Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for May 2, 2025 – May 13, 2025.
IRS GUIDANCE
May 2, 2025: The IRS issued Revenue Procedure 2025-20, providing guidance on the domestic asset/liability percentages and domestic investment yields used by foreign life insurance companies and foreign property and liability insurance companies to compute their minimum effectively connected net investment income under Section 842(b) of the Internal Revenue Code (Code) for taxable years beginning after December 31, 2023.
May 5, 2025: The IRS released Internal Revenue Bulletin 2025-19, which includes Revenue Ruling 2025-10 and Revenue Procedure 2025-18.
Revenue Ruling 2025-10 provides various prescribed rates for federal income tax purposes for May 2025, including:
- The short-, mid-, and long-term applicable federal rates for purposes of Code Section 1274(d).
- The short-, mid-, and long-term adjusted applicable federal rates for purposes of Code Section 1288(b).
- The adjusted federal long-term rate and the long-term tax-exempt rate from Code Section 382(f).
- The appropriate percentages for determining the low-income housing credit from Code Section 42(b)(1) (but only for buildings placed in service during May 2025).
- The federal rate for determining the present value of an annuity, an interest for life or for a term of years, or a remainder or a reversionary interest for purposes of Code Section 752.
Revenue Procedure 2025-18 provides issuers of qualified mortgage bonds (defined in Code Section 143(a)) and mortgage credit certificates (defined in Code Section 25(c)) with guidance related to nationwide purchase prices for residences, as well as the average area purchase price for residences located in statistical areas in each US state, the District of Columbia, Puerto Rico, the Northern Mariana Islands, American Samoa, the Virgin Islands, and Guam.
May 6, 2025: The IRS issued Revenue Procedure 2025-21, modifying Section 12 of Revenue Procedure 2024-32.
Executive Order 14219, issued through the Department of Government Efficiency’s deregulatory initiative, directed agencies to initiate a review process for identification and removal of certain regulations and guidance. Pursuant to Executive Order 14219, the US Department of the Treasury and the IRS identified Section 12 of Revenue Procedure 2024-32 as a regulation needing modification.
Revenue Procedure 2024-32 specifies the procedure by which the sponsor of a defined benefit plan, which is subject to the funding requirements of Code Section 430, may request approval from the IRS for the use of plan-specific substitute mortality tables. Section 12.02 of Revenue Procedure 2024-32 specifies that if a plan sponsor wishes to use plan-specific mortality tables, it must develop and request approval for the use of new plan-specific mortality tables for plan years beginning on or after January 1, 2026. Revenue Procedure 2025-21 provides immediate relief for some of those plan sponsors by narrowing the category of plan sponsors that must request approval of new plan-specific substitute mortality tables.
May 12, 2025: The IRS issued Revenue Ruling 2025-11, determining the interest rates on overpayments and underpayments of tax under Code Section 6621. For corporations, an overpayment rate of 6% and an underpayment rate of 7% is established for the calendar quarter beginning July 1, 2025. Where a portion of a corporate overpayment exceeds $10,000 during the calendar quarter beginning July 1, 2025, the overpayment rate is 4.5%. For large corporate underpayments, the underpayment rate for the calendar quarter beginning July 1, 2025, is 9%.
May 12, 2025: The IRS released Internal Revenue Bulletin 2025-20, which includes Notice 2025-25 and Notice 2025-26.
Notice 2025-25 publishes the inflation adjustment factor for credits under Code Section 45Q on carbon oxide sequestration, which is used to determine the amount of the credit allowable under Section 45Q for taxpayers that make an election under Code Section 45Q(b)(3) to have the dollar amounts applicable under Code Section 45Q(a)(1) or (2) apply.
Notice 2025-26 publishes the reference price under Code Section 45K(d)(2)(C) for calendar year 2024. The reference price applies in determining the amount of the enhanced oil recovery credit under Code Section 43, the marginal well production credit for qualified crude oil production under Code Section 45I, and the applicable percentage under Code Section 613A used in determining the percentage of depletion in the case of oil and natural gas produced from marginal properties.
The IRS also released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums, and Chief Counsel Advice).
THE “BIG, BEAUTIFUL BILL”
A recent tax bill, which some practitioners are calling the “Big, Beautiful Bill,” is currently being deliberated in Congress. As of the publication date of this edition of the IRS Roundup, a few of the notable provisions in the Big, Beautiful Bill include:
- A proposed disallowance of “substitute payments” related to state and local taxes.
- The proposal of a 23% pass-through business deduction, up from the current deduction of 20%.
- The renewal of a research and development expensing provision through 2029, including a 100% bonus depreciation.
- A phaseout of certain clean electricity credits, marking a notable change to the Inflation Reduction Act of 2022.
- The reinstatement of a partial charitable contribution deduction for nonitemizers.
- The proposed disallowance of certain amortization deductions for sports franchises.
- An extension of various provisions expected to sunset in 2026.
