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Weekly IRS Roundup June 20 – June 24, 2022

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of June 20, 2022 – June 24, 2022. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

June 20, 2022: The IRS announced that it’s on track to complete the processing of originally filed Form 1040s that were received in 2021 this week and that business paper returns also filed in 2021 will follow shortly thereafter. According to the announcement:

“IRS employees have been working tirelessly to process these tax returns as quickly as possible and help people who are waiting on refunds or resolution of an account issue,” said IRS Commissioner Chuck Rettig. “Completing the individual returns filed last year with no errors is a major milestone, but there is still work to do. We remain focused on doing everything possible to expedite processing of these tax returns, and we continue to add more people to this effort as our hiring efforts continue this summer.”

 

Rettig emphasized that adding sustained funding increases for the IRS will help the agency add more employees to process tax returns and answer phones as well as help improve technology and ensure fair enforcement of the tax laws.

 

“Taxpayers and tax professionals deserve the absolute highest-quality service from the nation’s tax system,” Rettig said. “Long-term and consistent funding for the agency is critical to ensuring the IRS is prepared for future tax seasons. It’s also critical for the IRS to be ready to answer the call for the nation during the next crisis, just as the agency did delivering three rounds of historic stimulus payments and advance Child Tax Credit payments during the pandemic.”

June 22, 2022: National Taxpayer Advocate Erin Collins released her statutorily mandated midyear report to US Congress. A highlight of the report is that concerns over continuing delays in the processing of paper-filed tax returns and the impact on taxpayer refunds are brought to light. The IRS issued a subsequent news release discussing the report.

June 23, 2022: The IRS advised taxpayers that more tax forms can now be amended electronically (with more enhancements planned for the future).

June 24, 2022: The IRS announced that it has issued frequently asked questions (FAQs) regarding the reinstated Superfund chemical excise tax. The FAQs detail what the tax is, how it is computed and who may be liable for the tax.

June 24, 2022: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).




Weekly IRS Roundup May 31 – June 3, 2022

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of May 31, 2022 – June 3, 2022. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

May 31, 2022: The IRS issued a press release, reminding taxpayers living and working outside the United States that their 2021 federal income tax return is due on June 15, 2022. The deadline applies to both US citizens and resident aliens abroad, including those with dual citizenship. The press release also contains other information to assist said taxpayers with their filings.

June 1, 2022: The IRS issued the first part of its “Dirty Dozen” tax scams for 2022, focusing on the following items:

  • Use of Charitable Remainder Annuity Trust (CRAT) to Eliminate Taxable Gain. In this transaction, appreciated property is transferred to a CRAT. Taxpayers improperly claim the transfer of the appreciated assets to the CRAT, which in and of itself gives those assets a step-up in basis to fair market value as if they had been sold to the trust. The CRAT then sells the property but does not recognize gain because of the claimed step-up in basis. Next, the CRAT uses the proceeds to purchase a single premium immediate annuity (SPIA). The beneficiary reports, as income, only a small portion of the annuity received from the SPIA. Through a misapplication of the law relating to CRATs, the beneficiary treats the remaining payment as an excluded portion representing a return of investment for which no tax is due. Taxpayers seek to achieve this inaccurate result by misapplying the rules under sections 72 and 664.
  • Maltese (or Other Foreign) Pension Arrangements Misusing Treaty. In these transactions, US citizens or US residents attempt to avoid US tax by making contributions to certain foreign individual retirement arrangements in Malta (or possibly other foreign countries). In these transactions, the individual typically lacks a local connection, and local law allows contributions in a form other than cash or does not limit the amount of contributions by reference to income earned from employment or self-employment activities. By improperly asserting that the foreign arrangement is a “pension fund” for US tax treaty purposes, the US taxpayer misconstrues the relevant treaty to improperly claim an exemption from US income tax on earnings in, and distributions from, the foreign arrangement.
  • Puerto Rican and Other Foreign Captive Insurance. In these transactions, US owners of closely held entities participate in a purported insurance arrangement with a Puerto Rican or other foreign corporation with cell arrangements or segregated asset plans in which the US owner has a financial interest. The US-based individual or entity claims deductions for the cost of “insurance coverage” provided by a fronting carrier, which reinsures the “coverage” with the foreign corporation. The characteristics of the purported insurance arrangements typically include one or more of the following: implausible risks covered, non-arm’s length pricing and lack of [...]

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Weekly IRS Roundup May 23 – May 27, 2022

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of May 23, 2022 – May 27, 2022. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

May 25, 2022: The IRS issued a press release revising frequently asked questions concerning the 2021 Earned Income Tax Credit to educate eligible taxpayers on how to properly claim the credit on their 2021 tax return.

May 25, 2022: The IRS announced that it has enhanced its “Where’s My Refund?” online tool, which introduces a new feature that allows taxpayers to check the status of the current tax year and the two prior years.

May 26, 2022: The IRS issued a press release, announcing the issuance of its Fiscal Year 2021 Data Book, which describes its activities from October 1, 2020, to September 30, 2021. The Data Book is published annually and contains statistical tables and organization information relating to data on collecting revenue, issuing refunds, enforcing the law, assisting taxpayers and the budget and workforce.

May 26, 2022: The IRS issued a memorandum to Employee Plan employees and Exempt Organizations/Government Entities Employees, stating that video meetings via secure IRS-approved platforms will continue to be allowed on a going forward basis.

May 27, 2022: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).




IRS Appeals Acknowledges Massive Backlog of Cases, Shares Plan to Catch Up

In a memorandum dated April 19, 2022, the Internal Revenue Service’s (IRS) Independent Office of Appeals (IRS Appeals) acknowledged that it has a large backlog of cases that is slowing down the process of resolving cases with taxpayers. In the memorandum, IRS Appeals details its multipoint plan to get back on track. Apparently, there is a “significant inventory” of cases docketed in the US Tax Court that have been referred back to IRS Appeals. To solve this problem, IRS Appeals is:

  • Dedicating additional resources to work these cases
  • Prioritizing docketed casework
  • Making faster initial contact with the taxpayer or their representative by telephone shortly after the case is filed in the Tax Court
  • Applying streamlined case processing, such as specific dollar settlements, expedited tax computation requests and the use of Form 5402, Appeals Settlement Memorandum, to document settlements
  • Resolving cases without an IRS Appeals conference for matters that result from pandemic miscommunication rather than actual tax disputes
  • Obviating an actual trial to develop the facts and instead relying on oral statements to resolve cases more efficiently.

All of the above measures are welcome developments. Timely first contact with taxpayers and streamlined case processing should result in faster settlements and closure of matters while reducing interest expenses for taxpayers with deficiencies. Acknowledging that the controversy stems from a pandemic miscommunication (e.g., the IRS not processing or responding to taxpayer submissions before issuing a notice of deficiency) should eliminate unnecessary conferences and promote the dismissal of matters that never should have ended up before the Tax Court.

The acceptance of oral statements should also help resolve matters faster. In many situations, the documents necessary to substantiate a position may not be available or there may not be any documents in the first instance, so the only way to prove a factual point is through oral testimony. IRS Appeals should also consider declarations or affidavits signed under penalties of perjury as an appropriate means for substantiating facts to resolve cases more efficiently. Indeed, the use of such written statements is commonplace in litigation when parties seek summary adjudication.

We have discussed IRS Appeals numerous times on this blog. It remains one of the best forums to resolve tax disputes with the IRS and avoid court, meaning a substantial slow down at IRS Appeals is a real problem for taxpayers who cannot come to an agreement with an IRS examination team.

Practice Point: We applaud the IRS’s attempt to break the bottleneck at IRS Appeals. The measures that IRS Appeals is employing seem reasonable and appropriate and most of them should be employed even after IRS Appeals becomes updated on its caseload. In the meantime, if you have a case that will go to IRS Appeals, consider trying to expedite your appeal by requesting the 30-day letter as soon as it becomes clear you will be having an unagreed-case.




Weekly IRS Roundup May 1 – May 7, 2022

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of May 1, 2022 – May 7, 2022. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

May 2, 2022: The IRS issued a news release as part of National Small Business Week, setting forth various resources to assist entrepreneurs with the tax aspects of starting and running a small business.

May 2, 2022: The IRS issued a news release, announcing the opening of the application period for 2023 grants under the Low Income Taxpayer Clinic (LITC) program, an IRS program created to assist organizations in providing pro bono representation to low-income and English as a second language (ESL) taxpayers in federal tax disputes.

May 3, 2022: The IRS issued Notice 2022-23, setting forth proposed changes to the procedures regarding qualified intermediary withholding agreements under Treas. Reg. §§ 1.1441-1(e)(5) and (e)(6). The Notice states that the proposed changes, subject to modifications based on comments received, will be finalized in a forthcoming Revenue Procedure and apply to qualified intermediary withholding agreements in effect on or after January 1, 2023.

May 3, 2022: The IRS issued a news release as part of National Small Business Week, urging small business owners to take advantage of the deductions for business-related food and beverage expenses (as expanded for 2022 pursuant to Section 274(n)(2)(D) of the Code), home office expenses and certain other deductions and benefits applicable to small businesses.

May 4, 2022: The IRS issued proposed regulations, providing updates to the rules regarding the use of actuarial tables in valuing annuities, interests for life or a term of years and remainder or reversionary interests under Section 7520 of the Code.

May 4, 2022: The IRS issued a news release as part of National Small Business Week, providing certain resources regarding estimated tax payments and encouraging taxpayers to make estimated tax payments electronically.

May 5, 2022: The IRS issued a news release as part of National Hurricane Preparedness Week and National Wildfire Awareness Month, reminding taxpayers of certain best practices to minimize the effect of natural disasters on tax compliance.

May 5, 2022: The IRS issued a news release as part of National Small Business Week, urging small businesses to take advantage of electronic options to file payroll tax returns and to pay and make deposits of payroll taxes.

May 6, 2022: The IRS issued Revenue Procedure 2022-22 and an accompanying news release, providing simplified procedures for certain residents of Puerto Rico to claim the Child Tax Credit under Section 24 of the Code, as expanded by the American Rescue Plan Act of 2021 (ARPA).

May 6, 2022: The IRS issued a news release as part of National Small Business Week, providing information to [...]

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Weekly IRS Roundup April 24 – April 30, 2022

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of April 24, 2022 – April 30, 2022. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

April 25, 2022: The IRS issued a news release, soliciting applications for the IRS Advisory Council, a forum consisting of representatives of the public to advise the IRS on various tax administration issues.

April 26, 2022: The IRS issued proposed regulations under Section 2010(c)(3) of the Code, as amended by the Tax Cuts and Jobs Act (TCJA), relating to the increase in the estate and gift tax exclusion amount for taxable years 2018 through 2025. The proposed regulations generally provide that the special rule of Treas. Reg. § 20.2010-1(c), which states that certain coordinating rules for estate and gift tax with respect to decedents who made gifts during the period of the increased exclusion amount but died following such period, does not apply with respect to gifts that are includible in the decedent’s estate.

April 26, 2022: The IRS issued Notice 2022-21, soliciting recommendations from the public regarding items to be included in the IRS Priority Guidance Plan for 2022-2023.

April 27, 2022: The IRS issued proposed regulations, setting forth updated general mortality tables for use in applying rules under Section 430 of the Code regarding defined benefit pension plans.

April 27, 2022: The IRS issued Notice 2022-22, setting forth specific mortality tables applicable to 2023 for use in applying rules under Section 430 of the Code regarding defined benefit pension plans.

April 27, 2022: The IRS issued a news release announcing the appointment of Lia Colbert, formerly the deputy chief of the IRS Independent Office of Appeals, as commissioner of the IRS Small Business/Self-Employed Division.

April 27, 2022: The IRS issued a news release, providing an update to a Fact Sheet containing answers to frequently asked questions regarding the Child Tax Credit under Section 24 of the Code, as expanded by the American Rescue Plan Act of 2021 (ARPA).

April 29, 2022: The IRS issued Revenue Procedure 2022-24, announcing various inflation-adjusted amounts relevant to health savings accounts (HSAs) for calendar year 2023.

April 29, 2022: The IRS issued Notice 2022-17, announcing that the reference price under Section 45K(d)(2)(C) of the Code, which is relevant for certain Code sections regarding oil and gas production, is $65.90 for calendar year 2021.

April 29, 2022: The IRS issued Notice 2022-18, providing the applicable reference price and associated credit amount used in determining the marginal well production credit under Section 45I of the Code.

April 29, 2022: The IRS issued Notice 2022-19, announcing the inflation adjustment factor and associated phase-out amount for purposes of determining the enhanced oil recovery credit under [...]

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Weekly IRS Roundup April 17 – April 23, 2022

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of April 17, 2022 – April 23, 2022. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

April 18, 2022: The IRS issued Revenue Ruling 2022-9, providing various prescribed interest rates for federal income tax purposes for May 2022.

April 18, 2022: The IRS issued a news release, reminding taxpayers of the option to request an automatic extension of time to file individual income tax returns and noting certain categories of taxpayers who automatically qualify for extensions.

April 18, 2022: The IRS issued a news release, setting forth certain penalty relief options that may be available to taxpayers who are unable to pay increased tax liabilities resulting from retroactive claims for employee retention tax credits.

April 19, 2022: The IRS issued Revenue Procedure 2022-23, providing procedures for taxpayers to make late elections under Sections 168(j)(8), 168(l)(3)(D) and 181(a)(1) of the Code, relating to certain depreciation deductions, for taxable years 2018 and 2019.

April 19, 2022: The IRS issued Notice 2022-16, providing the monthly update to certain interest rates used for pension plan funding and distribution purposes.

April 19, 2022: The IRS issued a news release, announcing that the 2022 IRS Nationwide Tax Forum, an annual series of continuing education seminars for tax professionals, will be held virtually from July 19, 2022, through August 18, 2022.

April 19, 2022: The IRS issued a news release urging taxpayers who missed the April 18, 2022, filing deadline to file their individual tax returns as soon as possible in order to obtain tax refunds and limit penalties and interest.

April 20, 2022: The IRS issued a news release, announcing the awarding of more than $12.1 million in grants to 131 organizations across the country as part of its Low Income Taxpayer Clinic program, a program to assist organizations in providing pro bono representation to low-income and English as a second language (ESL) taxpayers in federal tax disputes.

April 21, 2022: The IRS issued a news release, reminding tax-exempt organizations of the May 16, 2022, filing deadline with respect to certain information and tax returns.

April 22, 2022: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

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




Weekly IRS Roundup April 10 – April 16, 2022

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of April 10, 2022 – April 16, 2022. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

April 11, 2022: The IRS issued a news release, reminding taxpayers of the option to obtain an Identity Protection PIN to guard against tax-related identity theft.

April 12, 2022: The IRS issued a news release announcing the mailing of letters to certain taxpayers, notifying them of additional actions that must be taken to comply with the administrative requirements applicable to Qualified Opportunity Funds (QOFs).

April 12, 2022: The IRS issued a news release addressing certain common misconceptions regarding income tax refunds.

April 13, 2022: The IRS issued a news release, urging taxpayers who have filed their 2021 individual income tax returns to use the IRS Tax Withholding Estimator to ensure they are subject to an appropriate level of salary withholding for 2022.

April 13, 2022: The IRS issued a news release, providing an update to a Fact Sheet containing answers to frequently asked questions regarding the 2020 Recovery Rebate Credit, enacted as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act.

April 13, 2022: The IRS issued a news release, providing an update to a Fact Sheet containing answers to frequently asked questions regarding the 2021 Recovery Rebate Credit, enacted as part of the American Rescue Plan Act of 2021 (ARPA).

April 14, 2022: The IRS issued a news release urging low- and moderate-income taxpayers to use IRS Free File to prepare and electronically file their tax returns.

April 14, 2022: The IRS issued a news release, reminding taxpayers of the resources available on irs.gov that can answer their tax questions.

April 15, 2022: The IRS issued Notice 2022-15, providing relief (for Q3 2022 through Q1 2023) with respect to penalties under Section 6656 of the Code for failure to make deposits of “Superfund” chemical taxes under Sections 4661 and 4671 of the Code, as reinstated by the Infrastructure Investment and Jobs Act (IIJA). The Notice also provides that, for Q1 2023 through Q3 2023, and subject to certain conditions, the IRS will not prohibit a taxpayer from using the Treas. Reg. § 40.6302(c)-1(b)(2)(v) “deposit safe harbor” if the taxpayer fails to make deposits of Superfund chemical taxes.

April 15, 2022: The IRS issued a news release, notifying taxpayers that CP2100 and CP2100A notices, which are sent semiannually to notify taxpayers who filed certain information returns that information on the returns does not match IRS records, will be sent out beginning in mid-April 2022.

April 15, 2022: The IRS issued a news release, reminding [...]

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Weekly IRS Roundup April 3 – April 9, 2022

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of April 3, 2022 – April 9, 2022. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

April 4, 2022: The IRS issued a news release, announcing that the application period for 2023 grants under the Low Income Taxpayer Clinic (LITC) program, an IRS program created to assist organizations in providing pro bono representation to low-income and English as a second language (ESL) taxpayers in federal tax disputes, will begin on or around May 2, 2022.

April 4, 2022: The IRS issued a news release, announcing that, in advance of the federal tax filing deadline, free face-to-face tax preparation assistance will be provided at Taxpayer Assistance Centers around the country on April 9, 2022.

April 5, 2022: The IRS issued proposed regulations amending the eligibility requirements for the premium tax credit under Section 36B of the Code. The proposed regulations generally provide that, for purposes of determining eligibility for the premium tax credit, the affordability of an employer-sponsored health plan with respect to an employee’s family members is determined based on the cost of covering the employee and their family members, rather than on the cost of covering the employee individually.

April 6, 2022: The IRS issued a news release, reminding taxpayers who make estimated tax payments that the due date for the first estimated tax installment is April 18, 2022.

April 8, 2022: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

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




Weekly IRS Roundup March 20 – March 26, 2022

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of March 20, 2022 – March 26, 2022. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

March 21, 2022: The IRS issued Revenue Ruling 2022-07, addressing the disclosure of tax information pursuant to certain exceptions to the general non-disclosure rule of Internal Revenue Code (Code) Section 6103(a). The Revenue Ruling, which modifies and supersedes Revenue Ruling 2004-53, generally holds that individuals who lawfully obtain tax information under the disclosure exception in Section 6103(c) of the Code are subject to restrictions on redisclosure. However, individuals who obtain tax information under the exceptions in Section 6103(e) or 6013(k)(6) of the Code are not subject to restrictions on redisclosure. The ruling further holds that these results are not affected by whether the individuals are government employees.

March 21, 2022: The IRS issued Notice 2022-14, providing guidance on various interest rates relevant to employee benefit plans under the Code.

March 22, 2022: The IRS issued a news release, providing tips to taxpayers on how to avoid common tax return filing mistakes.

March 22, 2022: The IRS issued a news release, reminding taxpayers of the various electronic payment and deferred payment options available to those who owe taxes with the filing of their individual income tax returns.

March 23, 2022: The IRS issued a news release, providing an update to a Fact Sheet that contains answers to frequently asked questions regarding the tax treatment of 2020 unemployment compensation, taking into account relief provided by the American Rescue Plan Act of 2021 (ARPA).

March 23, 2022: The IRS issued a news release, setting forth common reasons why certain tax refunds may take longer than 21 days to be issued.

March 25, 2022: The IRS issued proposed regulations, setting forth an exception to the “unified plan rule” for multiple employer plans (MEPs) under Section 413(c) of the Code.

March 25, 2022: The IRS issued Revenue Procedure 2022-15, providing an update to the rules taxpayers can use when generating substitutes for Form 941 (Employer’s Quarterly Federal Tax Return) and associated forms and schedules.

March 25, 2022: The IRS issued Revenue Procedure 2022-18, waiving the residence requirements needed to qualify for benefits under Section 911 of the Code for the 2021 taxable year, with respect to certain individual taxpayers who departed from Iraq, Burma, Chad, Afghanistan or Ethiopia in 2021.

March 25, 2022: The IRS issued a news release estimating that a total of nearly $1.5 billion worth of unclaimed tax refunds are available to approximately 1.5 million taxpayers who did not file individual income tax returns for the 2018 taxable year and urging those taxpayers to file such returns prior to the applicable deadlines in [...]

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