Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of February 22, 2021 – February 26, 2021. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.
February 25, 2021: The IRS issued an alert warning taxpayers to refrain from submitting meritless amended returns to claim the Domestic Production Activities Deduction (DPAD) for prior tax years—the DPAD was repealed as part of the Tax Cuts and Jobs Act for taxable years after December 31, 2017. This alert was in response to a large number of filings claiming the DPAD deduction based on studies conducted after the fact, which the IRS claims contained unreasonable assumptions of facts and law. The IRS further noted that examining these claims will continue to be a priority and that penalties may be asserted under section 6676. We have previously written about section 199 refund claims and penalties under section 6676.
February 25, 2021: The IRS released Internal Revenue Bulletin 2021-9, dated March 1, 2021, containing the following highlights: Announcement 2021-4 (Administrative).
February 26, 2021: The IRS issued Notice 21-18 providing the adjusted limitations on housing expenses for 2021 for purposes of section 911, which allows a qualified individual to elect to exclude from gross income certain foreign earned income and to exclude or deduct certain housing expenses.
February 26, 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 Samuel DiPietro in our Chicago office for this week’s roundup.