Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of July 8 – 12, 2019.

July 9, 2019: The IRS updated its frequently asked questions page for the Tax Cuts and Jobs Act (TCJA) changes to Charitable Contributions and Foreign Taxes Taken into Account in Determining Limitations on Allowance of Partner’s Share of Loss. The updated FAQ page addresses the extent a partner is allowed to take into account its distributive share of partnership losses, the effect of charitable contributions or foreign taxes on the basis limitation, and the new rules for determining losses subject to the basis limitation.

July 10, 2019: The IRS issued a news release noting that National Taxpayer Advocate Nina Olson had released a special report on the Earned Income Tax Credit (EITC), which makes recommendations designed to increase the participation rate of eligible taxpayers and reduce overclaims by ineligible taxpayers. Also, the Taxpayer Advocate Service (TAS) published a subway map that depicts a taxpayer’s “journey” through the tax system to help taxpayers and policymakers to better understand the tax administration process.

July 11, 2019: The IRS issued a notice in which it released corporate bond weighted average interest rates and the permissible range of interest rates used to calculate pension plan minimum funding for plan years beginning in July 2019. The IRS updated the yield curve and 24-month segment rates, the 30-year Treasury securities interest rates, and the minimum present value segment rates.

July 11, 2019: The IRS issued a T.D. in which it introduced a correction to regulations relating to organizations under common control for purposes of certain rules relating to pension, profit-sharing, and stock bonus plans. The IRS stated that the regulations were corrected on May 9, 1988, but that the corrections were never properly incorporated into the Code of Federal Regulations. The correction updates a cross reference to regulations under tax code Section 414 in Treasury Regulations Section 1.52-1.

July 11, 2019: The IRS issued a T.D. in which it introduced the removal of Treasury Regulations Section 1.451-5. The removed regulations dealt with advance payments for goods and long-term contracts. The IRS deemed those regulations to no longer be necessary after enactment of the TCJA. The regulations affect accrual method taxpayers who receive advance payments for goods, including those for inventoriable goods. Also, in the preamble to this T.D., the IRS stated that Tax code Section 451(c), enacted by the 2017 tax act, and its election to defer advance payments override the deferral method provided by Treas. Reg. Section 1.451-5.

July 12, 2019: The IRS issued a notice that stated that the continuity safe harbor for placing energy property in service may be tolled and extended in certain limited circumstances involving significant national security concerns. The continuity safe harbor for the energy credit and production tax credit allows a taxpayer to be deemed to satisfy the continuous construction test or the continuous efforts test [...]

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Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of July 1 – 5, 2019.

July 2, 2019: The IRS issued a Chief Counsel Notice wherein the Chief Counsel’s Office advised that accruing interest and failure to pay penalties on restitution amounts cannot accrue consistent with the holding in Klein v. Commissioner, 149 T.C. No. 15. The Chief Counsel’s Office stated that any accrued interest and penalties should be abated. This guidance updates Notice CC-2011-018.

July 3, 2019: The IRS issued proposed regulations that would provide an exception to the unified plan rule for defined contribution multiple employer plans where an employer fails to satisfy the qualification requirement or to provide information to determine compliance. The proposed regulations would also provide a threshold condition for the exception. Specifically, the proposed regulations would require the plan administrator to have established practices and procedures that are reasonably designed to promote and facilitate overall compliance with applicable tax code requirements, including procedures for obtaining information from participating employers.

July 5, 2019: The IRS issued a notice that provided the 2019 renewable energy production credit and refined coal production credit inflation adjustment factors and reference prices.

July 5, 2019: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

Special thanks to Alex Ruff in our Chicago office for this week’s roundup.

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of June 24 – 28, 2019.

June 24, 2019: The IRS updated its frequently asked questions for Opportunity Zones page. In the updated FAQs, the IRS now poses, and answers in the affirmative, the question of whether a taxpayer can still make a valid deferral election based on an investment that was lower than the total tax code Section 1231 gain but realized within the 180-day period after the last day of the 2018 tax year under proposed regulations.

June 24, 2019: The IRS issued a technical correction to its final regulations Section 1.956-1 that acts to reduce the amount determined under tax code Section 956 with respect to certain domestic corporations. The correction updates a cross reference table in the instructions to Treas. Reg. Section 1.956-1 that had misidentified a subparagraph affected.

June 27, 2019: The IRS posted a page for General Section 965 Questions and Answers. In addition to discussing various frequently asked questions (FAQs) with regards to Section 965, the page also discusses filing transfer and consent agreements arising under Section 965(h) and Section 965(i).

June 28, 2019: The IRS issued a news release noting that it had issued proposed regulations concerning the new 1.4 percent excise tax on the net investment income of certain private colleges and universities provided for under section 4968.

June 28, 2019: The IRS issued corrections to its regulations concerning the recognition and deferral of Section 987 Gain or Loss (IRC §987) which will become effective on July 1, 2019. The corrections relate to combinations and separations of qualified business units (QBUs) subject to Section 987 and the recognition and deferral of foreign currency gain or loss with respect to a QBU subject to Section 987 in connection with certain QBU terminations and certain other transactions involving partnerships. Specifically, the corrections were made to Treas. Reg. Section 1.987-2 and Treas. Reg. Section 1.987-4 to properly identify regulation sections references. The substance of the regulations were not changed.

June 28, 2019: The IRS issued final regulations clarifying the employment tax treatment of partners in a partnership that owns a disregarded entity. The rules provide that if a partnership is the owner of an entity that is disregarded as an entity separate from its owner, the entity is not treated as a corporation for purposes of employing a partner of the partnership that owns the entity; instead, the entity is disregarded as an entity separate from the partnership for this purpose and is not the employer of any partner of the partnership that owns the entity. A partner of a partnership that owns an entity that is disregarded as an entity separate from its owner is subject to the same self-employment tax rules as a partner of a partnership that does not own an entity that is disregarded as an entity separate from its owner, according to the [...]

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Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of June 17 – 21, 2019.

June 18, 2019: The IRS issued a news release noting that it and the US Department of the Treasury issued proposed regulations that provide guidance for cooperatives and their patrons on calculating the deduction for qualified business income and the deduction for domestic production activities for agricultural or horticultural cooperatives and their patrons (the Section 199A(g) deduction).

June 19, 2019: The IRS released issued a news release announcing that the Electronic Tax Administration Advisory Committee (ETAAC) issued its annual report to Congress featuring recommendations focused on the prevention of identity theft and refund fraud.  The recommendations were focused on the areas of enabling and expanding the IRS-sponsored Security Summit, improving security in key areas of the tax system, and protecting and enabling taxpayers.

June 19, 2019: The IRS released a proposed revenue procedure that provides computational guidance on methods and sources of data for calculating W-2 wages for purposes of tax code Section 199A(g).  The IRS proposed three methods, which would limit the amount of the deduction available to 50% of a specified agricultural or horticultural cooperative’s W-2 wages. In addition, Revenue Procedure 2006-47 is obsoleted and Notice 2019-27 is effective on June 18, 2019.

June 20, 2019: The IRS released issued a news release National Taxpayer Advocate Nina E. Olson released her 37th and final report to Congress featuring her assessment of the key challenges facing the IRS and the Taxpayer Advocate Service (TAS) in the coming years and featuring her review of the 2019 filling season.

June 21, 2019: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

 Special thanks to Alex Ruff in our Chicago office for this week’s roundup.

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of June 10 – 14, 2019.

June 11, 2019: The IRS issued a news release noting that it and the US Department of the Treasury issued final regulations that require taxpayers to reduce their charitable contribution deductions by the amount of any state or local tax credits they receive or expect to receive in return for those contributions.

June 13, 2019: The IRS released final regulations on discounting rules for unpaid losses and estimated salvage recoverable of insurance companies for federal income tax purposes. The final regulations update and replace existing regulations and proposed regulations to implement recent legislative changes to the Code and make a technical improvement to the derivation of loss payment patterns used for discounting.

June 13, 2019: The IRS released final regulations that allow integrating health reimbursement arrangements (HRAs) and other account-based group health plans with individual health insurance coverage or Medicare, if certain conditions are satisfied. The final regulations also set forth conditions under which certain HRAs and other account-based group health plans will be recognized as limited excepted benefits and finalize rules regarding premium tax credit eligibility for individuals offered an individual coverage HRA.

June 14, 2019: The IRS released issued a news release announcing that it and the US Department of the Treasury issued final regulations and proposed regulations concerning global intangible low-taxed income under section 951A, the foreign tax credit, the treatment of domestic partnerships for purposes of determining the subpart F income of a partner, and the treatment of income of a controlled foreign corporation subject to a high rate of foreign tax under section 951A.

June 14, 2019: The IRS released final regulations that ensure that the income of an S corporation will continue to be subject to US income tax when a nonresident alien is a deemed owner of a grantor trust that elects to be an electing small business trust. The final regulations adopt, without any changes, proposed regulations that were issued in April 2019.

June 14, 2019: The IRS released temporary regulations that act to limit the section 245A dividends received deduction for some dividends from current or former controlled foreign corporations and that limit the section 954(c)(6) exception to foreign personal holding company income for some dividends received by upper-tier CFCs from lower-tier CFCs. The text of these temporary regulations also serve as the text of the proposed regulations (REG-106282-18).

June 14, 2019: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

 Special thanks to Alex Ruff in our Chicago office for this week’s roundup.

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of May 27 – May 31, 2019.

May 28, 2019: The IRS released Announcement 2019-05 listing recent disciplinary sanctions against attorneys, CPAs, enrolled agents, enrolled actuaries, enrolled retirement plan agents and appraisers.

May 30, 2019: The IRS released a Tax Tip advising taxpayers to include tax planning in their wedding plans. The Tax Tip focuses on advice on filing a couple’s first tax return as newlyweds.

May 31, 2019: The IRS issued a news release announcing a draft of the 2020 Form W-4, Employees Withholding Allowance Certificate. The revised form is intended to be more compatible with changes made by the 2017 Tax Cuts and Jobs Act.

May 31, 2019: The IRS released Proposed Regulations regarding withholding on certain periodic and nonperiodic distributions under Section 3405. The Proposed Regulation is based on earlier guidance under Notice 87-7 which the Treasury and IRS concluded provides an administrable standard with respect to withholding under Section 3405.

May 31, 2019: The Treasury Department and the IRS in the May 31 edition of the Federal Register requested comments concerning various forms, guidance and regulations. Topics include Treasury Decision 9452, Form 13441-A, mortgage interest and reporting requirements, and the Employee Plans Compliance Resolution System (EPCRS).

May 31, 2019: The IRS issued a notice of public hearing on proposed regulations regarding the amount of the deduction for foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI). The hearing is scheduled for July 10, 2019, and speaker’s outlines are due July 1, 2019.

Special thanks to Terence McAllister in our New York office for this week’s roundup.