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Weekly IRS Roundup September 28 – October 2, 2020

by McDermott Will & Emery | Oct 7, 2020 | IRS Guidance, Settlements, Tax Reform

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 28, 2020 – October 2, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

September 29, 2020: The IRS published final regulations related to the source of income for certain property sales and modifying rules for determining whether foreign source income is effectively connected with a US trade or business.

September 29, 2020: The IRS published final regulations related to a wide range of foreign tax credit topics. The regulations provide guidance on 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, the application of the foreign tax credit limitation to consolidated groups, adjustments to hybrid deduction accounts to take into account certain inclusions in income by a United States shareholder, conduit financing arrangements involving hybrid instruments and the treatment of certain payments under the global intangible low-taxed income provisions.

October 1, 2020: The IRS published Notice 2020-70 generally removing Form 1040NR, US Nonresident Alien Income Tax Return, from the list of returns that are administratively exempt from the electronic filing requirement.

October 1, 2020: The IRS published final regulations related to savings programs for eligible individuals with a disability under section 529A.

October 1, 2020: The IRS released an Office of Chief Counsel Notice related to settlement options for syndicated conservation easement transactions.

October 2, 2020: The IRS published Notice 2020-76 providing for transition relief related to information reporting requirements related to the Affordable Care Act.

October 2, 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.

October 2, 2020: The IRS released Internal Revenue Bulletin 2020-41, dated October 5, 2020, containing the following highlights: Announcement 2020-12 (Administrative); Rev. Proc. 2020-42 (Administrative); Rev. Rul. 2020-20 (Income Tax); Rev. Rul. 2020-21 (Income Tax); TD 9915 (Income Tax); Notice 2020-73 (Income Tax); Notice 2020-74 (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 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 24 – August 28, 2020

by McDermott Will & Emery | Sep 2, 2020 | Appellate Courts, IRS Appeals, IRS Guidance, Tax Reform, Trial Courts

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of August 24, 2020 – August 28, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

August 24 2020: The IRS published a memorandum concerning guidance to the field on the criteria that should be applied in considering if a request for designation for litigation should be made to the Office of Chief Counsel. The memorandum also provides interim guidance on the requirements of Section 1001 of the Taxpayer First Act (TFA) with respect to the limitation on designation of cases as not eligible for referral to the IRS Independent Office of Appeals.

August 25, 2020: The IRS published a Summer 2020 Statistics of Income Bulletin. The Summer 2020 Bulletin focuses individual income tax shares, 2017; foreign recipients of US income, calendar year 2017; effects of post-filing adjustments on Statistics of Income (SOI) estimates; and implementation of the Tax Cuts and Jobs Act.

August 25, 2020: The IRS published a practice unit focusing on the definition of foreign earned income for purposes of section 911.

August 26, 2020: The IRS published a notice and request for comments on Treasury Decision 8702 concerning certain transfers of domestic stock or securities by US persons to foreign corporations. The regulation relates to certain transfers of stock or securities of domestic corporations pursuant to the corporate organization, reorganization or liquidation provisions of the Internal Revenue Code (Code). Transfers of stock or securities by US persons in tax-free transactions are treated as taxable transactions when the acquirer is a foreign corporation, unless an exception applies under section 367(a). The regulation provides that no US person will qualify for an exception unless the US target company complies with certain reporting requirements. The comments should be received on or before October 26, 2020.

August 26, 2020: The IRS published a notice and request for comments on Treasury Decision 8612 concerning the availability of the gift and estate tax marital deduction when the donee spouse or the surviving spouse is not a US citizen. The regulation provides guidance to individuals or fiduciaries: (1) for making a qualified domestic trust election on the estate tax return of a decedent whose surviving spouse is not a US citizen in order that the estate may obtain the marital deduction; and (2) for filing the annual returns that such an election may require. The comments should be received on or before October 26, 2020.

August 27, 2020: The IRS published an announcement on the opening of the application period for the 2021 Compliance Assurance Process program. The application period runs September 1 to November 13, 2020. The IRS will inform applicants if they’re accepted into the program in February 2021.

August 28, 2020: The IRS published
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Weekly IRS Roundup August 3, 2020 – August 7, 2020

by McDermott Will & Emery | Aug 11, 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 3, 2020 – August 7, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

August 3, 2020: The IRS published a news release announcing that James Lee will become the new chief of IRS Criminal Investigation on October 1, 2020.

August 4, 2020: The IRS published a notice and request for comments concerning Form 3800 (General Business Credit), which is the form taxpayers file to claim any of the general business credits. Comments are due on or before October 5, 2020.

August 4, 2020: The IRS published corrections to final regulations under Treasury Decision 9896 that were published in the Federal Register on Wednesday, April 8, 2020. The final regulations provide guidance regarding hybrid dividends and certain amounts paid or accrued pursuant to hybrid arrangements, which generally involve arrangements whereby US and foreign tax law classify a transaction or entity differently for tax purposes. The corrections are effective on August 4, 2020.

August 4, 2020: The IRS added new content to Internal Revenue Manual 21.7.2 concerning a new major subsection with COVID-19 related employment tax relief guidance.

August 5, 2020: The IRS released public comments in response to Notice 2020-43, which requested comments on a proposed requirement for partnerships to use only one of two alternative methods (described in the notice) to satisfy the tax capital reporting requirement with respect to partnership taxable years that end on or after December 31, 2020. If adopted, partnerships and certain other persons would no longer be permitted to report partner capital accounts using any other method, including section 704(b) and US generally accepted accounting principles.

August 7, 2020: The IRS released Internal Revenue Bulletin 2020-33, dated August 10, 2020, containing the following: Announcement 2020-10, Announcement 2020-11; Revenue Procedure 2020-37; T.D. 9901, T.D. 9902; REG-127732-19.

August 7, 2020: The IRS announced corrections to Treasury Decision 9900, published in Internal Revenue Bulletin 2020-30 on Monday, July 20, 2020, regarding consolidated net operating loss deductions. The corrections revise the applicability date of the temporary regulations, revise the amended return filing date, and revise a specific regulation’s expiration date.

August 7, 2020: The IRS released for publication in the Federal Register final regulations under sections 162, 164, and 170 affecting taxpayers who make transfers to entities described in section 170(c) for business purposes and taxpayers who receive state or local tax credits in exchange for transfers to such entities or who receive other third party benefits in exchange for transfers to such entities. The final regulations: (1) update the regulations under section 162 to reflect current law regarding the application of section 162 to taxpayers that make payments or transfers for business purposes to entities described in section 170(c); (2) provide safe harbors under section 162 to provide certainty with respect to the treatment of payments made by business [...]

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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 June 8 – June 12, 2020

by McDermott Will & Emery | Jun 15, 2020 | IRS Guidance

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of June 8 – June 12, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

June 9, 2020: The IRS published a reminder for taxpayers that estimated tax payments for tax year 2020, originally due April 15 and June 15, are now due July 15. Any individual or corporation that has a quarterly estimated tax payment due has until July 15 to make that payment without penalty.

June 11, 2020: The IRS released Notice 2020-46 to address that cash payments employers make to charitable organizations that provide relief to victims of the COVID-19 pandemic in exchange for sick, vacation, or personal leave which their employees forgo will not be treated as compensation. Additionally, the employees will not be treated as receiving the value of the leave as income and cannot claim a deduction for the leave that they donated to their employer.

June 12, 2020: The IRS and Treasury issued proposed regulations to amend the existing regulations to add a definition of real property to reflect statutory changes and the Tax Cuts and Jobs Act (TCJA) limiting IRC § 1031 to exchanges of real property. Written or electronic comments and requests for a public hearing must be received by August 11, 2020.

June 12, 2020: The IRS issued Notice 2020-49 to provide tax relief for certain taxpayers affected by the COVID-19 pandemic involved in new markets tax credit transactions under IRC § 45D(a). Specifically, the notice provides guidance for community development entities (CDEs) and qualified active low-income community businesses (QALICBs) investing and conducting businesses in low-income communities. The notice postpones to December 31, 2020, the due dates for making investments, making reinvestments, and expending amounts for construction of real property under IRC § 45D due to be performed or expended on or after April 1, 2020, and before December 31, 2020.

June 12, 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.

Tax Court Records Accessible Again

by Kevin Spencer and McDermott Will & Emery | Jun 11, 2020 | Court Procedure Matters, IRS Guidance

When the US Tax Court (Tax Court) shut down in March, the public was unable to request copies of Tax Court records. That changed effective June 1, 2020, as non-parties may now call and request copies of court records which will then be sent via email. The cost for copy requests is $0.50 per page, with a per-document cap of $3.00. The Tax Court’s press release on this subject can be found here.

Practice Point: It can be extremely beneficial to taxpayers and their advisors to see arguments being made by other taxpayers and the Internal Revenue Service in cases with similar legal issues. The ability to now directly call the Tax Court to request briefs or other filings in a docketed case, and to receive such documents electronically, is significant. Moreover, the cap of $3.00 per document may provide an incentive to request documents where the price per page, without a cap, was previously financially burdensome.

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