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.
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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Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of April 13 – April 17, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.
April 16, 2020: The CARES Act made several modifications to net operating losses (NOLs). Specifically, NOLs incurred in 2018, 2019 and 2020 can be carried back to offset taxable income earned during the five-year period prior to the year in which the NOL was incurred. Accordingly, to allow taxpayers to meet the deadlines to submit such refunds, the IRS issued temporary procedures to allow taxpayers to fax certain Forms 1139 and 1045 due to COVID-19.
Only claims allowed under sections 2303 and 2305 of the CARES Act that are made on Form 1139 or Form 1045 are eligible refund claims that can be faxed.
April 16, 2020: The IRS published FAQs to address specific issues related to the deferral of deposit and payment of employment taxes due to the CARES Act. The deferral applies to deposits and payments of the employer’s share of Social Security tax that would otherwise be required to be made during the period beginning on March 27, 2020, and ending December 31, 2020. Employers that received a Paycheck Protection Program loan may not defer the deposit and payment of the employer’s share of Social Security tax that is otherwise due after the employer receives a decision from the lender that the loan was forgiven.
April 17, 2020: The IRS issued Revenue Procedure 2020-25, which provides guidance allowing a taxpayer to change its depreciation under IRC § 168 for qualified improvement property placed in service by the taxpayer after December 31, 2017, in its taxable year ending in 2018, 2019 or 2020.
April 17, 2020: The IRS released FAQs regarding the Economic Impact Payments (EIPs). The FAQs address eligibility, requesting EIPs, calculating EIPs and receiving EIPs.
April 17, 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.
On April 8, 2020, the Internal Revenue Service (IRS) released a statement telling taxpayers that guidance would be forthcoming on refund claims related to the Coronavirus Aid, Relief and Economic Security Act, or the CARES Act. Consistent with that promise, on April 13, 2020, the IRS issued guidance describing temporary procedures permitting the submission via fax of Form 1139, Corporation Application for Tentative Refund, and Form 1045, Application for Tentative Refund. For our prior discussion of CARES Act refund guidance issued by the IRS, see here.
On April 8, 2020, the Internal Revenue Service (IRS) issued Rev. Proc. 2020-23 in response to the Coronavirus Aid, Relief and Economic Security (CARES) Act. Rev. Proc. 2020-23 eases restrictions on partnerships’ ability to file amended tax returns and issue amended Schedules K-1 in order for their partners to avail themselves of the retroactive tax relief provided by the CARES Act.
The Coronavirus Aid, Relief and Economic Security Act, or CARES Act, provides tax relief to taxpayers in certain situations. Some of these provisions may generate refunds for prior years, such as the relaxation of restrictions on the use of net operating losses (NOLs) and interest deductions as well as the retroactive availability of additional depreciation related to qualified improvement property. For our prior discussions of these, and other CARES Act provisions, see here.
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