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Weekly IRS Roundup June 7 – June 11, 2021

by | Jun 14, 2021 | , , , , ,

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of June 7, 2021 – June 11, 2021. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

June 7, 2021: The IRS issued a news release announcing it has begun sending letters to inform more than 36 million American families of their potential eligibility to receive monthly Child Tax Credit payments beginning in July, pursuant to the expansion of the Child Tax Credit under the American Rescue Plan Act of 2021 (ARPA).

June 8, 2021: The IRS issued a news release, soliciting applications for 80 vacancies within its Procurement office, including vacancies for contract specialists who assist the IRS in the procurement and administration of third-party contracts.

June 8, 2021: The IRS issued a news release reminding taxpayers who make estimated tax payments that the second installment of estimated taxes for 2021 is due June 15, 2021.

June 9, 2021: The IRS issued a news release announcing the disbursement of more than 2.3 million Economic Impact Payments worth more than $4.2 billion, bringing the total amount of disbursements under ARPA to more than 169 million payments worth approximately $395 billion.

June 10, 2021: The IRS issued Notice 2021-36, announcing that the applicability date for certain regulations under sections 59A and 6038A of the Code, which set forth various reporting requirements with respect to qualified derivative payments (QDPs) for purposes of the base erosion and anti-abuse tax (BEAT), is delayed to the 2023 taxable year.

June 11, 2021: The IRS issued final regulations regarding the new mandatory 60-day postponement of certain tax deadlines due to a federally-declared disaster, enacted as section 7805A(d) of the Code by the Further Consolidated Appropriations Act, 2020.

June 11, 2021: The IRS issued Revenue Ruling 2021-11, providing the semi-annual Standard Industry Fare Level (SIFL) rates and terminal charges used in computing the value of noncommercial flights on employer-provided aircrafts for purposes of the taxation of fringe benefits under section 61 of the Code. The Revenue Ruling provides both unadjusted SIFL rates and SIFL rates adjusted for relief provided to the airline industry by COVID-related legislation.

June 11, 2021: The IRS issued an Action on Decision, announcing it would not acquiesce to TriNet Group, Inc. v. United States, 979 F.3d 1311 (11th Cir. 2020), which held that a professional employer organization (PEO) had “control of the payment of wages” to its clients’ employees and therefore the PEO—not its clients—was the “employer” (under section 3401(d) of the Code) eligible to claim Federal Insurance Contributions Act (FICA) tip tax credits with respect to such wages.

June 11, 2021: The IRS issued a news release and two sets of FAQs, providing assistance to families and small businesses claiming [...]

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Weekly IRS Roundup November 23 – November 27, 2020

by | Dec 1, 2020 | ,

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of November 23, 2020 – November 27, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

November 23, 2020: The IRS released TD 9935, providing final regulations implementing statutory changes to the treatment of like-kind exchanges.

November 23, 2020: The IRS issued a News Release announcing a research partnership to improve IRS procurement operations.

November 24, 2020: The IRS released Notice 2020-84 announcing the adjusted applicable dollar amount for calculating the fee imposed by sections 4375 and 4376 for certain health plans.

November 25, 2020: The IRS updated FAQs providing guidance on What Is an Eligible Employer for COVID-19-related tax credit purposes and How to Claim the Credits.

November 27, 2020: The IRS released Internal Revenue Bulletin 2020-49, dated November 30, 2020, containing the following highlights: Notice 2020-81 (Employee Plans); Notice 2020-82 (Employee Plans); TD 9929 (Employee Plans); TD 9930 (Employee Plans); REG-101657-20 (Income Tax); Rev. Proc. 2020-48 (Income Tax); TD 9922 (Income Tax); and Notice 2020-75 (Income Tax).

November 27, 2020: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

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



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IRS Implementation of Tax Reform Continues to Move Forward

by | May 24, 2018 | , ,

The Internal Revenue Service (IRS) has been busy in recent months working on implementing the recent tax reform legislation. The latest announcement by the IRS focuses on the $10,000 cap on the amount of state and local taxes that can be deducted for federal income tax purposes. In a press release and release of guidance in the form of Notice 2018-54, the IRS announced that proposed regulations will be issued addressing this issue to help taxpayers understand the relationship between federal charitable contribution deductions in exchange for a tax credit against state and local taxes owed. The press release, Notice and forthcoming proposed regulations are in response to workarounds by various high property tax states allowing local governments to set up charitable organizations that can accept property tax statements. Based on these materials, it is anticipated that the IRS will disagree with the workarounds:

The Treasury Department and the IRS intend to propose regulations addressing the federal income tax treatment of transfers to funds controlled by state and local governments (or other state-specified transferees) that the transferor can treat in whole or in part as satisfying state and local tax obligations. The proposed regulations will make clear that the requirements of the Internal Revenue Code, informed by substance-over-form principles, govern the federal income tax treatment of such transfers. The proposed regulations will assist taxpayers in understanding the relationship between the federal charitable contribution deduction and the new statutory limitation on the deduction for state and local tax payments.

The IRS’s website provides information on the latest IRS news releases, fact sheets and statements. Additionally, we have a dedicated webpage with insights on significant developments related to tax reform.



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Refined Coal Tax Credit Case Filed

by , and | Oct 24, 2017 | , , ,

On September 14, 2017, Cross Refined Coal LLC (Partnership) (and USA Refined Coal LLC as the Tax Matters Partner) filed a Petition in the US Tax Court seeking a redetermination of partnership adjustments determined by the Internal Revenue Service (IRS). According to the Petition, during audit of the 2011 and 2012 tax years, the IRS reduced the Partnership’s and certain partners’ Internal Revenue Code Section 45(e)(8) refined coal production tax credits by several million dollars and disallowed several million dollars more of claimed losses. The Notice of Deficiency, a copy of which is attached to the Petition, provides the following reasons for the adjustments:

  • Neither the Partnership nor the partners have established the existence of the partnership as a matter of fact;
  • The formation of the Partnership was not, in substance, a partnership for federal income tax purposes because it was not formed to carry on a business or for the sharing of profits and losses from the production or sale of refined coal by its purported members/partners, but rather was created to facilitate the prohibited transaction of monetizing refined coal tax credits;
  • The refined coal tax credits are disallowed because the transaction was entered into solely to purchase refined coal tax credits and other tax benefits; and
  • Ordinary losses were disallowed because it has not been established that they were ordinary and necessary or credible expenses in connection with a trade or business or other activity engaged in for profit.

As we have previously reported, the IRS has issued negative guidance concerning refined coal transactions and has denied the tax benefits associated with some of those transactions.

We will be watching this case closely and will report back on any developments.



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IRS Determines Refined Coal Transaction Doesn’t Have Economic Substance

by , and | Mar 24, 2016 | ,

On March 17, 2016, the Internal Revenue Service (IRS) issued a Field Attorney Advice Memorandum, 20161101F (Dec. 3, 2015) (the FAA).  In the FAA, the IRS concluded that an investment in a partnership designed to deliver a tax credit allocation did not have a potential for profit or risk of loss, was not a meaningful interest in the venture and, as such, was not a bona fide partnership interest. In analyzing whether the arrangement was in substance a prohibited sale of tax benefits, the IRS determined that promotional materials and the partnership agreement indicated the investors were only interested in creating tax credits, not in operating a profitable refined coal business. The IRS relied heavily on Commissioner v. Culbertson, 337 U.S. 733 (1949), and Historic Boardwalk Hall LLC v. Commissioner, 694 F.3d 425 (3rd Cir. 2012), to determine that the investor did not have the requisite risk of loss or profit potential irrespective of creating tax credits, and that the partnership agreement indicated that the purported partner was to be indemnified for disallowed tax credits and deductions. An important fact for the IRS’analysis was that the payments to be made by the investor were nonrecourse, meaning the investor could walk away at any time. The IRS ruled that because “purported capital contributions are largely to be made in the future and only in relation to the amount of refined coal, and by extension tax credits generated, we believe that the payments are in exchange for tax benefits and do not constitute capital contributions in substance.”

Although a FAA is merely the opinion of one attorney at the IRS, it may be indicative of how the IRS evaluates these issues.



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