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Weekly IRS Roundup March 11 – March 15, 2024

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of March 11, 2024 – March 15, 2024.

March 11, 2024: In Internal Revenue Bulletin 2024-11, the IRS released Announcement 2024-10, which provides that replacement of lead service lines by government entities does not result in income for taxpayers.

March 11, 2024: The IRS highlighted seven suspicious signs that an Employee Retention Credit (ERC) claim is incorrect and urged businesses to seek a trusted tax professional to resolve an incorrect claim while they still can without penalties or interest. Fraudulent ERC claims have been added to the IRS’s “Dirty Dozen” list.

March 12, 2024: The IRS announced the full-scale launch of the Direct File pilot and encouraged eligible taxpayers in  Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Wyoming, Arizona, California, Massachusetts, New York and Washington to file their tax returns online for free directly with the IRS using the new service.

March 13, 2024: The IRS announced that, effective April 1, Guy Ficco will become the new IRS Criminal Investigation Chief.

March 13, 2024: The IRS announced that the Joint Board for the Enrollment of Actuaries is retroactively extending the temporary waiver of its physical presence requirement for continuing professional education programs and is proposing regulations to eliminate the in-person requirement altogether.

March 13, 2024: The IRS reminded auto dealers and sellers that to submit time-of-sale reports and receive advance payments of the clean vehicle tax credit they must register their business with IRS Energy Credits Online.

March 14, 2024: The IRS reminded taxpayers who struggle to gather the necessary documents they need to file or pay the taxes they owe to consider several options offered on IRS.gov to avoid late filing and interest penalties. These include, among other things, requesting an extension to file tax returns and requesting a payment plan online.

March 14, 2024: The IRS reminded businesses that file 10 or more information returns that they must e-file Form 8300, Report of Cash Payments Over $10,000, instead of filing a paper return.

March 15, 2024: The IRS reminded businesses to review the ERC guidelines and consider the ERC Voluntary Disclosure Program or the claim withdrawal process to avoid penalties and interest. The deadline to apply for the ERC Voluntary Disclosure Program is March 2022.

March 15, 2024: The IRS reminded individuals and businesses that it is increasing the amount of information available in multiple languages. Much of the information on the IRS website has now been translated into seven different languages other than English. The IRS website’s Languages page includes an overview of key topics related to information about federal taxes in 21 languages.

March 15, 2024: The IRS released
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IRS (Belatedly) Strikes Back Against FedEx in Ongoing Foreign Tax Credit Case

FedEx Corporation, previously the victor in a closely watched dispute regarding the government’s regulatory attempt to prevent taxpayers from claiming foreign tax credits on offset earnings (131 AFTR 2d 2023-1284 (W.D. Tenn. 2023)), recently filed a motion for judgment in the US District Court for the Western District of Tennessee to confirm its resulting refund amount. FedEx says it filed the motion because the government ended negotiations for a joint proposal of judgment, told FedEx to file a motion and said it would oppose the motion based on a new argument that would reduce FedEx’s refund amount. The government did not provide a written description of its new argument, so FedEx forged ahead with what it could gather based on conversations with the government and filed its motion on March 8, 2024.

According to FedEx, the government’s new argument appears to rest on a different regulation (Treasury Regulation Section 1.965-5(c)(1)(i)), which limits foreign tax credits by withholding taxes paid to a foreign jurisdiction. This is known as the “Haircut Rule.” FedEx provides several reasons why the government’s argument based on the Haircut Rule should be rejected, including that the rule cannot apply where a taxpayer did not claim foreign tax credits based on withholding taxes, that the rule itself is procedurally deficient under the Administrative Procedure Act and that the government is simply too late in presenting the argument.

Practice Point: Given the late stage of the litigation, the government will likely face headwinds to get the court to consider its argument of whether the Haircut Rule applies. It is unclear from the motion how transparent the government was with the court while the parties attempted to reach a mutually agreeable refund computation. However, it appears fairly clear that the government could have argued the Haircut Rule as an alternative to its main position throughout the course of the 2023 briefing before the court. As with any argument newly conceived in the heat of litigation, parties should carefully consider the consequences of waiting to bring the argument to the court’s attention (with one of those consequences being that such new argument is rejected for dilatoriness).




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Weekly IRS Roundup March 4 – March 8, 2024

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of March 4, 2024 – March 8, 2024.

March 4, 2024: The IRS released Internal Revenue Bulletin 2024-10, which includes the following:

  • Revenue Ruling 2024-6, which provides that the overpayment interest rate under § 6621 of the Internal Revenue Code (Code) for the calendar quarter beginning April 1, 2024, will be 8% (7% in the case of a corporation), the underpayment interest rate will be 8% and the interest rate for large corporate underpayments will be 10%. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 will be 5.5%.
  • Notice 2024-24, which provides updates on the corporate bond monthly yield curve and corresponding spot segment rates for January 2024 used under Code § 417(e)(3)(D), the 24-month average segment rates applicable for February 2024, and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv).
  • Announcement 2024-13, which revokes § 501(c)(3) determinations for certain organization(s) and stipulates that contributions made to the organization(s) by individual donors are no longer deductible under § 170(b)(1)(A).
  • Revenue Ruling 2024-04, which provides the March 2024 applicable federal rates.

March 4, 2024: The IRS announced that registration for its 2024 Nationwide Tax Forum is now open, providing tax professionals the opportunity to attend special continuing education sessions in five cities across the nation.

March 4, 2024: The IRS reminded taxpayers that the legal deadline for claiming the Recovery Rebate Credit in 2020 is May 17, 2024. The deadline for claiming the Recovery Rebate Credit in 2021 will be April 15, 2025.

March 5, 2024: The IRS issued final regulations, providing that certain tax-exempt organizations and political entities that earn certain clean energy credits can choose to make an elective payment election. Such an election results in the credits being treated as payments against the electing entity’s federal income tax liabilities with the IRS refunding any excess value. Notice 2024-27, in turn, requests additional comments on situations in which an elective payment election should be permitted with respect to credits purchased in a transfer for which an election under § 6418(a) is made.

March 6, 2024: The IRS reminded taxpayers that they are generally required to report all earned income on their tax returns, including income earned from digital asset transactions, the gig economy and the service industry as well as income from foreign sources.

March 6, 2024: The IRS released a statement acknowledging concerns related to a proposed policy change from January 2 that would limit access to tax return information from the IRS to protect taxpayer confidentiality. In response to comments, the IRS has suspended any changes under the proposed policy.

March 6, 2024: The IRS announced that Margie Rollinson took the oath [...]

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Weekly IRS Roundup February 26 – March 1, 2024

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of February 26, 2024 – March 1, 2024.

February 26, 2024: The IRS released Internal Revenue Bulletin 2024-9, which includes the following:

  • Announcement 2024-11, which shares recent disciplinary sanctions involving lawyers, certified public accountants, enrolled agents, enrolled actuaries, enrolled retirement plan agents and appraisers.
  • Revenue Procedure 2024-12, which extends the time for providing certain seller reports for vehicle sales that qualify for the clean vehicle credit or the previously owned clean vehicle credit under Internal Revenue Code (Code) §§ 30D and 25E, respectfully.
  • Revenue Procedure 2024-13, which provides two tables of limitations on depreciation deductions for owners of passenger automobiles placed in service during calendar year 2024 and a table of dollar amounts that must be used to determine income inclusions by passenger automobile lessees with a lease term beginning in calendar year 2024.
  • Revenue Procedure 2024-14, which provides indexing adjustments for applicable dollar amounts under Code § 4980H(c)(1) and (b)(1). These indexed amounts are used to calculate the employer shared responsibility payments under § 4980H(a) and (b)(1), respectively.

February 26, 2024: The IRS announced that it will accept supplemental applications from all qualified organizations for Low Income Taxpayer Clinic matching grants from February 26 to April 10.

February 26, 2024: The IRS provided businesses, tax professionals and others who want to learn more about resolving incorrect Employee Retention Credit (ERC) claims a free webinar about the ERC Voluntary Disclosure Program and other IRS efforts to help taxpayers who may have been misled by aggressive marketing and misinformation around ERC eligibility.

February 27, 2024: The IRS announced that individuals and businesses in parts of California affected by severe storms and flooding that began on January 21, 2024, now have until June 17, 2024, to file various federal individual and business tax returns and make tax payments.

February 27, 2024: The IRS announced that two private sector experts with extensive experience in the tax and cryptocurrency industries have been hired as executive advisors to help the agency’s efforts within the digital assets space.

February 27, 2024: The IRS released Notice 2024-26, which provides that withholding agents (both US and foreign persons) are administratively exempt from the requirements to electronically file Forms 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, that are required to be filed in calendar year 2024. Additionally, withholding agents that are foreign persons are administratively exempt from the requirements to electronically file Forms 1042 that are required to be filed in calendar year 2025.

February 28, 2024: The IRS reminded taxpayers that recent improvements to Where’s My Refund? provide more information and remains the best way to check the status of a refund, including information regarding IRS confirmation [...]

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IRS Announces New Audit Initiative Focused on Jet Airplane Usage

On February 21, 2024, the Internal Revenue Service (IRS) announced a new initiative to audit the use of airplanes by corporations, large partnerships and high-net-worth individuals. While the IRS has always examined plane usage, this new focus aligns with recent IRS messaging that corporations and high-income taxpayers are not paying their “fair share” of tax and have been subject to “historically low audit rates.” The IRS will use some of its Inflation Reduction Act of 2022 funding to step up its enforcement efforts in this area.

Indeed, the IRS has been keeping score and publicly sharing their successes in collecting tax from millionaire taxpayers. We have also previously reported on the IRS’s strengthened enforcement plans thanks to its newfound funding.

The IRS’s airplane usage audit initiative will focus on allocations between business and personal use, which highlights several potential tax issues, including:

  • Limitations on deductions per Internal Revenue Code Section 274
  • Limitations on deprecation and recapture under Internal Revenue Code Section 280F
  • Whether the value of a flight is income to the passenger and/or guests (See Reg. §1.61-21).

Practice Point: If you have an airplane and claimed tax deductions for its use and ownership, you should prepare for an IRS examination. What can you do now? First and foremost, you should maintain meticulous records that fully substantiate the business use of the plane. For example, adding more detail about what the plane was used for, how it was used, and tying its use to a business purpose will be key to winning over an IRS auditor. Second, make sure the maintenance and flight log records are up to date and correct. Also, although not directly related to the recently announced IRS’s audit initiative, do not forget to ensure compliance with Federal Aviation Administration regulations and sales tax, use tax, and federal excise tax considerations, particularly if you decide to reorganize the ownership or organizational structure of an entity that owns an aircraft.




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Weekly IRS Roundup February 19 – February 23, 2024

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of February 19, 2024 – February 23, 2024.

February 20, 2024: The IRS published Announcement 2024-12, which revokes tax-exempt status for the Chicago Cannabis Alliance and Keeping My Kids Inc.

February 20, 2024: The IRS reminded farmers and fishers who chose to forgo making estimated tax payments by January that they must generally file their 2023 federal income tax return and pay all taxes by March 1, 2024, to avoid estimated tax penalties.

February 20, 2024: The IRS reminded businesses to review their Employee Retention Credit eligibility because there’s limited time to voluntarily resolve incorrect claims and avoid issues, such as penalties and interest.

February 21, 2024: The IRS announced plans to begin dozens of audits on business aircraft involving personal use, focusing specifically on aircraft usage by large corporations, large partnerships and high-income taxpayers.

February 21, 2024: The IRS announced that interest rates for overpayments and underpayments will remain the same for the calendar quarter beginning April 1, 2024. Interest rates are provided in Revenue Ruling 2024-6.

February 21, 2024: The IRS reminded military personnel that they have several options to file their federal tax returns for free, including the US Department of Defense’s MilTax and the IRS Free File program.

February 21, 2024: The IRS announced the beginning of its 2024 Tax Time Guide series, which provides new and updated resources to help taxpayers file an accurate tax return.

February 22, 2024: The IRS warned tax professionals about a recurring scheme in which scammers pose as tax software providers and email tax professionals with requests to provide Electronic Filing Identification Number information via fax.

February 22, 2024: The IRS announced that applications for the 2025 Taxpayer Advocacy Panel (TAP) are now being accepted to fill vacancies in 29 states and territories. TAP submits recommendations to the IRS to help improve satisfaction with IRS services, products and procedures.

February 23, 2024: The IRS announced that the replacement of lead service lines under various governmental programs do not result in income to the residential property owners under Internal Revenue Code § 61.

February 23, 2024: The IRS issued frequently asked questions related to the US Department of Agriculture’s (USDA) Discrimination Financial Assistance Program, which provides financial assistance to farmers, ranchers and forest landowners who experienced discrimination by the USDA in farm lending prior to 2021.

February 23, 2024: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).




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Weekly IRS Roundup February 12 – February 16, 2024

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of February 12, 2024 – February 16, 2024.

February 12, 2024: The IRS released Internal Revenue Bulletin 2024-7, which includes the following:

  • Revenue Ruling 2024-5, which provides that if one or more of a state’s allocations of housing credit dollar amounts under § 305 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 to qualified disaster zones in 2021 or 2022 are returned after 2022, then the returned housing credit dollar amounts are not restricted to projects located in qualified disaster zones.
  • Announcement 2024-7, which corrects Revenue Procedure 2024-5 by providing initially omitted effective dates for changes to the user fees that apply to certain requests for advance approvals.
  • Announcement 2024-8, which revokes tax-exempt status for the Altruistic United Humanity Association.
  • Announcement 2024-9, which revokes tax-exempt status for the West Los Angeles Obedience Training Club Inc.
  • Notice 2024-20, which advises that forthcoming proposed regulations will set forth (i) requirements for qualifying as an eligible census tract for purposes of the alternative fuel vehicle refueling property credit under § 30C of the Internal Revenue Code (Code) and (ii) guidance as to how taxpayers can verify that property satisfies the geographic requirements of Code § 30C.
  • Notice 2024-23, which provides special relief under Code § 529 for certain rollovers to or from Maryland Prepaid College Trust (MPCT) accounts. Due to accounting discrepancies and administrative issues, access to MPCT interest earnings was frozen in April 2022 and restored July 2023. Due to the freeze, many taxpayers executed a qualified rollover out of MPCT accounts. Notice 2024-23 permits taxpayers to transfer funds back into an MPCT account in a qualified rollover even though the transfer of funds out of the MPCT account may have occurred within the past 12 months.

February 12, 2024: The IRS announced that Jim Lee, chief of IRS Criminal Investigation, will retire effective April 6, 2024.

February 12, 2024: The IRS issued Revenue Procedure 2024-14, which provides indexing adjustments for applicable dollar amounts used to calculate the employer shared responsibility payments under § 4980H(a) and (b)(1) of the Code.

February 12, 2024: The IRS reminded senior taxpayers of free tax filing options, including the programs Tax Counseling for the Elderly, Volunteer Income Tax Assistance and IRS Free File.

February 13, 2024: The IRS highlighted seven suspicious signs that an Employee Retention Credit claim may be questionable and could signal future IRS problems to help small businesses that may need to resolve incorrect claims.

February 13, 2024: The IRS alerted tax professionals to watch out for a “new client” scam, which is an email scheme (in which cybercriminals pose as potential clients) that peaks during the busy tax filing season.

[...]

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Weekly IRS Roundup February 5 – February 9, 2024

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of February 5, 2024 – February 9, 2024.

February 5, 2024: The IRS released Internal Revenue Bulletin 2024-5, which includes the following:

  • Announcement 2024-4, which clarifies that until the IRS issues new final regulations under Internal Revenue Code (Code) Section 6050I implementing the Infrastructure Investment and Jobs Act, at this time, digital assets are not required to be included when determining whether cash received in a single transaction (or two or more related transactions) has a value exceeding the $10,000 reporting threshold.
  • Notice 2024-21, which provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under Section 417(e)(3), and the 24-month average segment rates under Code Section 430(h)(2).
  • Notice 2024-22, which provides initial guidance on the anti-abuse rules under Code Section 402A(e)(12) to assist in the implementation of the SECURE 2.0 Act of 2022’s Section 127 provisions.
  • Final regulations, which provide guidance on changes made by the Pension Protection Act of 2006 to the prescribed interest rate and mortality table and other guidance, including rules for the treatment of preretirement mortality discounts and Social Security-level income options.
  • Revenue Ruling 2024-3, which provides the February 2024 applicable federal rates.

February 5, 2024: The IRS announced that individuals and businesses in parts of Maine affected by severe storms and flooding that began on December 17, 2023, now have until June 17, 2024, to file various federal individual and business tax returns and make tax payments.

February 6, 2024: The IRS revised frequently asked questions for Form 1099-K, Payment Card and Third Party Network Transactions, providing more general information for taxpayers, including common situations, along with clarity as to which organizations should submit Forms 1099-K.

February 6, 2024: The IRS issued Revenue Procedure 2024-13, which provides two tables of limitations on depreciation deductions for owners of passenger automobiles placed in service during calendar year 2024 and a table of dollar amounts that must be used to determine income inclusions by lessees of passenger automobiles with a lease term beginning in calendar year 2024.

February 6, 2024: The IRS reminded taxpayers that through new elective payment and transfer options, applicable businesses; tax-exempt organizations; or entities such as state, local, and tribal governments can take advantage of certain tax credits and apply these options to certain clean energy and manufacturing credits. Eligible taxpayers can register using the IRA/CHIPS Pre-Filing Registration Tool.

February 7, 2024: The IRS issued Revenue Procedure 2024-12, which offers a temporary extension for providing certain seller reports under Code Sections 25E and 30D.

February 7, 2024: The IRS launched a new page on IRS.gov that explains the Employer-Provided Childcare Credit, which offers employers a tax credit of up [...]

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Weekly IRS Roundup January 22 – January 26, 2024

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of January 22, 2024 – January 26, 2024.

January 22, 2024: The IRS released Internal Revenue Bulletin 2024-4, which includes Revenue Procedure 2024-8. This revenue procedure lists qualified census tracts used to determine income limits for targeted area residences for purposes of Internal Revenue Code (Code) § 143(a), dealing with qualified mortgage bonds, and Code § 25(c), dealing with mortgage credit certificates.

January 22, 2024: The IRS announced that individuals and businesses in parts of Connecticut affected by severe storms, flooding and a potential dam breach that began on January 10 now have until June 17, 2024, to file various federal individual and business tax returns and make tax payments.

January 22, 2024: The IRS reminded taxpayers that they must disclose whether they received or disposed of digital assets, such as cryptocurrency, on their 2023 personal income tax returns.

January 22, 2024: The IRS announced that IRS Free File is now available for the 2024 filing season. IRS Free File is generally available to taxpayers with adjusted gross income of $79,000 or less. Additional information can be accessed here.

January 23, 2024: The IRS announced that work is underway on the Simple Notice Initiative, which will review and redesign various IRS notices. The IRS intends to focus first on the notices that are most commonly sent to individual taxpayers.

January 23, 2024: The IRS published a Request for Information from the US Department of the Treasury, Employee Benefits Security Administration, US Department of Labor, and Pension Benefit Guaranty Corporation following the directive provided under the SECURE 2.0 Act of 2022 to review the existing reporting and disclosure requirements for retirement plans. Comments are due by April 22, 2024, and each agency will be required to report to US Congress on December 29, 2025. Reports will offer recommendations for simplifying, standardizing and improving reporting and disclosure requirements.

January 25, 2024: The IRS issued Notice 2024-23, which provides special relief under Code § 529 for certain rollovers to or from Maryland Prepaid College Trust (MPCT) accounts. Due to accounting discrepancies and administrative issues, access to MPCT interest earnings was frozen in April 2022 and restored in July 2023. As a result of the freeze, many taxpayers executed a qualified rollover out of MPCT accounts. Notice 2024-23 permits taxpayers to transfer funds back into an MPCT account in a qualified rollover even though the transfer of funds out of the MPCT account may have occurred within 12 months of the transfer back into an MPCT account.

January 26, 2024: In the spirit of the IRS’s annual Earned Income Tax Credit Awareness Day outreach campaign, the IRS posted information on the Earned Income Tax Credit to help educate low- to middle-income taxpayers who may be eligible to [...]

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Weekly IRS Roundup January 15 – January 19, 2024

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of January 15, 2024 – January 19, 2024.

January 16, 2024: The IRS released Internal Revenue Bulletin 2024-3, which includes the following:

  • Notice 2024-10, which provides guidance on the corporate alternative minimum tax, including rules for determining the “adjusted financial statement income” of a US shareholder when a controlled foreign corporation pays a dividend and modifications to Notice 2023-64.
  • Proposed regulations, which provide guidance on the new Internal Revenue Code (Code) Section 45X advanced manufacturing production credit established by the Inflation Reduction Act of 2022 (IRA). This credit is intended to incentivize domestic production of certain green energy components.
  • Final regulations regarding penalty protections for de minimis errors on information returns and payee statements.

January 16, 2024: The IRS released transitional guidance under Code Section 60501 on reporting transactions involving the receipt of digital assets and clarified that at this time, digital assets are not required to be included when determining whether cash received in a single transaction (or two or more related transactions) meets the reporting threshold.

January 16, 2024: The IRS issued Revenue Ruling 2024-3, which provides the February 2024 applicable federal rates.

January 16, 2024: The IRS reminded taxpayers of their rights under the Taxpayer Bill of Rights, which includes 10 rights all taxpayers have any time they interact with the IRS. Those rights include privacy, confidentiality and the right to appeal an IRS decision in an independent forum.

January 17, 2024: The IRS announced the appointment of 12 new members to the Internal Revenue Service Advisory Council, a public forum that provides the IRS and agency leaders with feedback, observations and recommendations related to tax administration.

January 18, 2024: The IRS reached a major milestone in the implementation of key provisions in the IRA as more than 1,000 projects have now been registered through the new IRS Energy Credits Online tool.

January 18, 2024: The IRS alerted a limited group of tax-exempt organizations subject to unrelated business income tax that they will not be able to electronically file Form 990-T, Exempt Organization Business Income Tax Return, or Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations, until March 17, 2024.

January 19, 2024: The IRS issued Notice 2024-20, which provides guidance on the qualified alternative fuel vehicle refueling property credit under Code Section 30C. The IRS intends to issue additional guidance via proposed regulations.

January 19, 2024: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).




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