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Weekly IRS Roundup October 10 – October 14, 2022

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of October 10, 2022 – October 14, 2022. 

October 11, 2022: The IRS released Internal Revenue Bulletin 2022-41, which highlights the following:

  • Notice 2022-42: This notice announces that the IRS and the US Department of the Treasury (Treasury) intend to amend the regulations under Section 901 with respect to the application of the noncompulsory payment regulations to certain amended Puerto Rico tax decrees.
  • Notice 2022-44: This notice provides annual awareness of the 2022-2023 special per diem rates for taxpayers to use when substantiating the amount of business expenses incurred while traveling away from home. The guidance addresses (1) the special transportation industry meal and incidental expenses rates, (2) the rate for the incidental expenses only deduction and (3) the rates and list of high-cost localities for purposes of the high-low substantiation method.
  • Revenue Procedure 2022-19: This revenue procedure provides guidance to allow S corporations and their shareholders to resolve frequently encountered issues with certainty and without requesting a private letter ruling issued by the IRS.

October 11, 2022: The IRS issued Notice 2022-41, which expands the application of permitted change-in-status rules for health coverage under a Section 125 cafeteria plan. This guidance addresses when a plan participant may want to revoke the employee’s election under the cafeteria plan for family coverage under a group health plan (other than a flexible spending arrangement) in order to allow one or more family members to enroll in a Qualified Health Plan through a Health Insurance Exchange in the individual market.

October 11, 2022: The IRS announced that seminars from the 2022 IRS Nationwide Tax Forum are now available online. The platform offers 18 self-study seminars, including ones on the following topics:

  • IRS Commissioner Chuck Rettig’s Keynote Address
  • Tax Law Changes for Tax Year 2022 – in English and Spanish
  • Professional Responsibility Obligations (Ethics) – in English and Spanish
  • Tax Treatment of Digital Assets
  • Tax-Exempt Organizations Update
  • Emerging Cyber Crimes – in English and Spanish

October 11, 2022: The IRS announced that it is expanding dyed diesel penalty relief in response to Hurricane Ian. The IRS will not impose a penalty when dyed diesel fuel with a sulfur content that does not exceed 15 parts-per-million is sold for use or used on highways in the state of Florida. The relief began on September 28, 2022, and lasts through October 19, 2022. The penalty relief previously only applied to emergency vehicles.

October 11, 2022: The IRS issued a statement related to uncertain tax positions (UTP) reporting. Draft changes to the Schedule UTP and the UTP instructions are available at Draft Task Forms. The draft changes are intended to improve the form’s usefulness by incorporating additional relevant examples and [...]

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Weekly IRS Roundup October 18 – October 22, 2021

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of October 18, 2021 – October 22, 2021. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

October 18, 2021: The IRS announced that beginning October 18, its Large Business and International (LB&I) Division will accept all taxpayer requests to meet with IRS employees using secure video conferencing.

October 20, 2021: The IRS published an announcement, reminding employers that the next quarterly payroll tax return is due November 1, 2021. The IRS urged employers to use the speed and convenience of filing the returns electronically.

October 21, 2021: The IRS and US Department of the Treasury (Treasury) published a notice and request for comments concerning Form 4810 (Request for Prompt Assessment Under Internal Revenue Code Section 6501(d)). The form is used to help locate a return and expedite the processing of a taxpayer’s request. Written comments are due on or before December 20, 2021.

October 21, 2021: The IRS published an announcement, reminding the more than 759,000 federal tax return preparers that they must renew their Preparer Tax Identification Numbers (PTINs) now for 2022. All current PTINs will expire December 31, 2021.

October 21, 2021: The IRS published a notice, setting forth current standards that a limited liability company (LLC) must satisfy in order to receive a determination letter recognizing it as tax exempt under Section 501(a) and described in Section 501(c)(3). The notice also requests comments on these standards, as well as specific issues relating to tax exempt status for LLCs, to assist the Treasury and the IRS in determining whether additional guidance is needed concerning the standards that an LLC must satisfy in order to be exempt from taxation by reason of being described in Section 501(c). Written comments should be submitted by February 6, 2022.

October 22, 2021: The IRS published an announcement, reminding employers that they generally will not jeopardize the tax status of their pension plans if they rehire retirees or permit distributions of retirement benefits to current employees who have reached age 59 and a half or the plan’s normal retirement age. The IRS posted FAQs to help employers impacted by COVID-19, which resulted in labor shortages.

October 22, 2021: The IRS published Revenue Procedure 2021-42, providing guidelines and general requirements for the development, printing and approval of the 2021 substitute tax forms. The IRS accepts quality substitute tax forms that are consistent with the official forms and have no adverse impact on processing.

October 22, 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.




You Can Now Submit Your Letter Rulings and Determinations to the IRS Electronically

Rev. Proc. 2020-29 temporarily allows taxpayers to submit certain requests for letter rulings and determinations to the Internal Revenue Service (IRS) electronically. Electronic submissions will be permitted until the revenue procedure is superseded or modified, but taxpayers may still make paper submissions.

Electronic submissions are permitted for requests for letter rulings, closing agreements, determination letters, and information letters from the Associate Chief Counsel Offices and for determination letters from the Large Business and International (LB&I) Division. However, procedures for submissions to the IRS Small Business/Self Employed Division, Wage and Investment Division, or Tax Exempt and Government Entities Division are unchanged.

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Weekly IRS Roundup October 29 – November 2, 2018

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of October 29 – November 2, 2018:

October 30, 2018: The IRS issued a notice of public hearing on November 28, 2018, regarding the proposed regulations the first-year additional depreciation deductions under section 168(k).

October 30, 2018: The IRS Large Business and International Division in an announcement identified five compliance campaigns it approved, which are Individual Foreign Tax Credit Phase II, Offshore Service Providers, FATCA Filing Accuracy, 1120-F Delinquent Returns Campaign and Work Opportunity Tax Credit. We recently blogged about this here.

October 31, 2018: The IRS and the Treasury submitted proposed regulations that would reduce the amount determined under Internal Revenue Code Section 956 with respect to certain domestic corporations.

November 2, 2018: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandum and Chief Counsel Advice).

Special thanks to Alex Cheng-Yi Lee in our DC office for this week’s roundup.




LB&I Announces Five New Campaigns

On September 10, 2018, the Internal Revenue Service (IRS) Large Business and International (LB&I) Division announced five new audit “campaigns.” These new campaigns follow: (1) the initial 13 campaigns announced on January 31, 2017; (2) followed by 11 campaigns announced on November 3, 2017; (3) five campaigns announced on March 13, 2018; six campaigns announced on May 21, 2018; and five campaigns announced on July 2, 2018.

The following five new LB&I campaigns are listed by title and description:

Section 199 – Claims Risk Review

Public Law 115-97 repealed the Domestic Production Activity Deduction (DPAD) for taxable years beginning after December 31, 2017. This campaign addresses all business entities that may file a claim for additional DPAD under Internal Revenue Code (IRC) Section 199. The campaign objective is to ensure taxpayer compliance with the requirements of IRC Section 199 through a claim risk review assessment and issue-based examinations of claims with the greatest compliance risk.

Syndicated Conservation Easement Transactions

The IRS issued Notice 2017-10, designating specific syndicated conservation easement transactions as listed transactions, requiring disclosure statements by both investors and material advisors.

This campaign is intended to encourage taxpayer compliance and ensure consistent treatment of similarly situated taxpayers by ensuring the easement contributions meet the legal requirements for a deduction, and the fair market values are accurate. The initial treatment stream is issue-based examinations. Other treatment streams will be considered as the campaign progresses.

Foreign Base Company Sales Income: Manufacturing Branch Rules

In general, foreign base company sales income (FBCSI) does not include income of a controlled foreign corporation (CFC) derived in connection with the sale of personal property manufactured by such corporation. However, if a CFC manufactures property through a branch outside its country of incorporation, the manufacturing branch may be treated as a separate, wholly owned subsidiary of the CFC for purposes of computing the CFC’s FBCSI, which may result in a subpart F inclusion to the U.S. shareholder(s) of the CFC.

The goal of this campaign is to identify and select for examination returns of U.S. shareholders of CFCs that may have underreported subpart F income based on certain interpretations of the manufacturing branch rules. The treatment stream for the campaign will be issue-based examinations.

1120F Interest Expense/Home Office Expense

This campaign addresses compliance on two of the largest deductions claimed on Form1120-F, U.S. Income Tax Return of a Foreign Corporation. Treasury Regulation Section 1.882-5 provides a formula to determine the interest expense of a foreign corporation that is allocable to their effectively connected income. The amount of interest expense deductions determined under Treasury Regulation Section 1.882-5 can be substantial. Treasury Regulation Section 1.861-8 governs the amount of home office expense deductions allocated to effectively connected income. Home office expense allocations have been observed to be material amounts compared to the total deductions taken by a foreign corporation.

The campaign compliance strategy includes the identification of aggressive positions in these areas, such as the use of apportionment [...]

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LB&I Announces Six New Campaigns

On May 21, 2018, the Internal Revenue Service (IRS) Large Business and International Division (LB&I) announced the identification and selection of six new campaigns. These new campaigns follow the initial 13 campaigns announced on January 31, 2017, followed by 11 campaigns announced on November 3, 2017, and 5 campaigns announced on March 13, 2018. (more…)




IRS Releases Several Transfer Pricing Directives

The Internal Revenue Service (IRS) Large Business and International (LB&I) Division recently released several directives (LB&I Directives) geared toward transfer pricing. LB&I acknowledges that significant LB&I resources are devoted to transfer pricing issues, and such issues make up a substantial portion of the LB&I inventory. It appears that these directives are aimed at ensuring that LB&I resources are utilized in the most efficient and effective manner on transfer pricing issues. A link to each LB&I Directive and a short summary is provided below.

Interim Instructions on Issuance of Mandatory Transfer Pricing Information Document Request (IDR) in LB&I Examinations

This LB&I Directive advises LB&I examiners that it is no longer necessary to issue the mandatory transfer pricing information document request (IDR) to taxpayers that have filed Form 5471, Information Return of U.S. Person with Respect To Certain Foreign Corporations, or Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business, or engaged in cross-border transactions. An update to Part 4.60.8 of the Internal Revenue Manual will be made in the future to further explain this change. (more…)




International Practice Units – Competent Authority

In recent months, the Internal Revenue Service (IRS) Large Business and International Division (LB&I) has issued a variety of international tax practice “units” as part of its process to improve tax compliance from identified groups of business taxpayers. The overall process also includes short descriptions of respective “campaigns” and briefly describes the agency’s designated, tailored treatment or treatments for each campaign.

Most recently, it issued a unit on the mutual agreement procedure (MAP), commonly referred to as the Competent Authority Process under bilateral tax treaties (Doc Control No. ISO/P/01_07_03-01). The purpose of the unit is to provide IRS examiners (for the most part, the unit does not address foreign-initiated adjustments) with clear guidance on their responsibility in situations where proposed adjustments will be made in a context in which the taxpayer could potentially face double taxation, consistent with the most recent revenue procedure (Rev. Proc.) 2015-40. The unit also provides a helpful checklist for taxpayers in such situations.

The unit amplifies the guidance in Rev. Proc. 2015-40 with respect to both issues arising in Advance Pricing and Mutual Agreement (APMA) and Treaty Assistance and Interpretation Team (TAIT) (for non-transfer pricing issues). The discussion is consistent with current practice. Critical issues addressed include the following. (more…)




LB&I’s Final Campaigns Webinar: Section 48C Energy Credits and Completed Contract Method for Land Developers

On June 20, 2017, the Internal Revenue Service (IRS) Large Business and International Division (LB&I) hosted its final webinar regarding LB&I Campaigns. Our previous coverage of LB&I Campaigns can be found here. The webinar focused on two campaigns:  (1) Section 48C Energy Credits and (2) Land Developers – Completed Contract Method.

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