and discusses ways taxpayers can make this year’s tax filing season run smoother.
February 17, 2023: The IRS and the Treasury announced Notice 2023-20, which provides interim guidance for insurance companies and certain other taxpayers for the new corporate alternative minimum tax until the issuance of proposed regulations. Specifically, the notice provides interim guidance for the determination of adjusted financial statement income as it relates to (1) variable contracts and similar contracts, (2) funds withheld from reinsurance and modified coinsurance agreements, and (3) the basis of certain assets held by certain previously tax-exempt entities that received a “fresh start” basis adjustment.
February 17, 2023: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).