foreign governments Archives | TAX CONTROVERSY 360

IRS roundup: December 12, 2025 – January 12, 2026

by Matthew J. Blaney and Suzanne Golshanara | Jan 13, 2026 | IRS Guidance, Penalties, Tax Reform

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for December 12, 2025 – January 12, 2026.

December 12, 2025: The IRS issued Treasury Decision 10042, which modified and clarified the Internal Revenue Code (Code) Section 892 rules. The Treasury Decision contains final regulations regarding the taxation of income earned by foreign governments from investments in the United States. The regulations clarify how to determine when a foreign government is engaged in commercial activity and when an entity qualifies as a controlled commercial entity. These rules apply to foreign governments that earn income from US sources.

December 12, 2025: The IRS issued proposed regulations, which provided additional guidance under Section 892 and focus on:

Determining when an acquisition of debt by a foreign government is treated as a commercial activity
Determining when a foreign government has effective control of an entity engaged in a commercial activity
Clarifying that partnerships, including partnerships wholly owned by a single foreign sovereign, are not controlled entities under Section 892 for US tax purposes.

December 15, 2025: The IRS issued proposed regulations, updating points of contact within the US Department of Justice (DOJ) and the IRS to identify points of contact for matters involving internal revenue laws following a reorganization within the DOJ. The regulations would also update points of contact at the IRS for taxpayers submitting administrative claims for civil damages related to certain unauthorized collection actions or awards of administrative costs in specified administrative proceedings.

December 15, 2025: The IRS withdrew two notices of proposed rulemaking regarding innocent spouse relief.

December 22, 2025: The IRS issued proposed updates, which set forth a clearer, more predictable system for its Voluntary Disclosure Practice and a more streamlined penalty framework. The IRS seeks public comment on the proposed updates by March 22, 2026.

December 29, 2025: The IRS released Internal Revenue Bulletin 2026-1, which includes the following:

Revenue Procedure 2026-1, which contains the revised procedures for letter rulings and information letters issued by the different associate chief counsel offices. This revenue procedure also contains the revised procedures for determination letters issued by the Large Business and International Division, the Small Business/Self-Employed Division, the Wage and Investment Division, and the Tax Exempt & Government Entities (TE/GE) Division.
Revenue Procedure 2026-2, which explains when and how associate chief counsel offices should provide advice in technical advice memoranda (TAM) as well as taxpayers’ rights when a field office requests a TAM.
Revenue Procedure 2026-3, which provides a revised list of Code areas under the jurisdiction of the following associate chief counsel offices:
- Corporate
- Financial Institutions and Products
- Income Tax and Accounting
- Passthroughs and Special Industries
- Procedure and Administration
- Energy, Credits, and Excise Tax
- Employee Benefits, Exempt Organizations, and Employment Taxes.

These relate to matters in which the IRS will not issue letter rulings [...]

Continue Reading

Weekly IRS Roundup January 17 – January 20, 2023

by McDermott Will & Emery | Jan 23, 2023 | 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 January 17, 2023 – January 20, 2023.

January 17, 2023: The IRS released Internal Revenue Bulletin 2023-3, which highlights the following:

Notice 2023-10: This notice provides that calendar year 2022 will be a transition period for purposes of implementing the $600 reporting threshold for third-party settlement organizations. As a result, third-party organizations will not be required to report tax year 2022 transactions on Form 1099-K to the IRS or the payee for the lower $600 threshold amount unless the amount exceeds $20,000 and the number of transactions exceeds 200.

Notice 2023-2: This notice provides interim guidance on the new 1% excise tax on a covered corporation’s repurchases of corporate stock under Section 4501. Section 4501 was added as part of the Inflation Reduction Act of 2022 (IRA). The notice provides an exclusive list of Section 317(b) redemption transactions that are treated as Section 317(b) redemption but are not repurchases, as well as an exclusive list of economically similar transactions. The notice applies to stock repurchases and issuances of stock made after December 31, 2022.

Announcement 2023-1: This announcement notifies taxpayers of the applicable reference standard that must be used to determine the amount of the energy-efficient commercial building property deduction allowed under Section 179D, as amended by the IRA. This announcement identifies the existing reference standard, affirms a new one and clarifies when the two reference standards will apply.

Notice 2023-1: This notice informs taxpayers that the IRS and the US Department of the Treasury (Treasury) intend to propose new clean vehicle credit regulations, addressing the definitions of certain terms in Section 30D.

Notice 2023-03: This notice provides the 2023 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. As of January 1, 2023, the standard mileage rates for the use of a car, van, pickup or panel truck are:
- 5 cents per mile driven for business use
- 22 cents per mile driven for medical or moving purposes for qualified active-duty members of the armed forces
- 14 cents per mile driven in service of charitable organizations

Notice 2023-7: This notice announces that the IRS and the Treasury plan to issue guidance on the new corporate alternative minimum tax (CAMT), which imposes a 15% minimum tax on the adjusted financial statement income of large corporations for taxable years beginning after December 31, 2022. It also clarifies which corporations the CAMT applies to and how the alternative minimum tax is calculated.

Notice 2023-9: This notice informs taxpayers that the Treasury and the IRS have reviewed the incremental cost for all street vehicles in calendar year 2023 and the analysis shows [...]

Continue Reading

The IRS Can Share Your Tax Information with Foreign Governments

by Kevin Spencer and McDermott Will & Schulte | Oct 28, 2022 | Appellate Courts, Court Procedure Matters, IRS Audits, IRS Guidance

The recent Zhang v. United States case, Docket No. 21-17093 (9th Cir. Oct. 18, 2022), serves as a reminder that the Internal Revenue Service (IRS) can force you to disclose and share your tax information with foreign governments. The taxpayers in Zhang appealed the decision from the US District Court for the Northern District of California denying their petition to quash an IRS summons for information. The summons was at the request of the Canadian tax authority pursuant to a bilateral tax treaty between the United States and Canada. The US Court of Appeals for the Ninth Circuit reaffirmed that the IRS can seek information for, and on behalf of, a foreign government as long as the request satisfies the accepted guidelines of requesting information in the United States—for example, the “good faith” requirement announced in United States v. Powell, 379 U.S. 48, 57-58 (1964).

So why do we highlight Zhang for you? In this ever-increasing world of tax information transparency, taxpayers need to be mindful of the ability of tax authorities to share information with each other and adjust their taxes accordingly. During a tax audit, it’s a strategic decision as to what tax information to share and what not to share with each tax authority. Telling different stories to different tax authorities could lead to more intrusive audits/scrutiny and higher overall tax bills and could even lead to criminal prosecution. Below are some basic principles to keep in mind:

There are three primary methods as to how countries share tax information with each other:
- Automatic Exchanges
- Spontaneous Exchanges
- Targeted Requests
Automatic exchanges are becoming increasingly used by countries (g., BEPS Action 5 and the Foreign Account Tax Compliance Act) because they are automatic and routine and usually associated with standardized financial/bank transactions.
A spontaneous exchange occurs when one country sees something of interest and alerts another country about a potential tax issue or as part of a joint audit by the countries.
- These exchanges are usually facilitated by provisions in bilateral tax treaties.
- The IRS’s Internal Revenue Manual (g., IRM 4.60.1.3) has detailed instructions for IRS employees on how to handle these treaty exchanges.
Targeted requests (like in Zhang) are typically initiated by one country that is a party to an information exchange treaty to seek information needed by that country in its tax investigation of its resident or citizen.
- In such a case where a foreign government makes a request of the US government through a treaty, the IRS Office of the Competent Authority on the US side handles the request. (See, e.g., IRM 4.60.1.2.2.4.)
- If the US taxpayer does not comply with the IRS request for information made by the foreign government (usually in the form of an “Information Document Request”), the IRS can use its administrative summons power to enforce the summons in court (which is what happened in Zhang).