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Weekly IRS Roundup August 8 – August 12, 2022

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of August 8, 2022 – August 12, 2022.

August 8, 2022: The IRS released Internal Revenue Bulletin 2022-32, highlighting Notice 2022-32, which provides guidance on the corporate bond monthly yield curve and corresponding spot segment rates and the 24-month average segment rates. The notice also provides guidance as to interest rates on 30-year Treasury securities and the 30-year Treasury weighted average rates.

August 8, 2022: The IRS released IR-2022-146, reminding truckers to file Form 2290, Heavy Highway Vehicle Use Tax Return, on or before the August 31, 2022, deadline. Truck owners who drive a highway motor vehicle weighing 55,000 pounds or more must file the return and pay the tax. Vehicles that used 5,000 miles or less (7,500 miles for farm vehicles) must file the return but do not have to pay the tax.

August 8, 2022: The IRS released Tax Tip 2022-120, explaining how some money raised through crowdfunding may be a gift and excluded from gross income. Crowdfunding websites must file Form 1099-K, Payment Card and Third-Party Network Transactions.

August 9, 2022: The Security Summit partners unveiled a new sample security plan designed to help tax professionals protect their data, particularly those with smaller practices. Tax professionals, software and industry partners and representatives from state tax groups, along with the IRS, developed the plan, dubbed the Written Information Security Plan. Federal law requires that all professional tax preparers create and implement a data security plan.

August 9, 2022: The IRS released COVID Tax Tip 2022-121, reminding taxpayers of the resources available on IRS.gov to help them file their tax returns electronically, get tax account information and find the status of their refund.

August 10, 2022: The IRS released IR-2022-148, reminding teachers and educators that they can deduct up to $300 of out-of-pocket classroom expenses when they file their 2022 tax return. This is the first increase since the deduction was enacted in 2002. From 2002 through 2021, the limit was $250 per year.

August 10, 2022: The IRS announced that storm victims in parts of Missouri now have until November 15, 2022, to file individual and business tax returns and make tax payments if they had a valid extension to file their 2021 returns. The relief is available to anyone in an area designated by the Federal Emergency Management Agency as qualifying for individual or public assistance. The current list of eligible localities is available here.

August 10, 2022: The IRS released Tax Tip 2022-122, outlining the steps business owners need to take when closing a business.

August 11, 2022: The IRS announced Tax Tip 2022-123, highlighting two educational tax credits available to taxpayers who paid higher [...]

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Weekly IRS Roundup August 1 – August 5, 2022

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of August 1, 2022 – August 5, 2022. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

August 1, 2022: The IRS released Internal Revenue Bulletin 2022-31, which highlights the following:

  • Administrative: Revenue Procedure 2022-30 provides specifications for the private printing of red ink substitutes for the 2022 Forms W-2 and W-3.
  • Income Tax: Revenue Ruling 2022-14 provides the applicable federal rates for federal income tax purposes for August 2022.

August 1, 2022: The IRS released Tax Tip 2022-116, explaining the basics of excise tax and what businesses should know.

August 1, 2022: The IRS announced Revenue Procedure 2022-29, which modifies and supersedes Revenue Procedure 2006-36, 2006-38 I.R.B 498. The Procedure updates how government agencies and members of the public should request the creation of special statistical studies and compilations involving return information. It also sets forth the criteria for determining reasonable fees for the costs associated with the creation of the special statistical studies and compilations.

August 2, 2022: The IRS released IR-2022-144, urging tax professionals to learn the signs of data theft so that they can react quickly to protect clients. This topic is the third of a five-part series from the Security Summit, including the IRS, state tax agencies and others from the tax community. Tax professionals or firms that are the victim of data theft should immediately report it to the local IRS Stakeholder Liaison.

August 2, 2022: The IRS announced that Kentucky storm and flooding victims now have until November 15, 2022, to file individual and business tax returns and make tax payments if they had a valid extension to file their 2021 returns. The relief is available to anyone in an area designated by the Federal Emergency Management Agency as qualifying for individual or public assistance. The current list of eligible localities is available here.

August 2, 2022: The IRS released Tax Tip 2022-117, providing the legal distinctions between an employee and an independent contractor.

August 3, 2022: The IRS released Notice 2022-33, extending the deadlines for amending a retirement plan or individual retirement arrangement to reflect certain provisions of Division O of the Further Consolidated Appropriations Act, also known as the Setting Every Community Up for Retirement Enhancement Act of 2019, and section 104 of Division M of the Further Consolidated Appropriations Act, 2020, also known as the Bipartisan American Miners Act of 2019.

August 3, 2022: The IRS released COVID Tax Tip 2022-118, explaining the educator expense deduction, which allows eligible teachers and administrators to deduct part of their cost for technology, supplies and training from their personal taxes. This applies only to expenses [...]

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Is the IRS Finally Receiving Increased Funding?

After months of back and forth, it appears that additional funding is on its way to the Internal Revenue Service (IRS). Senate Majority Leader Chuck Schumer (D-NY) released a statement yesterday on his agreement with Senator Joe Manchin (D-WV) on the FY2022 Budget Reconciliation legislation and plans to hold a vote in the US Senate next week. A summary of the Inflation Reduction Act of 2022 (Act) provides the following topline estimates:

Total Revenue Raised $739 billion 15% Corporate Minimum Tax $313 billion* Prescription Drug Pricing Reform $288 billion** IRS Tax Enforcement $124 billion** Carried Interest Loophole $14 billion* Total Investments $433 billion Energy Security and Climate Change $369 billion** Affordable Care Act Extension $64 billion** Total Deficit Reduction $300+ billion * = Joint Committee on Taxation Estimate ** = Congressional Budget Office Estimate

 

With respect to taxes, the summary states that the Act will “[m]ake the biggest corporations and ultra-wealthy pay their fair share” and “[t]here are no new taxes on families making $400,000 or less and no new taxes on small business – we are closing tax loopholes and enforcing the tax code.”

Section 10301 of the Act, entitled “Enhancement of Internal Revenue Service Resources,” provides the following appropriations:

  • IRS: $78,911,000,000
    • Taxpayer Services: $3,181,500,000
      • Provide taxpayer services, including pre-filing assistance and education; filing and account services; taxpayer advocacy services; and other services authorized by 5 U.S.C. 3109 (relating to employment of excerpts and consultants on a temporary or intermittent basis)
    • Enforcement: $45,637,400,000
      • Conduct tax enforcement activities to determine and collect owed taxes; provide legal and litigation support; conduct criminal investigations; provide digital asset monitoring and compliance activities; enforce criminal statutes related to violations of internal revenue laws and other financial crimes; purchase and hire passenger motor vehicles; and provide other services authorized by 3109
    • Operations Support: $25,326,400,000
      • Support taxpayer services and enforcement programs, including rent payments; facilities services; printing; postage; physical security; headquarters and other IRS-wide administrative activities; research and statistics of income; telecommunications; information technology development, enhancement, operations, maintenance and security; hire of passenger motor vehicles, operations of the IRS Oversight Board; and other services authorized by 3109
    • Business Systems Modernization: $4,750,700,000
      • Improve the business systems modernization program, including development of callback technology and other technology to provide a more personalized customer service experience but do not include the operation and maintenance of legacy systems.
    • Report on IRS-Run Free “Direct Efile” Tax Return System: $15,000,000
      • Deliver to US Congress (within nine months) a report on the cost of developing and running a free direct efile tax return system; taxpayer opinions, expectations and level of trust—based on surveys—for such a system; and opinions of an independent third party on the overall feasibility, approach, schedule, cost, organizational design and the IRS’s capacity to deliver such a system
    • Treasury Inspector General for Tax Administration (TIGTA): $403,000,000



Weekly IRS Roundup July 18 – July 22, 2022

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of July 18, 2022 – July 22, 2022. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

July 18, 2022: The IRS issued Tax Tip 2022-108, reminding people that they can get the latest IRS news through the agency’s verified social media accounts and by subscribing to e-news services.

July 18, 2022: The Treasury Inspector General for Tax Administration (TIGTA) released its Fiscal Year 2022 IRS Federal Information Security Modernization Act Evaluation report. In the report, TIGTA determined that the Cybersecurity Program was not effective in 17 out of 20 metrics. (TIGTA does not make recommendations as part of its evaluation.)

July 19, 2022: The IRS announced that the Security Summit partners are encouraging tax professionals to inform clients about the IRS Identity Protection PIN Opt-In Program to help protect people against tax-related identity theft. This announcement came during the first of the five-part summer series to highlight the critical steps tax professionals can take to protect client data and their businesses.

July 19, 2022: The IRS reminded 2021 tax extension filers not to wait until October to file their returns. (The IRS estimated that 19 million taxpayers requested an extension to file their 2021 tax return.) The announcement urges taxpayers to file their returns as soon as they have all the necessary information and to avoid the October 17 deadline and last-minute rush.

July 19, 2022: The IRS issued Tax Tip 2022-110, which contains information on reporting independent contractor compensation of $600 or more. This is completed using Form 1099-NEC, Nonemployee Compensation.

July 20, 2022: The IRS announced a new five-year strategic plan that outlines its goals to improve taxpayer service and tax administration. The IRS Strategic Plan FY 2022-2026 will serve as a roadmap to help guide the agency’s programs and operations and to meet the changing needs of taxpayers and members of the tax community. The plan also focuses on four goals to improve customer service: (1) Service; (2) Enforcement; (3) People and (4) Transformation. We will be posting more information about the plan on the blog in the coming days.

July 20, 2022: The IRS issued Tax Tip 2022-110, reminding taxpayers of the Taxpayer Advocate Service (TAS), an independent organization within the IRS that helps to protect taxpayer rights. The tax tip also includes information on the Taxpayer Bill of Rights (TBOR). We previously wrote an article explaining what TAS does and how it can be utilized by all types of taxpayers, as well as a post about how taxpayers can utilize the TBOR.

July 20, 2022: The IRS issued a notice and request for comments for [...]

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Weekly IRS Roundup July 11 – July 15, 2022

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of July 11, 2022 – July 15, 2022. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

July 11, 2022: The IRS announced that the Nationwide Tax Forum will start July 19, 2022. The programing includes a keynote address by IRS Commissioner Chuck Rettig, updates on tax law, cybersecurity, ethics and more. The virtual event will take place over a five-week period from July 19 to August 18 on Tuesdays, Wednesdays and Thursdays each week. Those wanting to participate must register at least three business days in advance to guarantee access. Attendance at the webinars qualifies as continuing education (CE) for enrolled agents, certified public accountants, Annual Filing Season Program participants, California Tax Education Council (CTEC) participants and Certified Financial Planners (CFP).

July 12, 2022: The IRS issued renewed warnings for tax professionals to guard themselves against identity theft. This effort begins next week with the Security Summit’s annual summer campaign, “Protect Your Clients; Protect Yourself,” which is focused on tax professionals taking steps to prevent data theft from their offices. This will mark the seventh year that the IRS, state tax agencies and the national tax community have teamed up to raise awareness on the issue.

July 12, 2022: The IRS announced a special virtual session for those interested in becoming an IRS revenue agent. The agency plans to hire 470 revenue agents for the Small Business Self Employed (SB/SE) division. For further discussion, see our recent post.

July 12, 2022: The IRS issued Tax Tip 2022-105, reminding taxpayers that they can log into their account to check account information, including balance, payments and tax records.

July 13, 2022: The IRS reminded taxpayers to file their tax returns as soon as possible. The agency also encourages people to utilize special tools on IRS.gov to help them file and access assistance.

July 13, 2022: The IRS issued Tax Tip 2022-106, which gives points on how taxpayers should evaluate whether they have a hobby or business.

July 14, 2022: The IRS is requesting comments on Form 8874, Form 1041-QFT and Form 706-GS(T). Form 8874 is for investors seeking a credit for their equity investment; Form 1041-QFT is the return for a qualified funeral trustee to report the trust’s taxes; and Form 706-GS(T) is used to report taxes due from trust terminations subject to generation-skipping transfer tax.

July 14, 2022: The IRS issued Tax Tip 2022-107, which provides information on Individual Retirement Arrangements.

July 14, 2022: The IRS announced a free IRS/Federal Trade Commission webinar focused on scams and identity theft. The webinar will also cover how a taxpayer can add a layer of protection by applying for [...]

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Weekly IRS Roundup June 20 – June 24, 2022

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of June 20, 2022 – June 24, 2022. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

June 20, 2022: The IRS announced that it’s on track to complete the processing of originally filed Form 1040s that were received in 2021 this week and that business paper returns also filed in 2021 will follow shortly thereafter. According to the announcement:

“IRS employees have been working tirelessly to process these tax returns as quickly as possible and help people who are waiting on refunds or resolution of an account issue,” said IRS Commissioner Chuck Rettig. “Completing the individual returns filed last year with no errors is a major milestone, but there is still work to do. We remain focused on doing everything possible to expedite processing of these tax returns, and we continue to add more people to this effort as our hiring efforts continue this summer.”

 

Rettig emphasized that adding sustained funding increases for the IRS will help the agency add more employees to process tax returns and answer phones as well as help improve technology and ensure fair enforcement of the tax laws.

 

“Taxpayers and tax professionals deserve the absolute highest-quality service from the nation’s tax system,” Rettig said. “Long-term and consistent funding for the agency is critical to ensuring the IRS is prepared for future tax seasons. It’s also critical for the IRS to be ready to answer the call for the nation during the next crisis, just as the agency did delivering three rounds of historic stimulus payments and advance Child Tax Credit payments during the pandemic.”

June 22, 2022: National Taxpayer Advocate Erin Collins released her statutorily mandated midyear report to US Congress. A highlight of the report is that concerns over continuing delays in the processing of paper-filed tax returns and the impact on taxpayer refunds are brought to light. The IRS issued a subsequent news release discussing the report.

June 23, 2022: The IRS advised taxpayers that more tax forms can now be amended electronically (with more enhancements planned for the future).

June 24, 2022: The IRS announced that it has issued frequently asked questions (FAQs) regarding the reinstated Superfund chemical excise tax. The FAQs detail what the tax is, how it is computed and who may be liable for the tax.

June 24, 2022: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).




Weekly IRS Roundup May 31 – June 3, 2022

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of May 31, 2022 – June 3, 2022. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

May 31, 2022: The IRS issued a press release, reminding taxpayers living and working outside the United States that their 2021 federal income tax return is due on June 15, 2022. The deadline applies to both US citizens and resident aliens abroad, including those with dual citizenship. The press release also contains other information to assist said taxpayers with their filings.

June 1, 2022: The IRS issued the first part of its “Dirty Dozen” tax scams for 2022, focusing on the following items:

  • Use of Charitable Remainder Annuity Trust (CRAT) to Eliminate Taxable Gain. In this transaction, appreciated property is transferred to a CRAT. Taxpayers improperly claim the transfer of the appreciated assets to the CRAT, which in and of itself gives those assets a step-up in basis to fair market value as if they had been sold to the trust. The CRAT then sells the property but does not recognize gain because of the claimed step-up in basis. Next, the CRAT uses the proceeds to purchase a single premium immediate annuity (SPIA). The beneficiary reports, as income, only a small portion of the annuity received from the SPIA. Through a misapplication of the law relating to CRATs, the beneficiary treats the remaining payment as an excluded portion representing a return of investment for which no tax is due. Taxpayers seek to achieve this inaccurate result by misapplying the rules under sections 72 and 664.
  • Maltese (or Other Foreign) Pension Arrangements Misusing Treaty. In these transactions, US citizens or US residents attempt to avoid US tax by making contributions to certain foreign individual retirement arrangements in Malta (or possibly other foreign countries). In these transactions, the individual typically lacks a local connection, and local law allows contributions in a form other than cash or does not limit the amount of contributions by reference to income earned from employment or self-employment activities. By improperly asserting that the foreign arrangement is a “pension fund” for US tax treaty purposes, the US taxpayer misconstrues the relevant treaty to improperly claim an exemption from US income tax on earnings in, and distributions from, the foreign arrangement.
  • Puerto Rican and Other Foreign Captive Insurance. In these transactions, US owners of closely held entities participate in a purported insurance arrangement with a Puerto Rican or other foreign corporation with cell arrangements or segregated asset plans in which the US owner has a financial interest. The US-based individual or entity claims deductions for the cost of “insurance coverage” provided by a fronting carrier, which reinsures the “coverage” with the foreign corporation. The characteristics of the purported insurance arrangements typically include one or more of the following: implausible risks covered, non-arm’s length pricing and lack of [...]

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Weekly IRS Roundup May 23 – May 27, 2022

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of May 23, 2022 – May 27, 2022. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

May 25, 2022: The IRS issued a press release revising frequently asked questions concerning the 2021 Earned Income Tax Credit to educate eligible taxpayers on how to properly claim the credit on their 2021 tax return.

May 25, 2022: The IRS announced that it has enhanced its “Where’s My Refund?” online tool, which introduces a new feature that allows taxpayers to check the status of the current tax year and the two prior years.

May 26, 2022: The IRS issued a press release, announcing the issuance of its Fiscal Year 2021 Data Book, which describes its activities from October 1, 2020, to September 30, 2021. The Data Book is published annually and contains statistical tables and organization information relating to data on collecting revenue, issuing refunds, enforcing the law, assisting taxpayers and the budget and workforce.

May 26, 2022: The IRS issued a memorandum to Employee Plan employees and Exempt Organizations/Government Entities Employees, stating that video meetings via secure IRS-approved platforms will continue to be allowed on a going forward basis.

May 27, 2022: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).




Weekly IRS Roundup April 17 – April 23, 2022

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of April 17, 2022 – April 23, 2022. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

April 18, 2022: The IRS issued Revenue Ruling 2022-9, providing various prescribed interest rates for federal income tax purposes for May 2022.

April 18, 2022: The IRS issued a news release, reminding taxpayers of the option to request an automatic extension of time to file individual income tax returns and noting certain categories of taxpayers who automatically qualify for extensions.

April 18, 2022: The IRS issued a news release, setting forth certain penalty relief options that may be available to taxpayers who are unable to pay increased tax liabilities resulting from retroactive claims for employee retention tax credits.

April 19, 2022: The IRS issued Revenue Procedure 2022-23, providing procedures for taxpayers to make late elections under Sections 168(j)(8), 168(l)(3)(D) and 181(a)(1) of the Code, relating to certain depreciation deductions, for taxable years 2018 and 2019.

April 19, 2022: The IRS issued Notice 2022-16, providing the monthly update to certain interest rates used for pension plan funding and distribution purposes.

April 19, 2022: The IRS issued a news release, announcing that the 2022 IRS Nationwide Tax Forum, an annual series of continuing education seminars for tax professionals, will be held virtually from July 19, 2022, through August 18, 2022.

April 19, 2022: The IRS issued a news release urging taxpayers who missed the April 18, 2022, filing deadline to file their individual tax returns as soon as possible in order to obtain tax refunds and limit penalties and interest.

April 20, 2022: The IRS issued a news release, announcing the awarding of more than $12.1 million in grants to 131 organizations across the country as part of its Low Income Taxpayer Clinic program, a program to assist organizations in providing pro bono representation to low-income and English as a second language (ESL) taxpayers in federal tax disputes.

April 21, 2022: The IRS issued a news release, reminding tax-exempt organizations of the May 16, 2022, filing deadline with respect to certain information and tax returns.

April 22, 2022: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

Special thanks to Le Chen in our Washington, DC, office for this week’s roundup.




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