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Weekly IRS Roundup January 27 – 31, 2020

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of January 27 – 31, 2020.

January 27, 2020: The Joint Committee on Taxation released a report regarding an overview of selected provisions and options relating to funding and financing infrastructure investments. The report addresses the use of private activity bonds, new markets tax credits, and the opportunity zones incentive to fund infrastructure projects. The House Ways and Means Committee has scheduled a hearing entitled “Paving the Way for Funding and Financing Infrastructure Investments” on January 29, 2020.

January 29, 2020: The IRS issued a notice stating that the health coverage tax credit (HCTC) has been extended for all coverage months beginning in 2020. The IRS explained that eligible individuals can receive a tax credit to offset the cost of their monthly health insurance premiums so long as they have qualified health coverage. This notice supersedes the October 2019 letter from the IRS advising participants in the HCTC program to seek alternative insurance options due to the expiration of the HCTC law in December 2019.

January 30, 2020: The IRS issued final regulations that update the due dates and available extensions of time to file certain tax returns and information returns. The dates are updated to reflect the statutory requirements set by section 2006 of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 and section 201 of the Protecting Americans from Tax Hikes Act of 2015. The regulations also remove a provision for electing large partnerships that was obsoleted by section 1101(b)(1) of the Bipartisan Budget Act of 2015.

January 31, 2020: The IRS issued a news release announcing that nearly 80% of the taxpayers that received a settlement offer letter while under audit for their participation in abusive micro-captive insurance transactions have elected to accept the IRS’ settlement terms. The IRS also announced that it is establishing 12 new examination teams that are expected to open thousands of audits in the coming months. Abusive micro-captives have been a recurring feature on the IRS “Dirty Dozen” list of tax scams since 2014.

January 31, 2020: The IRS issued a revenue procedure detailing its revision of Form 1023, Application for Recognition of Exemption under Section 501(c)(3), announcing that the Form must be filed electronically beginning January 31, 2020, subject to a 90-day grace period during which the IRS will continue to receive paper forms. The IRS also revised the Instructions to Form 1023.

January 31, 2020: The IRS revised Form 8996, Qualified Opportunity Fund (QOF), to reflect final regulations on the subject. Form 8996 allows corporations and partnerships to certify that they are organized to invest in qualified opportunity zone (QOZ) property and to report that the QOF meets the 90% investment standard that section 1400Z-2 imposes. The IRS also revised the Instructions to Form 8966.

January 31, 2020: The IRS released its weekly list of written determinations (e.g., Private [...]

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Weekly IRS Roundup December 16 – 20, 2019

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of December 16 – 20, 2019.

December 16, 2019: The IRS released a notice extending the phase-in period for the enforcement and administration of section 871(m) of the IRC. The notice extends the transition relief provided in Notice 2018-72, 2019-40 I.R.B. 522, for two years. As a result, the regulations under section 871(m) will not apply to any payment made with respect to a non-delta-one transaction issued before January 1, 2023. The IRS noted that the anti-abuse rule provided in §1.871-15(o) will continue to apply during the phase-in years.

December 16, 2019: The IRS issued final regulations providing guidance regarding a corporation’s distribution of stock or securities of a controlled corporation without the recognition of income, gain or loss. More specifically, the regulations address how to determine whether a corporation is a predecessor or a successor of a distributing controlled corporation for purposes of section 355(e) of the IRC. The regulations also address the extent to which section 355(f) causes a distributing corporation—and in some cases, its shareholders—to recognize income or gain on the distribution of stock or securities of a controlled corporation. The final regulations became effective on December 18, 2019.

December 17, 2019: The IRS issued final regulations relating to certain financial products that provide for payments that are contingent upon or determined by reference to US source dividend payments. The regulations define the term broker for purposes of section 871(m) of the IRC, and provide guidance on how to identify which party to a potential section 871(m) transaction is responsible for determining whether that transaction qualifies as a section 871(m) transaction if multiple brokers or dealers are involved. The final regulations withdraw the temporary regulations under Treas. Reg. § 1.871-15T.

December 17, 2019: The IRS released a revenue ruling that provides various prescribed rates for federal income tax purposes for January 2020. These rates include the applicable federal rates for the current month for purposes of both section 1274(d) and section 1288(b) of the IRC, the adjusted federal long-term rate and the long-term tax-exempt rate in section 382(f), and the federal rate for determining the present value of an annuity, among others.

December 17, 2019: The IRS released a revenue procedure providing that the third six-year remedial amendment cycle for pre-approved defined benefit plans begins on May 1, 2020, and ends on January 31, 2025. The on-cycle submission period for providers to submit applications for opinion letters for pre-approved defined benefit plans begins on August 1, 2020, and ends on July 31, 2021.

December 19, 2019: The IRS issued a news release regarding final regulations that provide details about investment in qualified opportunity zones (QOZ). The final regulations provide guidance for taxpayers eligible to make an election to temporarily defer the [...]

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