TAX CONTROVERSY 360

Margie Rollinson Becomes First Female IRS Chief Counsel

by Kevin Spencer | Mar 7, 2024 | Uncategorized

On March 6, 2024, the Internal Revenue Service (IRS) announced that Margie Rollinson has been sworn in as the 49th chief counsel, making her the first female to take on the role. The position has been vacant since Michael Desmond stepped down on January 20, 2021. It took nearly a year for the US Senate to confirm his appointment. We previously reported on Ms. Rollinson’s nomination to the top job.

Ms. Rollinson began her career at Ernst & Young (EY) in 1987, became a partner in 1997 and was eventually named Deputy Director of the National Tax Department, where she also led the International Tax Technical Committee.

In 2013, Ms. Rollinson left EY and joined the IRS Office of Chief Counsel as the Technical Deputy Associate Chief Counsel in the Office of the Associate Chief Counsel International. In 2016, she was named Associate Chief Counsel International and oversaw 100 tax lawyers responsible for issuing published guidance and providing technical guidance.

Practice Point: The IRS Chief Counsel position is appointed by the President of the United States (with the advice and consent of the Senate) and serves as the chief legal advisor to the IRS Commissioner on all matters pertaining to the interpretation, administration and enforcement of the Internal Revenue Code. Under the Internal Revenue Service Restructuring and Reform Act of 1998, the Chief Counsel reports to both the IRS Commissioner and the General Counsel of the Department of Treasury.

Weekly IRS Roundup February 26 – March 1, 2024

by Kevin Spencer, Evan Walters and Jeremy Kass | Mar 6, 2024 | IRS Guidance, Tax Reform, Tax Refunds

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of February 26, 2024 – March 1, 2024.

February 26, 2024: The IRS released Internal Revenue Bulletin 2024-9, which includes the following:

Announcement 2024-11, which shares recent disciplinary sanctions involving lawyers, certified public accountants, enrolled agents, enrolled actuaries, enrolled retirement plan agents and appraisers.
Revenue Procedure 2024-12, which extends the time for providing certain seller reports for vehicle sales that qualify for the clean vehicle credit or the previously owned clean vehicle credit under Internal Revenue Code (Code) §§ 30D and 25E, respectfully.
Revenue Procedure 2024-13, which provides two tables of limitations on depreciation deductions for owners of passenger automobiles placed in service during calendar year 2024 and a table of dollar amounts that must be used to determine income inclusions by passenger automobile lessees with a lease term beginning in calendar year 2024.
Revenue Procedure 2024-14, which provides indexing adjustments for applicable dollar amounts under Code § 4980H(c)(1) and (b)(1). These indexed amounts are used to calculate the employer shared responsibility payments under § 4980H(a) and (b)(1), respectively.

February 26, 2024: The IRS announced that it will accept supplemental applications from all qualified organizations for Low Income Taxpayer Clinic matching grants from February 26 to April 10.

February 26, 2024: The IRS provided businesses, tax professionals and others who want to learn more about resolving incorrect Employee Retention Credit (ERC) claims a free webinar about the ERC Voluntary Disclosure Program and other IRS efforts to help taxpayers who may have been misled by aggressive marketing and misinformation around ERC eligibility.

February 27, 2024: The IRS announced that individuals and businesses in parts of California affected by severe storms and flooding that began on January 21, 2024, now have until June 17, 2024, to file various federal individual and business tax returns and make tax payments.

February 27, 2024: The IRS announced that two private sector experts with extensive experience in the tax and cryptocurrency industries have been hired as executive advisors to help the agency’s efforts within the digital assets space.

February 27, 2024: The IRS released Notice 2024-26, which provides that withholding agents (both US and foreign persons) are administratively exempt from the requirements to electronically file Forms 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, that are required to be filed in calendar year 2024. Additionally, withholding agents that are foreign persons are administratively exempt from the requirements to electronically file Forms 1042 that are required to be filed in calendar year 2025.

February 28, 2024: The IRS reminded taxpayers that recent improvements to Where’s My Refund? provide more information and remains the best way to check the status of a refund, including information regarding IRS confirmation [...]

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IRS Announces New Audit Initiative Focused on Jet Airplane Usage

by Kevin Spencer and Evan Walters | Mar 1, 2024 | IRS Audits

On February 21, 2024, the Internal Revenue Service (IRS) announced a new initiative to audit the use of airplanes by corporations, large partnerships and high-net-worth individuals. While the IRS has always examined plane usage, this new focus aligns with recent IRS messaging that corporations and high-income taxpayers are not paying their “fair share” of tax and have been subject to “historically low audit rates.” The IRS will use some of its Inflation Reduction Act of 2022 funding to step up its enforcement efforts in this area.

Indeed, the IRS has been keeping score and publicly sharing their successes in collecting tax from millionaire taxpayers. We have also previously reported on the IRS’s strengthened enforcement plans thanks to its newfound funding.

The IRS’s airplane usage audit initiative will focus on allocations between business and personal use, which highlights several potential tax issues, including:

Limitations on deductions per Internal Revenue Code Section 274
Limitations on deprecation and recapture under Internal Revenue Code Section 280F
Whether the value of a flight is income to the passenger and/or guests (See Reg. §1.61-21).

Practice Point: If you have an airplane and claimed tax deductions for its use and ownership, you should prepare for an IRS examination. What can you do now? First and foremost, you should maintain meticulous records that fully substantiate the business use of the plane. For example, adding more detail about what the plane was used for, how it was used, and tying its use to a business purpose will be key to winning over an IRS auditor. Second, make sure the maintenance and flight log records are up to date and correct. Also, although not directly related to the recently announced IRS’s audit initiative, do not forget to ensure compliance with Federal Aviation Administration regulations and sales tax, use tax, and federal excise tax considerations, particularly if you decide to reorganize the ownership or organizational structure of an entity that owns an aircraft.

Weekly IRS Roundup February 19 – February 23, 2024

by Kevin Spencer, Evan Walters and Jeremy Kass | Feb 29, 2024 | IRS Audits, IRS Guidance, Tax Reform, Tax Refunds

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of February 19, 2024 – February 23, 2024.

February 20, 2024: The IRS published Announcement 2024-12, which revokes tax-exempt status for the Chicago Cannabis Alliance and Keeping My Kids Inc.

February 20, 2024: The IRS reminded farmers and fishers who chose to forgo making estimated tax payments by January that they must generally file their 2023 federal income tax return and pay all taxes by March 1, 2024, to avoid estimated tax penalties.

February 20, 2024: The IRS reminded businesses to review their Employee Retention Credit eligibility because there’s limited time to voluntarily resolve incorrect claims and avoid issues, such as penalties and interest.

February 21, 2024: The IRS announced plans to begin dozens of audits on business aircraft involving personal use, focusing specifically on aircraft usage by large corporations, large partnerships and high-income taxpayers.

February 21, 2024: The IRS announced that interest rates for overpayments and underpayments will remain the same for the calendar quarter beginning April 1, 2024. Interest rates are provided in Revenue Ruling 2024-6.

February 21, 2024: The IRS reminded military personnel that they have several options to file their federal tax returns for free, including the US Department of Defense’s MilTax and the IRS Free File program.

February 21, 2024: The IRS announced the beginning of its 2024 Tax Time Guide series, which provides new and updated resources to help taxpayers file an accurate tax return.

February 22, 2024: The IRS warned tax professionals about a recurring scheme in which scammers pose as tax software providers and email tax professionals with requests to provide Electronic Filing Identification Number information via fax.

February 22, 2024: The IRS announced that applications for the 2025 Taxpayer Advocacy Panel (TAP) are now being accepted to fill vacancies in 29 states and territories. TAP submits recommendations to the IRS to help improve satisfaction with IRS services, products and procedures.

February 23, 2024: The IRS announced that the replacement of lead service lines under various governmental programs do not result in income to the residential property owners under Internal Revenue Code § 61.

February 23, 2024: The IRS issued frequently asked questions related to the US Department of Agriculture’s (USDA) Discrimination Financial Assistance Program, which provides financial assistance to farmers, ranchers and forest landowners who experienced discrimination by the USDA in farm lending prior to 2021.

February 23, 2024: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

Weekly IRS Roundup February 12 – February 16, 2024

by Kevin Spencer, Evan Walters and Jeremy Kass | Feb 21, 2024 | IRS Guidance, Tax Reform, Tax Refunds

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of February 12, 2024 – February 16, 2024.

February 12, 2024: The IRS released Internal Revenue Bulletin 2024-7, which includes the following:

Revenue Ruling 2024-5, which provides that if one or more of a state’s allocations of housing credit dollar amounts under § 305 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 to qualified disaster zones in 2021 or 2022 are returned after 2022, then the returned housing credit dollar amounts are not restricted to projects located in qualified disaster zones.
Announcement 2024-7, which corrects Revenue Procedure 2024-5 by providing initially omitted effective dates for changes to the user fees that apply to certain requests for advance approvals.
Announcement 2024-8, which revokes tax-exempt status for the Altruistic United Humanity Association.
Announcement 2024-9, which revokes tax-exempt status for the West Los Angeles Obedience Training Club Inc.
Notice 2024-20, which advises that forthcoming proposed regulations will set forth (i) requirements for qualifying as an eligible census tract for purposes of the alternative fuel vehicle refueling property credit under § 30C of the Internal Revenue Code (Code) and (ii) guidance as to how taxpayers can verify that property satisfies the geographic requirements of Code § 30C.
Notice 2024-23, which provides special relief under Code § 529 for certain rollovers to or from Maryland Prepaid College Trust (MPCT) accounts. Due to accounting discrepancies and administrative issues, access to MPCT interest earnings was frozen in April 2022 and restored July 2023. Due to the freeze, many taxpayers executed a qualified rollover out of MPCT accounts. Notice 2024-23 permits taxpayers to transfer funds back into an MPCT account in a qualified rollover even though the transfer of funds out of the MPCT account may have occurred within the past 12 months.

February 12, 2024: The IRS announced that Jim Lee, chief of IRS Criminal Investigation, will retire effective April 6, 2024.

February 12, 2024: The IRS issued Revenue Procedure 2024-14, which provides indexing adjustments for applicable dollar amounts used to calculate the employer shared responsibility payments under § 4980H(a) and (b)(1) of the Code.

February 12, 2024: The IRS reminded senior taxpayers of free tax filing options, including the programs Tax Counseling for the Elderly, Volunteer Income Tax Assistance and IRS Free File.

February 13, 2024: The IRS highlighted seven suspicious signs that an Employee Retention Credit claim may be questionable and could signal future IRS problems to help small businesses that may need to resolve incorrect claims.

February 13, 2024: The IRS alerted tax professionals to watch out for a “new client” scam, which is an email scheme (in which cybercriminals pose as potential clients) that peaks during the busy tax filing season.

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