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Weekly IRS Roundup November 14 – November 18, 2022

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of November 14, 2022 – November 18, 2022.

November 14, 2022: The IRS released Internal Revenue Bulletin 2022-46, which highlights the following:

  • Announcement 2022-21: The Office of Professional Responsibility announced recent disciplinary sanctions involving lawyers, certified public accountants, enrolled agents, enrolled actuaries, enrolled retirement plan agents and appraisers.

November 14, 2022: The IRS released Notice 2022-59, which provides the adjusted applicable dollar amount to be multiplied by the average number of covered lives for purposes of calculating the fee imposed by Sections 4375 and 4376 for policy years and plan years that end on or after October 1, 2022, and before October 1, 2023. The amount is $3.00, up from $2.79.

November 14, 2022: The IRS released Tax Tip 2022-174, which provides an overview of the Taxpayer Bill of Rights (TBOR). We have previously posted about TBOR.

November 15, 2022: The IRS released Tax Tip 2022-175, reminding people that Giving Tuesday is coming up and is a good time to review whether their charitable donation is tax deductible. Giving Tuesday is the Tuesday after Thanksgiving.

November 15, 2022: The IRS reminded taxpayers that IRS Free File will be closed after November 17. IRS Free File allows people with incomes of $73,000 or less to file a return online for free using brand name software.

November 15, 2022: The IRS Advisory Council issued its 2022 Public Report, which includes recommendations for new and continuing issues in tax administration. The report emphasized the need for “consistent and multi-year funding for the IRS to achieve its goals of providing efficient, effective, modern service to the nation’s taxpayers.” The 146-page report details recommendations for 21 issues, including:

  • IRS business and information technology modernization
  • Reduction in electronic filing threshold for information return filers
  • Alignment of electronic signature requirements on withholding certificates
  • Accelerated issuance of IRS Form 6166, Certification of US Residency
  • Series 8038 Form Redesign and Updates
  • Business Master File Transcript Delivery Service

November 15, 2022: The IRS issued Revenue Rule 2022-22, which provides the applicable federal rates for federal income tax purposes for December 2022. The short-term federal interest rate will increase to 4.55%, the mid-term rate will rise to 4.27% and the long-term rate will rise to 4.34%.

November 16, 2022: The IRS released Revenue Procedure 2022-39, which obsoletes Revenue Procedure 94-69, 1994-2 C.B. 804, and sets out the procedures for eligible taxpayers to file an amended return in accordance with Section 1.6664-2(c)(4)(ii) of the regulations. This revenue procedure also sets out the procedures for eligible taxpayers to avoid the Sections 6662(b)(1) and 6662(b)(2) accuracy related penalties to the extent that the taxpayers report errors resulting in additional tax or adequately discloses the tax treatment of an [...]

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Weekly IRS Roundup August 29 – September 2, 2022

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of August 29, 2022 – September 2, 2022.

August 29, 2022: The IRS released Internal Revenue Bulletin 2022-35, which highlights the following:

  • Revenue Ruling 2022-15: This revenue ruling provides interest rates for tax overpayments and underpayments for the fourth quarter, starting October 1, 2022. The new rates are as follows:
    • Individuals: 6% per year, compounded daily, for both overpayments and underpayments
    • Corporations: 5% for overpayments; 6% for underpayments
    • Corporate overpayments for the portion exceeding $10,000:5%
    • Large corporate underpayments: 8%
  • Revenue Ruling 2022-16: This revenue ruling provides the average annual effective interest rates on new loans under the Farm Credit System and also contains a list of the states within each Farm Credit System Bank territory.
  • Treasury Decision 9964: The IRS released final regulations, providing guidance to states wanting to inspect certain return information for the purpose of administering state laws related to tax-exempt organizations. The final regulations reflect changes to the Internal Revenue Code made by the Pension Protection Act of 2006.

August 29, 2022: The IRS announced that September is National Preparedness Month and urges everyone to develop or update their emergency plans, especially with hurricane season approaching and the ongoing threat of wildfires.

August 29, 2022: The IRS released Tax Tip 2022-132, highlighting the Security Summit’s summer series, Protect Your Client; Protect Yourself. Professionals from the IRS, state tax agencies and others in the tax industry joined forces for a five-week series focused on the fundamentals of data and information security.

August 30, 2022: The IRS released Tax Tip 2022-133, clarifying taxpayer obligations during a Chapter 13 bankruptcy.

August 31, 2022: The IRS announced that Edward Killen will become division commissioner of its Tax-Exempt and Government Entities (TE/GE) division, effective September 30, 2022. The current TE/GE Commissioner, Sunita Lough, is retiring. Chief Privacy Officer Robert Choi will replace Killen as deputy commissioner of TE/GE.

August 31, 2022: The IRS released COVID Tax Tip-134, reminding parents of refunds and tax credits they may be missing if they do not normally file a tax return.

August 31, 2022: The IRS asked for comments on Form 7205, which is used to claim deductions for energy-efficient commercial buildings. The IRS wants to standardize the procedures for claiming the deduction and invites comments by October 31, 2022.

September 1, 2022: The IRS released Tax Tip 2022-135, providing suggestions to tax professionals on ways to protect clients from identity theft.

September 2, 2022: The IRS issued a statement acknowledging that it released confidential information from Form 990-Ts, which should not have been made public. Form 990-T is a business tax return used by tax-exempt entities to report and pay income [...]

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An Update on Section 6751 Penalties

Tax penalties are always a hot topic here. The Internal Revenue Service (IRS) has a large arsenal when it comes to grounds for asserting penalties on income tax deficiencies, ranging from the common 20% penalty under Internal Revenue Code (Code) Section 6662(a) to higher penalties ranging from 40% (gross valuation or basis misstatements and economic substance) to 75% (fraud).

However, before the IRS can assert most penalties against taxpayers, it must comply with the procedural requirement in Code Section 6751(b): That the “initial determination” to assert the penalty be “personally approved (in writing) by the immediate supervisor of the individual making such determination.” As the US Court of Appeals for the Second Circuit explained in Chai v. Commissioner, US Congress imposed this requirement because it “believes that penalties should only be imposed where appropriate and not as a bargaining chip” and “[t]he statute was meant to prevent IRS agents from threatening unjustified penalties to encourage taxpayers to settle.”

Over the past several years, there has been substantial litigation over the proper interpretation and application of Code Section 6751(b). The US Tax Court’s recent opinion in Oxbow Bend, LLC v. Commissioner is the latest development. In Oxbow Bend, the Tax Court rejected the taxpayer’s position that the “initial determination” was made on the date that the examining agent prepared a penalty lead sheet reflecting her recommendation to assert penalties and stated in a telephone conference with the taxpayer’s representative on that same day that penalties were being considered. Approximately three months later, the examining agent’s supervisor approved the penalty lead sheet, and the IRS issued a Notice of Final Partnership Administrative Adjustment asserting the penalties. The Tax Court, relying on its prior precedent, held that the word “determination”:

  1. “has an established meaning in the tax context and denotes a communication with a high degree of concreteness and formality”
  2. “signifies a consequential moment of IRS action”
  3. is not a “mere suggestion, proposal, or initial informal mention of penalties”
  4. “will be embodied in a formal written communication that notifies the taxpayer of the decision to assert penalties.”

Thus, under the Tax Court’s analysis, an “initial determination” can only be made in a “written” document that is provided to the taxpayer.

Oxbow Bend is a memorandum opinion of the Tax Court and, therefore, is limited to its facts and technically not precedential, as we have discussed in the past. However, memorandum opinions are often cited by litigants, and the Tax Court does not disregard these types of opinions lightly. One has to wonder whether, under different facts where an examining agent makes an explicit oral statement to a taxpayer that penalties “will” be asserted, courts might reach a different result given Congress’s express intent that examining agents should not threaten penalties and use them as a bargaining chip for settlement purposes. Further, Code Section 6751(b) expressly requires that the supervisory approval be “in writing” but contains a written requirement for purposes of the [...]

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Weekly IRS Roundup October 25 – October 29, 2021

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of October 25, 2021 – October 29, 2021. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

October 25, 2021: The IRS released a memorandum implementing the Large Partnership Compliance (LPC) Pilot Program, including the identification, selection and delivery of large partnership tax returns, exam procedures and feedback.

October 25, 2021: The IRS released a memorandum providing emergency guidance on emails with personal accounts in exigent circumstances to IRS employees responsible for protecting sensitive but unclassified data, including tax information and personally identifiable information.

October 26, 2021: The IRS and US Department of the Treasury (Treasury) published a notice and request for comments concerning the foreign tax credit used by individuals, estates or trusts. Comments are requested on Form 1116, Foreign Tax Credit (Individual, Estate or Trust), and Schedules B and C, which are used by individuals (including nonresident aliens), estates or trusts who paid foreign income taxes on US taxable income to compute the foreign tax credit. Written comments are due on or before December 27, 2021.

October 26, 2021: The IRS published a practice unit examining education expenses claimed by Nonresident Alien Individual (NRA) employees. The unit focuses on examining the education expenses claimed by NRAs engaged in a US trade or business as employees and discusses the issues and audit steps that examiners will need to consider for these taxpayers.

October 27, 2021: The IRS published a new release announcing that victims of Hurricane Ida in parts of Mississippi now have additional time—until January 3, 2022—to file various individual and business tax returns and make tax payments. The deadline remains November 1, 2021, for affected taxpayers in other parts of Mississippi.

October 28, 2021: The IRS and Treasury published a notice and request for comments concerning Form 3468 (Investment Credit). The form is used to compute taxpayers’ credit against their income tax for certain expenses incurred for their trades or businesses. Written comments are due on or before December 27, 2021.

October 29, 2021: The IRS and Treasury published a notice and request for comments concerning Form SS-4 (Application for Employer Identification Number). The form is used by taxpayers who are required to have an identification number for use on any return, statement or other document to obtain such number. Written comments are due on or before December 28, 2021.

October 29, 2021: The IRS and Treasury published a notice and request for comments concerning rules relating to the manner and method of reporting and paying the nondeductible 50% excise tax imposed by Section 5881 with respect to the receipt of greenmail. Written comments are due on or before December 28, 2021.

October 29, 2021: The IRS released a memorandum [...]

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Weekly IRS Roundup September 27 – October 1, 2021

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 27, 2021 – October 1, 2021. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

September 28, 2021: The IRS released a revenue procedure, adding Chile to the list of jurisdictions with which the United States has a relevant information exchange agreement in effect for reporting payments of deposit interest. The IRS also added two countries—the Dominican Republic and Singapore—to the list of jurisdictions with which the US Department of the Treasury (Treasury) and the IRS have determined it is appropriate to have an automatic exchange relationship with.

September 29, 2021: The IRS released draft instructions for supplemental income and loss (Schedule E of Form 1040) concerning the reporting of income or loss from rental real estate, royalties, partnerships, S corporations, estates, trusts and residual interests in real estate mortgage investment conduits (REMICs).

October 1, 2021: The Treasury and the IRS published corrections to final regulations (Treasury Decision 9922) that were published in the Federal Register on November 12, 2020. Treasury Decision 9922 provided 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, the application of the foreign tax credit limitation to consolidated groups, adjustments to hybrid deduction accounts to consider regarding certain inclusions in income by a US shareholder, conduit financing arrangements involving hybrid instruments and the treatment of certain payments under the global intangible low-taxed income provisions.

October 1, 2021: The Treasury and the IRS published a notice and request for comments concerning all forms used by tax-exempt organizations to determine that such organizations fulfill the operating conditions within the limitations of their tax exemption. The IRS provided a list of the relevant forms. Written comments are due on or before November 30, 2021.

October 1, 2021: The Treasury and the IRS published a notice and request for comments concerning the burden associated with US income tax return forms for individual taxpayers. The request covers Form 1040 and affiliated return forms that are used by individuals to report their income subject to tax and compute their correct tax liability. Written comments are due on or before December 3, 2021.

October 1, 2021: The IRS published a news release reminding US citizens, resident aliens and any domestic legal entity that the extension deadline to file their annual Report of Foreign Bank and Financial Accounts (FBAR) is October 15, 2021.

October 1, 2021: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

Special thanks to Robbie Alipour in our Chicago office for this week’s roundup.




Weekly IRS Roundup August 9 – August 13, 2021

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of August 9, 2021 – August 13, 2021. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

August 10, 2021: The IRS issued Revenue Procedure 2021-33 and an accompanying news release, providing a safe harbor pursuant to which employers are permitted to exclude certain amounts from gross receipts for purposes of determining Employee Retention Credit eligibility.

August 10, 2021: The IRS issued Notice 2021-43 and an accompanying news release, providing relief for employers to claim the Work Opportunity Tax Credit under Section 51 of the Code with respect to employees who began work after December 31, 2020. This latest update is in response to the extension of the associated Empowerment Zone designations through December 31, 2025, and pursuant to the Taxpayer Certainty and Disaster Tax Relief Act of 2020.

August 10, 2021: The IRS issued a news release as part of a Security Summit series in partnership with state tax agencies and the tax industry, advising tax professionals to guard against pandemic-related phishing scams.

August 11, 2021: The IRS issued Revenue Procedure 2021-34, updating and modifying procedures for taxpayers to obtain automatic consent for certain income tax accounting method changes made to comply with Section 451 of the Code, as amended by the Tax Cuts and Jobs Act (TCJA).

August 11, 2021: The IRS issued Revenue Procedure 2021-35, modifying procedures for the safe harbor method of accounting for original issue discounts on a pool of credit card receivables in response to changes made to Section 451 by the TCJA.

August 13, 2021: The IRS issued Announcement 2021-13, announcing that the United States and United Kingdom have entered into an arrangement providing that references to the North American Free Trade Agreement (NAFTA) in the US-UK income tax treaty are to be interpreted as references to the United States-Mexico-Canada Agreement (USMCA) upon the USMCA’s entry into force.

August 13, 2021: The IRS issued Announcement 2021-14, announcing that the United States and United Kingdom have entered into an arrangement providing that, notwithstanding the United Kingdom’s withdrawal from the European Union, UK residents will continue to be treated as “equivalent beneficiaries” for purposes of applying the derivative benefits test to trusts under the Limitation on Benefits provision of the US-UK income tax treaty.

August 13, 2021: The IRS issued a news release announcing the disbursement of the August round of advance payments of the Child Tax Credit, consisting of approximately 36 million payments worth approximately $15 billion.

August 13, 2021: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

Special thanks to Le Chen in our Washington, DC, office for this [...]

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Weekly IRS Roundup May 17 – May 21, 2021

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of May 17, 2021 – May 21, 2021. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

May 17, 2021: The IRS issued Revenue Ruling 2021-9, providing various prescribed interest rates for federal income tax purposes for June 2021.

May 17, 2021: The IRS issued Revenue Procedure 2021-24, providing procedures for individuals who are not required to file federal income tax returns to receive advance Child Tax Credit payments and third-round Economic Impact Payments under the American Rescue Plan Act of 2021 (ARPA), as well as 2020 recovery rebate credits under earlier coronavirus-related legislation.

May 17, 2021: The IRS issued a news release, reminding taxpayers that May 17 is the filing deadline for most individual income tax returns and summarizing various e-filing and extension options.

May 17, 2021: The IRS issued a news release, announcing that the first monthly payments under the Child Tax Credit, as expanded by ARPA, will be made to eligible families on July 15, 2021.

May 18, 2021: The IRS issued Notice 2021-31 and an accompanying news release, providing guidance on the temporary premium assistance for Consolidated Omnibus Budget Reconciliation Act (COBRA) health insurance benefits, and the associated COBRA premium assistance credit, enacted by ARPA.

May 19, 2021: The IRS issued Notice 2021-33, providing the monthly update to certain interest rates used for pension plan funding and distribution purposes.

May 19, 2021: The IRS issued a news release, summarizing various tax benefits available to individuals experiencing homelessness, the rural poor and other underserved groups and urging employers and community groups to spread information about such benefits and assist such individuals in filing 2020 tax returns.

May 20, 2021: The IRS issued a news release, urging taxpayers who missed the recent May 17 tax-filing deadline to file their tax returns as soon as possible to obtain refunds or limit penalties and interest.

May 21, 2021: The IRS issued Notice 2021-32, providing the 2021 inflation adjustment factors and reference prices for the renewable electricity production credit, refined coal production credit and Indian coal production credit under section 45 of the Code.

May 21, 2021: The IRS issued an Action on Decision, announcing that it would not acquiesce to Machacek v. Comm’r, 906 F.3d 429 (6th Cir. 2018), which held that the economic benefits of a compensatory split-dollar life insurance arrangement may be treated as a distribution under section 301 of the Code.

May 21, 2021: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

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




Weekly IRS Roundup March 29 – April 2, 2021

Presented below is our summary of significant Internal Revenue Serve (IRS) guidance and relevant tax matters for the week of March 29, 2021 – April 2, 2021. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

March 29, 2021: The IRS issued Notice 2021-21 and an accompanying news release, extending certain individual income tax deadlines to May 17, 2021, including the deadline for making contributions to individual retirement accounts (IRAs) and health savings accounts (HSAs) and the deadline for claiming refunds.

March 30, 2021: The IRS issued corrections to final regulations published on January 15, 2021, regarding credits for carbon capture equipment under section 45Q of the Code.

March 30, 2021: The IRS released Announcement 2021-6, providing a report on advance pricing agreements for calendar year 2020 under the Advance Pricing and Mutual Agreement Program.

March 30, 2021: The IRS issued a news release warning students and staff of educational institutions of an IRS-impersonation phishing scam.

March 30, 2021: The IRS issued a news release announcing that it anticipates Economic Impact Payments will begin to be issued to Social Security recipients and other individuals who do not normally file tax returns starting the weekend of April 3.

March 30, 2021: The IRS issued a news release providing answers to frequently asked questions regarding the reporting of pandemic-related emergency financial aid grants by students and higher education institutions.

March 31, 2021: The IRS issued a news release announcing that it will take steps to provide automatic refunds to taxpayers who filed tax returns reporting unemployment compensation prior to changes made by the American Rescue Plan Act of 2021 (ARPA).

April 1, 2021: The IRS issued a news release announcing a third round of Economic Impact Payments consisting of four million payments totaling over $10 billion, bringing the total amount of disbursements under ARPA to more than 130 million payments worth approximately $335 billion.

April 2, 2021: The IRS issued Notice 2021-23 and an accompanying news release, providing guidance on the changes made by the Taxpayer Certainty and Disaster Tax Relief Act of 2020 on the employee retention credit under the Coronavirus Aid, Relief and Economic Security (CARES) Act.

April 2, 2021: The IRS issued a news release soliciting civic-minded volunteers to serve on the Taxpayer Advocacy Panel, a federal advisory committee for identifying taxpayer concerns and making recommendations for improving IRS service and customer satisfaction.

April 2, 2021: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

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




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