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CARES Act

Weekly IRS Roundup December 28, 2020 – January 8, 2021

by McDermott Will & Emery | Jan 14, 2021 | IRS Guidance, Tax Reform

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the weeks of December 28, 2020 – January 8, 2021. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

December 29, 2020: The IRS released Revenue Procedure 21-09 providing a procedure for a trade or business that manages or operates a qualified residential living facility to elect to be treated as a real property trade or business for purposes of section 163(j).

December 31, 2020: The IRS issued Notice 21-05 clarifying and modifying the beginning of construction requirement for qualified facility and energy property projects under sections 45 and 48.

December 31, 2020: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

December 31, 2020: The IRS released Internal Revenue Bulletin 2021-1, dated January 4, 2021, containing the following highlights: Rev. Proc. 2021-1 (Administrative); Rev. Proc. 2021-2 (Administrative); Rev. Proc. 2021-3 (Administrative); Rev. Proc. 2021-4 (Employee Plans); Rev. Proc. 2021-5 (Exempt Organizations); and Rev. Proc. 2021-7 (Income Tax).

January 4, 2021: The IRS issued Notice 21-07 providing temporary relief for employers and employees using the automobile lease valuation rule due to the COVID-19 pandemic.

January 5, 2021: The IRS issued Revenue Procedure 21-08 modifying Revenue Procedure 2021-5 to provide that the exclusive means of submitting Form 1024-A, after the 90-day transition relief period, is through the electronic submission process.

January 5, 2021: The IRS issued Revenue Procedure 21-10 providing procedures for issuers of tax-advantaged bonds who received adverse determinations by the Office of Tax Exempt Bonds to request an administrative appeal from the Independent Office of Appeals.

January 5, 2021: The IRS released TD 9943 containing the final regulations under section 163(j) related to the limitation on the deduction for business interest expense.

January 6, 2021: The IRS issued Revenue Ruling 21-02 declaring Notice 2020-32 and Rev. Rul. 2020-27, both of which provided that certain taxpayers could not deduct expenses related to loans forgiven under the Paycheck Protection Program, as obsolete.

January 6, 2021: The IRS released TD 9944 containing the final regulations under section 45Q related to the credit for carbon oxide sequestration.

January 7, 2021: The IRS released TD 9945 containing the final regulations under section 1061 related to the characterization of gains for taxpayers directly or indirectly holding applicable partnership interests in connection with the performance of substantial services.

January 8, 2021: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

January 8, 2021: The IRS released Internal Revenue Bulletin 2021-2, dated January 11, 2021, containing the following highlights: TD 9940 (Administrative); Notice 2021-03 (Employee Plans); Notice 2021-04 (Excise [...]

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Weekly IRS Roundup September 21 – September 25, 2020

by McDermott Will & Emery | Oct 2, 2020 | IRS Guidance, Tax Reform

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 21, 2020 – September 25, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

September 21, 2020: The IRS released Announcement 2020-12 to detail information reporting requirements for taxpayers seeking forgiveness of Paycheck Protection Program loans under the Coronavirus Aid, Relief and Economic Security (CARES) Act.

September 21, 2020: The IRS published final regulations related to bonus depreciation. The rules provide additional guidance to final regulations issued in 2019.

September 21, 2020: The IRS published final regulations providing guidance for certain foreign persons that recognize gain or loss from the sale or exchange of an interest in a partnership that is engaged in a trade or business within the United States.

September 21, 2020: The IRS published final regulations clarifying that certain deductions allowed to an estate or non-grantor trust are not miscellaneous non-itemized deductions.

September 22, 2020: The IRS issued proposed regulations to modify the ownership attribution rules applicable to outbound transfers of stock or securities of a domestic corporation under section 367(a) and narrow the scope of foreign corporations that are treated as controlled foreign corporations for purposes of the look-through rule under section 954(c)(6).

September 22, 2020: The IRS published final regulations related to the downward attribution for ownership determination of controlled foreign corporations (CFCs) following changes in the Tax Cuts and Jobs Act.

September 24, 2020: The IRS announced that it will provide tax relief for victims of Hurricane Sally by extending the deadline for filing and payment deadlines that would have been due October 15, 2020, until January 15, 2021.

September 25, 2020: The IRS updated the instructions for Form 8858: Information Return of US Persons with Respect to Foreign Disregarded Entities (FDEs) and Foreign Branches (FBs) to reflect changes due to the COVID-19 pandemic.

September 25, 2020: The IRS released Internal Revenue Bulletin 2020-40, dated September 28, 2020, containing the following highlights: Notice 2020-66 (Administrative); Announcement 2020-17 (Employee Plans Administrative); Notice 2020-72 (Employee Plans); Notice 2020-59 (Income Tax); Notice 2020-71 (Income Tax); REG-107911-18 (Income Tax); Rev. Proc. 2020-41 (Income Tax); Rev. Rul. 2020-19 (Income Tax); TD 9905 (Income Tax).

September 25, 2020: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

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

Weekly IRS Roundup September 14 – September 18, 2020

by McDermott Will & Emery | Sep 22, 2020 | IRS Guidance, Tax Reform

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 14, 2020 – September 18, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

September 14, 2020: The IRS published final regulations providing guidance on the limitation on the deduction for business interest expense after amendment of the Internal Revenue Code (Code) by the Tax Cuts and Jobs Act (TCJA) and the Coronavirus Aid, Relief and Economic Security Act (CARES Act). The regulations provide guidance to taxpayers on how to calculate the limitation, what constitutes interest for purposes of the limitation, which taxpayers and trades or businesses are subject to the limitation and how the limitation applies in consolidated group, partnership, international and other contexts. The final regulations vary slightly from the document released on IRS.gov on July 28, 2020.

September 14, 2020: The IRS published a criminal tax bulletin concerning recent case law involving the Criminal Tax Division.

September 15, 2020: The IRS published Rev. Rul. 2020-20 that provides various prescribed rates for federal income tax purposes for October 2020, including: (1) the applicable federal rates (AFR) under section 1274(d); (2) the adjusted applicable federal rates (adjusted AFR) under section 1288(b); (3) the adjusted federal long-term rate and the long-term tax-exempt rate under section 382(f); (4) the appropriate percentages for determining the low-income housing credit under Section 42(b)(1); and (5) 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 under section 7520.

September 15, 2020: The IRS published a practice unit covering Last In-First Out (LIFO) inventories under various LIFO methods.

September 15, 2020: The IRS released for future publication in the Federal Register final regulations concerning the definition of an eligible terminated S corporation and rules relating to distributions of money by such a corporation after the post-termination transition period. The regulation package also amends current regulations to extend the treatment of distributions of money during the post-termination transition period to all shareholders of the corporation and clarifies the allocation of current earnings and profits to distributions of money and other property. The final regulations affect C corporations that were formerly S corporations and the shareholders of such corporations.

September 16, 2020: The IRS published a memorandum providing flexibility for taxpayers who are temporarily unable to meet the payment terms on accepted offers due to the economic impact of COVID-19. The procedures will expire December 31, 2020, unless extended.

September 17, 2020: The IRS published a practice unit providing an overview of the Overall Foreign Loss (OFL), Separate Limitation Loss (SLL) and Overall Domestic Loss (ODL) rules, as well as related examples.

September 17, 2020: The IRS
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Weekly IRS Roundup August 31 – September 4, 2020

by McDermott Will & Emery | Sep 9, 2020 | IRS Guidance, Tax Reform

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of August 31, 2020 – September 4, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

September 1, 2020: The IRS released for publication in the federal register final regulations providing additional guidance on the base erosion and anti-abuse tax (BEAT) imposed on certain large corporate taxpayers with respect to certain payments made to foreign related parties. The final regulations affect corporations with substantial gross receipts that make payments to foreign related parties.

September 1, 2020: The IRS announced the launch of the Bipartisan Budget Act (BBA) Centralized Partnership Audit Regime webpage. The Centralized Partnership Audit Regime replaces the Tax Equity and Fiscal Responsibility Act (TEFRA) and the electing large partnership rules. The centralized partnership audit regime, or BBA, is generally effective for tax years beginning January 2018. Under the BBA, the IRS generally assesses and collects any understatement of tax (called an imputed underpayment) at the partnership level.

September 1, 2020: The IRS published a memorandum providing guidance on the Bipartisan Budget Act of 2015 (BBA) until Internal Revenue Manual (IRM) 8.19 is revised. The guidance covers: (1) Appeals TEFRA Team (ATT) and Technical Guidance (TG) referrals; (2) Tax Court rules on BBA partnership proceedings; (3) Tax Computation Specialist (TCS) assistance; (4) Tried Cases and Counsel Settlements; (5) Tax Court Decision Appealed and Final Decision from Appeal; and (6) Department of Justice (DOJ) cases.

September 1, 2020: The IRS announced its intention to issue regulations addressing the application of sections 951 and 951A of the Internal Revenue Code (Code) to certain S corporations (as defined in section 1361(a)(1)) with accumulated earnings and profits, as described in section 316(a)(1) (AE&P). The notice also announces that the US Department of the Treasury and the IRS intend to issue regulations addressing the treatment of qualified improvement property (QIP) under the alternative depreciation system (ADS) of section 168(g) for purposes of calculating qualified business asset investment (QBAI) for purposes of the foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI) provisions. Comments should be submitted by November 2, 2020.

September 1, 2020: The IRS requested comments on Revenue Procedure 2015-40 (that provides guidance for taxpayers who believe that the actions of the United States, a treaty country or both result or will result in taxation that is contrary to the provisions of an applicable tax treaty) to submit the requested information in order to receive assistance from the IRS official acting as the US competent authority. Comments are due on or before November 2, 2020.

September 3, 2020: The IRS released the fourth quarter update to the 2019–2020 Priority Guidance Plan. The fourth quarter update to the 2019-2020 plan reflects 53 additional projects which have been published [...]

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Weekly IRS Roundup July 27 – July 31, 2020

by McDermott Will & Emery | Aug 3, 2020 | IRS Guidance, Tax Reform

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of July 27, 2020 – July 31, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

July 28, 2020: The IRS issued final regulations providing guidance about the limitation on the deduction for business interest expense after amendment of the Internal Revenue Code (Code) by the Tax Cuts and Jobs Act and the Coronavirus Aid, Relief and Economic Security Act (CARES Act). The regulations provide guidance to taxpayers on how to calculate the limitation, what constitutes interest for purposes of the limitation, which taxpayers and trades or businesses are subject to the limitation and how the limitation applies in consolidated group, partnership, international and other contexts.

July 28, 2020: The IRS published a notice of proposed rulemaking concerning rules that provide additional guidance on various business interest expense deduction limitation issues not addressed in the final regulations, including more complex issues related to the amendments made by the CARES Act.

July 28, 2020: The IRS added frequently asked questions regarding the aggregation rules under section 448(c)(2) that apply to the section 163(j) small business exemption.

July 29, 2020: The IRS posted a practice unit on issues concerning the receipt of dividends or interest from a related controlled foreign corporation.

July 29, 2020: The IRS posted a practice unit on accuracy-related penalties under section 6662.

July 29, 2020: The IRS published a notice of proposed rulemaking concerning regulations to implement legislative changes to sections 263A, 448, 460 and 471 that simplify the application of those tax accounting provisions for certain businesses having average annual gross receipts that do not exceed $25 million, adjusted for inflation. The notice also contains proposed regulations regarding certain special accounting rules for long-term contracts under section 460 to implement legislative changes applicable to corporate taxpayers. The proposed regulations generally affect taxpayers with average annual gross receipts of not more than $25 million (adjusted for inflation). The IRS also requested comments regarding the application of section 460 (or other special methods of accounting) to a contract with income that is accounted for in part under section 460 (or other special method) and in part under section 451. Comments must be received by September 14, 2020.

July 31, 2020: The IRS published a notice of proposed rulemaking concerning proposed regulations that provide guidance under section 1061. Section 1061 recharacterizes certain net long-term capital gains of a partner that holds one or more applicable partnership interests as short-term capital gains. The regulations also amend existing regulations on holding periods to clarify the holding period of a partner’s interest in a partnership that includes in whole or in part an applicable partnership interest and/or a profits interest. The regulations affect taxpayers who directly or indirectly [...]

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Weekly IRS Roundup July 20 – July 24, 2020

by McDermott Will & Emery | Jul 27, 2020 | IRS Guidance, Tax Reform, Tax Refunds

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of July 20, 2020 – July 24, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

July 20, 2020: The IRS published a news release on after-tax-day tips for taxpayers who missed the July 15, 2020, tax deadline and did not request an extension. The tips include advice on obtaining a refund and on reducing penalties and interest.

July 20, 2020: The IRS released public comments on the 2020-21 Priority Guidance Plan in response to Notice 2020-47, which invited the public to submit recommendations for items to be included on the 2020-2021 Priority Guidance Plan. The US Department of the Treasury and the IRS use the Priority Guidance Plan each year to identify and prioritize the tax issues that should be addressed through regulations, revenue rulings, revenue procedures, notices and other published administrative guidance.

July 21, 2020: The IRS announced the creation of the new Enterprise Digitalization and Case Management office, which will spearhead IRS efforts to empower taxpayers and IRS employees to rapidly resolve issues in a simplified digital environment. The office’s efforts will support overall IRS modernization and implementation of long-term changes stemming from the Taxpayer First Act. The new stand-alone office will focus on enhancing the taxpayer experience by improving business processes and modernizing systems.

July 22, 2020: The IRS published a notice to solicit comments on Form 3800 (General Business Credit). Section 38 permits taxpayers to reduce their income tax liability by the amount of their general business credit, which is an aggregation of various credits. Form 3800 is used to figure the correct credit. Comments are due on or before September 21, 2020.

July 23, 2020: The IRS published a notice requesting comments on TD 8435 that provides final income, estate and gift, and employment tax regulations relating to elections made under the Technical and Miscellaneous Revenue Act of 1988. This regulation enables taxpayers to take advantage of various benefits provided by the Internal Revenue Code (Code). Comments are due on or before September 21, 2020.

July 23, 2020: The IRS published final regulations under the global intangible low-taxed income (GILTI) and subpart F income provisions of the Code regarding income subject to a high rate of foreign tax. The final regulations allow taxpayers to exclude certain high-taxed income of a controlled foreign corporation from their GILTI computation on an elective basis. The final regulations are effective on September 21, 2020.

July 23, 2020: The IRS also published proposed regulations that generally conform the rules implementing the subpart F high-tax exception to the rules implementing the GILTI high-tax exclusion set forth in the final regulations, and provided for a single election under section 954(b)(4) for purposes [...]

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Weekly IRS Roundup July 6 – July 10, 2020

by McDermott Will & Emery | Jul 14, 2020 | IRS Guidance, Tax Reform

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of July 6, 2020 – July 10, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

July 6, 2020: The IRS added new frequently asked questions on the treatment of grants or loans to businesses through the Coronavirus Relief Fund established by the Coronavirus Aid, Relief and Economic Security (CARES) Act. The IRS stated that a government grant is taxable because the grant generally is not excluded from the business’s gross income except in narrow circumstances. A government loan, however, generally is not included in gross income except to the extent it is forgiven. If a government forgives all or a portion of the loan, then the amount forgiven is included in gross income and taxable unless an exclusion applies. If an exclusion applies, the IRS indicated the taxpayer may lose an equivalent amount of tax attributes.

July 6, 2020: The IRS added frequently asked questions on the treatment of grants or loans to health care providers through the Provider Relief Fund established by the CARES Act. The IRS stated that payments from this fund do not qualify as a qualified disaster relief payment under section 139 of the Internal Revenue Code (IRC) and, in turn, are includible in gross income. The IRS also stated that a tax-exempt recipient generally is not subject to tax on a fund payment unless the amount is a reimbursement to an unrelated trade or business under section 511.

July 6, 2020: The IRS added content to its Large Business & International (LB&I) Active Campaign covering section 965 for individuals. In connection with the transition to a participation exemption system, certain individuals had an obligation to include in gross income (and report) their pro rata share of the untaxed earnings and profits of certain directly and indirectly owned foreign corporations. The IRS indicated it will address noncompliance through soft letters and examinations.

July 7, 2020: The IRS issued a news release reminding tax-exempt organizations that certain forms they file with the IRS are due on July 15, 2020, including Form 990. Tax-exempt organizations that need additional time to file beyond the July 15 deadline can request an automatic extension by filing Form 8868. The IRS also indicated that extending the time for filing a return does not extend the time for paying tax.

July 8, 2020: The IRS issued a news release reminding certain taxpayers to restart their tax payments by July 15. Some taxpayers took advantage of tax relief measures under the People First Initiative and did not make previously owed tax payments between March 25 and July 15. The IRS also set forth what taxpayers should do to resume their payment agreements to the IRS, including Installment Agreements, Offers in Compromise and [...]

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Weekly IRS Roundup June 15 – June 20, 2020

by McDermott Will & Emery | Jun 23, 2020 | IRS Guidance, Trial Courts

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of June 15 – June 20, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

June 19, 2020: The US Tax Court announced that the Court will resume receiving mail effective July 10, 2020. Any items currently being held by the United States Postal Service or any private delivery service will be delivered to the Court on that day.

June 19, 2020: The IRS issued proposed regulations that provide guidance for the deduction of qualified transportation fringe (QTF) and commuting expenses. As part of the Tax Cuts and Jobs Act (TCJA), taxpayers are not allowed deductions for QTF expenses or for certain commuting expenses. These proposed regulations address the elimination of the QTF deduction. The proposed regulations also provide guidance to determine the amount of QTF parking expense that is nondeductible.

June 19, 2020: The IRS released Notice 2020-50 to help retirement plan participants affected by the COVID-19 take advantage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act regarding retirement plan distributions. The CARES Act provides that qualified individuals may treat as coronavirus-related distributions up to $100,000 in distributions made from their eligible retirement plans between January 1 and December 30, 2020 without being subject to the 10% additional tax that otherwise generally applies to distributions made before an individual reaches age 59 ½. Notice 2020-50 expands the definition of who is a qualified individual to take into account additional factors such as reductions in pay, rescissions of job offers, and delayed start dates with respect to an individual, as well as adverse financial consequences to an individual arising from the impact of the COVID-19 on the individual’s spouse or household member.

June 20, 2020: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

Special thanks to Emily Mussio in our Chicago office for this week’s roundup.

The Next Normal — Tax Responses to COVID-19

by McDermott Will & Emery | Jun 18, 2020 | IRS Guidance

The coronavirus (COVID-19) pandemic has thrown our personal and professional lives into a constant state of change, as we deal with social distancing, e-learning, remote working, and Zoom. In this American Bar Association article, Andrew R. Roberson, a partner in US and International Tax at McDermott Will & Emery, describes how the constant change or “next normal” rings true in the tax world as well, both for taxpayers and practitioners, as we all adapt to today’s challenges.

Access the full article.

Weekly IRS Roundup April 27 – May 1, 2020

by McDermott Will & Emery | May 5, 2020 | IRS Guidance, Tax Refunds, Uncategorized

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of April 27 – May 1, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

April 28, 2020: The IRS published Large Business and International (LB&I) Process Unit on the substantiation of foreign tax credits for individuals. For an individual to claim a foreign tax credit, individual taxpayers must submit Form 1116 with their US federal income tax return. At the request of the IRS, the taxpayer must provide evidence supporting the foreign taxes claimed on Form 1116.

April 28, 2020: The IRS published LB&I Concept Unit on the installment method under IRC § 453. An installment sale occurs when a seller receives at least one payment in a tax year after the disposition. An installment sale is reported on a Form 6252.

April 30, 2020: The IRS issued Revenue Procedure 2020-29, temporarily allowing for the electronic submission of letter ruling requests, closing agreements, determination letters, information letters from the IRS Office of Chief Counsel, and for determination letters issued by the IRS LB&I Division.

April 30, 2020: The IRS published Notice 2020-32, which provides guidance regarding the deductibility of certain otherwise deductible expenses incurred in a taxpayer’s trade or business when the taxpayer receives a loan (covered loan) pursuant to the Paycheck Protection Program under § 7(a)(36) of the Small Business Act. Notice 2020-32 provides that no deduction is allowed for US federal income tax purposes if the payment of the expense results in forgiveness of a covered loan pursuant to § 1106(b) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

May 1, 2020: The IRS released Notice 2020-36, which contains a proposed revenue procedure to update the procedures under which recognition of exemption from federal income tax for organizations described in IRC § 501(c) may be obtained on a group basis for subordinate organizations affiliated with and under the general supervision or control of a central organization. The proposed revenue procedure would modify and supersede Revenue Procedure 80-27, 1980-1 C.B. 677 (as modified by Rev. Proc. 96-40, 1996-2 C.B. 301).

May 1, 2020: The Department of Treasury and IRS released a notification that a public hearing is being held on Wednesday May 20, 2020 via teleconference. The public hearing will be on the proposed regulations that provide guidance relating to the allocation and apportionment of deductions and creditable foreign taxes, the definition of financial services income, foreign tax redeterminations, availability of foreign tax credits under the transition tax, and the application of the foreign tax credit limitation to consolidated groups. The IRS must receive speakers’ outlines of the topics to be discussed at the public hearing by Monday, May 11, 2020. If no outlines are received by May 11, 2020, the public hearing will be cancelled.

May 1, 2020: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, [...]

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