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Weekly IRS Roundup October 17 – October 21, 2022

by | Oct 24, 2022 | , ,

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of October 17, 2022 – October 21, 2022.

October 17, 2022: The IRS released Internal Revenue Bulletin 2022-42, which highlights the following:

  • Notice 2022-45: This notice extends the deadline for amending an eligible retirement plan to reflect the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act). Both allow for special tax treatment with respect to a coronavirus-related distribution or a qualified disaster distribution.
  • Notice 2022-43: This notice provides guidance regarding the extension of the four-year replacement period for livestock sold because of the drought. The relief extends to 44 states, two US territories and two independent nations. It generally applies to capital gains realized on sales of livestock held for draft, dairy or breeding purposes.

October 17, 2022: The IRS announced its continued support to fight fraud targeting charities, businesses and individuals during Charity Fraud Awareness Week, which was October 17 to October 21. The IRS estimates that charities lose 5% of their revenue each year to fraud.

October 17, 2022: The IRS released Tax Tip 2022-158, reminding taxpayers to review their withholdings and estimated tax payments.

October 17, 2022: The IRS released Revenue Ruling 2022-20, providing various prescribed rates for federal income tax purposes for November 2022.

October 17, 2022: The IRS released Notice 2022-54, which provides guidance on the corporate bond monthly yield curve and corresponding spot segment rates and the 24-month average segment rates for October 2022. The notice also provides guidance as to interest rates on 30-year Treasury securities and 30-year Treasury weighted average rates.

October 17, 2022: The IRS reminded families that they may be eligible for the Child Tax Credit if they claim at least one child as their dependent. The IRS specifically urges grandparents, foster parents or people caring for siblings or other relatives to check whether they are eligible to receive the 2021 Child Tax Credit.

October 18, 2022: The IRS released Tax Tip 2022-159, suggesting that taxpayers with an outstanding tax bill consider making an Offer in Compromise. An Offer in Compromise is an option for taxpayers who cannot pay their full tax liabilities or in situations where paying the balance would create financial hardship.

October 18, 2022: The IRS announced the 2023 annual inflation adjustments for more than 60 tax provisions, including the tax rate schedules and other tax changes. The Inflation Reduction Act of 2022 is extending certain tax breaks related to energy for the first time in 2023. The standard deduction for a married couple filing jointly and single and married taxpayers filing separately is also increasing. All of the 2023 adjustments can be found in
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Recent Tax Developments Concerning Administrative Law Issues

by and | Oct 20, 2022 | , , ,

We have written extensively on the intersection of tax law and administrative law, specifically on how the Administrative Procedure Act (APA) and the Anti-Injunction Act (AIA) factor into tax cases. In a recent article for the ABA Tax Times, Kristin E. Hickman, a leading authority in the fields of tax administration, administrative law and statutory interpretation, discusses several tax opinions from 2022 concerning APA issues. We think this article is a must-read for taxpayers and practitioners.

For some of our prior posts on tax law and administrative law, see below:



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New IRS Funding Will Be Used to Focus on Tax Compliance of Non-US Citizens and Residents

by and | Oct 18, 2022 | , ,

US Congress will be giving the Internal Revenue Service (IRS) $79.6 billion over the next 10 years in an effort to put the agency back on the path to effective and efficient tax administration. The money will find lots of uses, including for the hiring of new personnel and updating the IRS’s antiquated technology.

At a recent American Bar Association Tax Section conference, Audrey Morris from the IRS Office of Chief Counsel (Small Business/Self-Employed Division) publicly stated that tax compliance among foreign nationals living and working in the United States also will be a priority and focus of the IRS’s new funding.

We have reported extensively about the re-funding of the IRS. (See here and here for example.) There are special considerations for non-US citizens who are not in compliance with US tax laws. For example, failing to properly report taxable income could be a bar or impediment to obtaining immigration status in the United States.

Practice Point: If you are a foreign national living in the United States and you may not be in compliance with US tax rules, it is time to consider doing so. The IRS has programs to help, including a voluntary disclosure program by which taxpayers who knowingly have reported their income erroneously or have failed to report income at all can disclose their transgressions and clean up their non-compliance. (See, e.g., here.)

Care should be taken, however, when dealing with the convergence of tax and immigration issues. If you are dealing with these sorts of issues, we strongly suggest speaking frankly with your tax and immigration advisors before doing anything.



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Weekly IRS Roundup October 10 – October 14, 2022

by | Oct 17, 2022 | , ,

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of October 10, 2022 – October 14, 2022. 

October 11, 2022: The IRS released Internal Revenue Bulletin 2022-41, which highlights the following:

  • Notice 2022-42: This notice announces that the IRS and the US Department of the Treasury (Treasury) intend to amend the regulations under Section 901 with respect to the application of the noncompulsory payment regulations to certain amended Puerto Rico tax decrees.
  • Notice 2022-44: This notice provides annual awareness of the 2022-2023 special per diem rates for taxpayers to use when substantiating the amount of business expenses incurred while traveling away from home. The guidance addresses (1) the special transportation industry meal and incidental expenses rates, (2) the rate for the incidental expenses only deduction and (3) the rates and list of high-cost localities for purposes of the high-low substantiation method.
  • Revenue Procedure 2022-19: This revenue procedure provides guidance to allow S corporations and their shareholders to resolve frequently encountered issues with certainty and without requesting a private letter ruling issued by the IRS.

October 11, 2022: The IRS issued Notice 2022-41, which expands the application of permitted change-in-status rules for health coverage under a Section 125 cafeteria plan. This guidance addresses when a plan participant may want to revoke the employee’s election under the cafeteria plan for family coverage under a group health plan (other than a flexible spending arrangement) in order to allow one or more family members to enroll in a Qualified Health Plan through a Health Insurance Exchange in the individual market.

October 11, 2022: The IRS announced that seminars from the 2022 IRS Nationwide Tax Forum are now available online. The platform offers 18 self-study seminars, including ones on the following topics:

  • IRS Commissioner Chuck Rettig’s Keynote Address
  • Tax Law Changes for Tax Year 2022 – in English and Spanish
  • Professional Responsibility Obligations (Ethics) – in English and Spanish
  • Tax Treatment of Digital Assets
  • Tax-Exempt Organizations Update
  • Emerging Cyber Crimes – in English and Spanish

October 11, 2022: The IRS announced that it is expanding dyed diesel penalty relief in response to Hurricane Ian. The IRS will not impose a penalty when dyed diesel fuel with a sulfur content that does not exceed 15 parts-per-million is sold for use or used on highways in the state of Florida. The relief began on September 28, 2022, and lasts through October 19, 2022. The penalty relief previously only applied to emergency vehicles.

October 11, 2022: The IRS issued a statement related to uncertain tax positions (UTP) reporting. Draft changes to the Schedule UTP and the UTP instructions are available at Draft Task Forms. The draft changes are intended to improve the form’s usefulness by incorporating additional relevant examples and [...]

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Weekly IRS Roundup September 26 – September 30, 2022

by | Oct 3, 2022 | , , ,

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 26, 2022 – September 30, 2022.

September 26, 2022: The IRS released Internal Revenue Bulletin 2022-39, which highlights the following:

  • REG-125693-19: These proposed regulations clarify issues that do not meet the definition of a federal tax controversy, exceptions to consideration by the IRS Office of Appeals (IRS Appeals), and procedural and timing requirements that must be met before IRS Appeals will consider an issue. The proposed regulations also provide the requirements a taxpayer must meet to receive the notice described in Internal Revenue Code (Code) Section 7803(e)(5) when the taxpayer requests consideration by IRS Appeals and the request is denied. More coverage of this issue can be found here.
  • Notice 2022-38: This notice publishes the inflation adjustment factor for the carbon oxide sequestration credit under § 45Q for calendar year 2022. This notice also informs taxpayers that 2022 will be the final calendar year for which they may claim a credit under Code Section 45Q(a)(1) and (2) for qualified carbon oxide that is captured by carbon capture equipment originally placed in service at a qualified facility before the date of enactment of the Bipartisan Budget Act of 2018.

September 26, 2022: The IRS issued Notice 2022-44, providing annual notice of the 2022 to 2023 special per diem rates for taxpayers to use when substantiating the amount of business expenses incurred while traveling away from home. Specifically, the notice addresses (1) the special transportation industry meal and incidental expenses rates, (2) the rate for the incidental expenses only deduction and (3) the rates and list of high-cost localities for purposes of the high-low substantiation method.

September 26, 2022: The IRS released Notice 2022-45, extending the deadline for amending an eligible retirement plan to reflect the Coronavirus Aid, Relief, and Economic Security Act and the Taxpayer Certainty and Disaster Tax Relief Act of 2020. Both allow for special tax treatment with respect to a coronavirus-related distribution or a qualified disaster distribution.

September 26, 2022: The IRS released Tax Tip 2022-147, highlighting five resources people can find on IRS.gov. These resources are:

  1. Taxpayer Bill of Rights
  2. How to apply for 501(c)3 status
  3. IRS tax volunteer opportunities
  4. Latest tax scams
  5. Interactive Tax Assistant

September 27, 2022: The IRS released Tax Tip 2022-148, providing the steps for becoming an IRS-authorized e-file provider.

September 27, 2022: The IRS announced that victims of storms and flooding in Alaska, which started on September 15, now have until February 15, 2023, to file various federal individual and business tax returns and make tax payments. The relief is available to anyone in an area designated by the Federal Emergency Management Agency [...]

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Weekly IRS Roundup September 19 – September 23, 2022

by | Sep 26, 2022 | , ,

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 19, 2022 – September 23, 2022.

September 19, 2022: The IRS updated information on the Work Opportunity Tax Credit (WOTC), including information on the pre-screening and certification process. The WOTC is available to employers who hire designated categories of workers facing significant barriers to employment. Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, must be completed by the job applicant and the employer on or before the day of the job offer to satisfy the pre-screen requirement.

September 19, 2022: The IRS released Tax Tip 2022-143, reminding people that every taxpayer has the right to retain representation when they work with the IRS, including the right to seek assistance from the Low Income Taxpayer Clinic.

September 20, 2022: The IRS announced that it has selected eight new members for the Electronic Tax Administration Advisory Committee. The committee’s main goal is to promote paperless filing of tax and information returns. The following individuals have been appointed for three-year terms on the committee, starting in September:

  • Austin Emeagwai, CPA, Ph.D.; Collierville, Tennessee
  • Jerry Gaddis, EA, MBA; Winter Haven, Florida
  • Nikia Gainey; Orlando, Florida
  • Robert Gettemy;Marion, Iowa
  • Argi O’Leary; Voorheesville, New York
  • Hallie Parchman; Austin, Texas
  • RaeAnn Pilarski; Tucson, Arizona
  • Keith Richardson; Philadelphia, Pennsylvania

September 20, 2022: The IRS announced that Hurricane Fiona victims in Puerto Rico now have until February 15, 2023, to file various federal individual and business tax returns and make tax payments. The relief is available in all 78 Puerto Rican municipalities, which are designated by the Federal Emergency Management Agency.

September 20, 2022: The IRS released Notice 2022-40, which provides updates on the corporate bond monthly yield curve and corresponding spot segment rates and the 24-month average segment rates for September 2022. The notice also provides guidance as to interest rates on 30-year Treasury securities and the 30-year Treasury weighted average rates.

September 20, 2022: The IRS released Tax Tip 2022-144, recommending that people use caution when choosing a tax preparer since tax preparers have different levels of skill, education and expertise.

September 21, 2022: The IRS released Tax Tip 2022-145, describing the different types of authorizations for third-party representatives. The options include:

  • Power of Attorney: This allows someone to represent a taxpayer in tax matters before the IRS. The representative must be an individual authorized to practice before the IRS.
  • Tax Information Authorization: This allows a taxpayer to appoint anyone to review or receive a taxpayer’s confidential tax information for a specified type of tax for a specified period.
  • Third-Party Designee: This designates a person on a taxpayer’s tax form to discuss that specific tax return and year with the IRS.
  • Oral Disclosure: This authorizes the [...]

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IRS Appeals Will Not Consider Regulatory Invalidity and Subregulatory Procedural Invalidity Challenges

by and | Sep 21, 2022 | , , , , ,

In Mayo Found. for Med. Educ. & Rsch. v. United States, 131 S.Ct. 704 (2011), the Supreme Court of the United States made clear that administrative law rules apply to tax guidance like they do to other federal agency guidance. Since Mayo, the Supreme Court and other courts have provided further guidance—both in the tax and non-tax contexts—regarding the proper analysis in determining the validity of, and deference to, regulatory guidance.

Over the past decade, the number of taxpayer challenges to guidance issued by the Internal Revenue Service (IRS), whether in the form of regulations or subregulatory guidance (i.e., revenue rulings, revenue procedures, notices and announcements), has increased significantly. These challenges have taken a variety of forms, such as regulatory invalidity under Chevron USA, Inc. v. NRDC, 467 U.S. 837 (1984) and procedural invalidity under the Administrative Procedure Act (APA). Some successful challenges to the validity of IRS guidance and the ability to challenge such guidance in a pre-enforcement context include CIC Servs., LLC v. IRS, 141 S.Ct. 1582 (2021); United States v. Home Concrete & Supply, LLC, 132 S.Ct. 1836 (2012); Mann Construction, Inc. v. Commissioner, 27 F. 4th 1138 (6th Cir. 2022); Good Fortune Shipping SA v. Commissioner, 897 F.3d 256 (2018) and Liberty Global, Inc. v. United States, No. 1:20-cv-03501-RBJ (D. Colo. 2022). Many other challenges are pending both at the administrative level and in court.

The IRS and the US Department of the Treasury (Treasury) have noticed the increase in challenges to its published guidance. One important change is the more detailed discussions in preambles to final regulations regarding comments received and how the IRS views and incorporates said comments. This is a welcome development, although sometimes a tortuous one for taxpayers who must wade through hundreds of pages of preambles in some regulation packages. Another change, and the subject of this post, is the IRS’s views on how to deal with such challenges during the administrative process.

A federal tax controversy can involve three levels of review: Examination, Appeals and litigation. At the Examination stage, revenue agents and other IRS personnel develop the facts and determine whether an adjustment is warranted. Importantly, “hazards of litigation” are not considered at the Examination level, meaning, issues are viewed as binary—in favor of the IRS or the taxpayer—and not negotiated as a percentage of the item. However, at the Appeals level, the Appeals team weighs “hazards of litigation” to determine whether a case can be settled by the parties. Hazards of litigation are also considered at the litigation level.

Validly promulgated tax regulations are approved at the highest levels of the IRS, Treasury generally carry the force and effect of law and are binding on taxpayers and the IRS. Subregulatory guidance is also approved at senior levels of the IRS and the Treasury. At the Examination level, the IRS will not entertain challenges to the validity of [...]

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Weekly IRS Roundup September 12 – September 16, 2022

by | Sep 19, 2022 | , , ,

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 12, 2022 – September 16, 2022.

September 12, 2022: The IRS released Internal Revenue Bulletin 2022-37, which highlights the following:

  • Treasury Decision 9965: These regulations establish certain requirements regarding the implementation of protections against balance billing provided under the No Surprise Act.
  • Notice 2022-37: This guidance assists taxpayers in complying with the final regulations under Section 871(m). The US Department of the Treasury (Treasury) and the IRS intend to amend Section 871(m) regulations, which will delay the effective date of certain rules in the final regulations and extend the phase-in period provided in Notice 2020-2 for two years.

September 12, 2022: The IRS released COVID Tax Tip 2022-139, reminding taxpayers of recently issued Notice 2022-36, which provides penalty relief from certain failure to file penalties in taxable years 2019 and 2020. The relevant penalties will be waived, abated, refunded or credited. The relief is designed to help struggling taxpayers affected by the COVID-19 pandemic and to allow the IRS to focus resources on processing backlogged tax returns and taxpayer correspondence.

September 12, 2022: The Treasury Inspector General for Tax Administration (TIGTA) released the Fiscal Year 2022 Statutory Review of Compliance With Notice of Federal Tax Lien Filing Due Process Procedures. TIGTA is required to determine annually whether lien notices issued by the IRS comply with the legal requirements set forth in the Internal Revenue Code. TIGTA recommended that the Director of Collection Policy for the Small Business/Self-Employed Division (1) reinforce Internal Revenue Manual (IRM) guidance to ensure that taxpayers’ representatives are notified of Notice of Federal Tax Lien filings and (2) correct an IRM reference on Written Communication to a Taxpayer’s Authorized Representative. The IRS agreed.

September 12, 2022: TIGTA released its report entitled, Reliance on Self-Certifications Resulted in Federal Agencies Awarding Contracts and Grants to Entities With Delinquent Federal Taxes; However, the IRS Is Making Progress on Establishing the Federal Contractor Tax Check System. TIGTA performed this audit because in Calendar Years 2015 and 2016, federal contracts were awarded to thousands of contractors with unpaid taxes that were most likely delinquent. Between October 2018 and December 2019, the federal government awarded 2.1 million federal contracts to more than 83,000 awardees. More than 3,000 contractors that received contracts owned $621.8 million in delinquent federal taxes, and 938 grantees received $22.7 billion in federal grants while owning $269.2 million in delinquent federal taxes.

September 12, 2022: The IRS issued minor corrections to Treasury Decision 9964, originally published August 16, 2022. The regulations define guidance for states regarding the process by which they may obtain or inspect certain returns and return information for the purpose of administering state laws governing certain tax-exempt organizations and their activities.

September [...]

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Weekly IRS Roundup September 6 – September 9, 2022

by | Sep 12, 2022 | ,

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 6, 2022 – September 9, 2022.

September 6, 2022: The IRS released Internal Revenue Bulletin 2022-36, which highlights the following:

  • Notice 2022-36: This guidance provides relief from certain failure to file penalties with respect to the 2019 and 2020 tax years. The IRS is refunding $1.2 billion in penalties for 1.6 million taxpayers, which will be waived, abated, refunded or credited. The relief is designed to help struggling taxpayers affected by the COVID-19 pandemic and to allow the IRS to focus resources on processing backlogged tax returns and taxpayer correspondence.
  • Notice 2022-35: This notice provides updates on the corporate bond monthly yield curve, the corresponding segment rates, the 24-month average corporate bond segment rates, the 25-year average segment rates and the 30-year Treasury securities interest rates.
  • Revenue Ruling 2022-17: This ruling provides the federal rates, adjusted federal rates, adjusted federal long-term rate and the long-term tax-exempt rate for September 2022.

September 6, 2022: The IRS reminded taxpayers who pay estimated taxes that the deadline to submit their third quarter payments is September 15, 2022. Taxpayers not subject to withholding may need to make quarterly estimated payments, including those who are self-employed, investors, or retirees or those with other income not subject to withholding, such as interest, dividends, capital gains, alimony, cryptocurrency and rental income.

September 6, 2022: The IRS released Tax Tip 2022-136, explaining common tricks and scams that lead to identity theft. The IRS also suggested a few steps to help protect data, which include:

  • Using multifactor authentication to protect client accounts
  • Allowing anti-virus software to update automatically
  • Using drive encryption and regularly backing up files to help stop theft and ransomware attacks.

September 7, 2022: The IRS is seeking comments on regulations that provide guidance on proving delivery for documents with a filing deadline, specifically in cases where there is no direct proof. The IRS is inviting comments on (1) whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (2) the accuracy of the agency’s estimate of the burden of the collection of information; (3) ways to enhance the quality, utility and clarity of the information collected; (4) ways to minimize the burden of the collection of information on respondents; and (5) estimates of capital or start-up costs and costs of operation, maintenance and purchase of services to provide information. The comment window closes on November 7, 2022.

September 7, 2022: The IRS released Tax Tip 2022-137, highlighting the work opportunity tax credit for businesses looking to hire help. The credit encourages employers to hire workers certified as members of any of the 10 groups identified as facing barriers [...]

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