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Weekly IRS Roundup September 28 – October 2, 2020

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 28, 2020 – October 2, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here. September 29, 2020: The IRS published final regulations related to the source of income for certain property sales and modifying rules for determining whether foreign source income is effectively connected with a US trade or business. September 29, 2020: The IRS published final regulations related to a wide range of foreign tax credit topics. The regulations provide guidance on the allocation and apportionment of deductions and creditable foreign taxes, the definition of financial services income, foreign tax redeterminations, availability of foreign tax credits under the transition tax, the application of the foreign tax credit limitation to consolidated groups, adjustments to hybrid deduction...

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Weekly IRS Roundup December 2 – 6, 2019

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of December 2 – 6, 2019. December 2, 2019: The IRS issued final regulations providing guidance relating to the determination of the foreign tax credit as well as guidance relating to changes made by the 2017 US tax law. The regulations finalize the proposed regulations that were published on December 7, 2018. The regulations also finalize proposed regulations on overall foreign losses that were published on June 25, 2012, as well as certain portions of proposed regulations published on November 7, 2007, relating to a US taxpayer’s obligation to notify the IRS of a foreign tax redetermination. The final regulations will be effective upon their date of publication in the federal register. December 2, 2019: The IRS issued proposed regulations that also provide guidance relating to the determination of the foreign tax credit. The proposed...

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Weekly IRS Roundup January 21 – 25, 2019

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of January 21 – 25, 2019. Tax news is very limited because of the government shutdown: January 22, 2019: The IRS issued a news release cancelling a public hearing on proposed regulations relating to user fees for enrolled agents and enrolled retirement plan agents, due to the partial federal government shutdown. January 22, 2019: The IRS issued final instructions for Form 461, dealing with limitations on business losses under section 461(l) of the Code, enacted as part of the Tax Cuts and Jobs Act. January 22, 2019: The IRS issued final instructions for Form 965-A, dealing with individual taxpayers’ transition tax obligations under section 965 of the Code, enacted as part of the Tax Cuts and Jobs Act. January 22, 2019: The IRS issued final instructions for Form 965-B, dealing with corporations’ and REITs’ transition tax obligations under...

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Weekly IRS Roundup January 14 – 18, 2019

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of January 14 – 18, 2019. January 15, 2019: The IRS issued final regulations implementing the transition tax under section 965 of the Code, enacted as part of the Tax Cuts and Jobs Act. January 15, 2019: The IRS released an updated contingency plan describing its actions and activities in light of the partial federal government shutdown. January 16, 2019: The IRS released Notice 2019-11, providing a penalty waiver, under certain conditions, for an individual taxpayer’s underpayment of withholding and estimated income tax, in light of the major changes made by the Tax Cuts and Jobs Act. January 18, 2019: The IRS issued final regulations providing guidance on the deduction for qualified business income under section 199A of the Code, enacted as part of the Tax Cuts and Jobs Act. January 18, 2019: The IRS released proposed regulations...

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Section 965 Transition Tax Overpayment Addressed in Technical Corrections

On January 2, 2019, the outgoing Chair of the House Ways and Means Committee, Kevin Brady (R-TX), released the Tax Technical and Clerical Corrections Act (the Bill), addressing several technical issues associated with the Tax Cuts and Jobs Act (P.L. 115-97) (TCJA). The Bill includes certain provisions that, if enacted, would affirm Congress’ intent that taxpayers with an overpayment with respect to an installment payment of the transition tax under Internal Revenue Code (Code) Section 965 should be able to claim a credit or refund with respect to such amount. The provisions in the Bill with respect to Code Section 965 overpayments are largely consistent with similar draft legislation introduced on November 26, 2018 (the Retirement, Savings and Other Tax Relief Act of 2018 and the Taxpayer First Act of 2018, or H.R. 88; see prior discussion here). In particular, the Bill provides that where a taxpayer that made an election under Code Section 965(h)(1) to pay...

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Weekly IRS Roundup November 5 – 9, 2018

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of November 5 – 9, 2018: November 6, 2018: The IRS added in “Questions and Answers about Reporting Related to Section 965 on 2017 Tax Returns” information concerning the filing of transfer agreements under Internal Revenue Code (Code) Section 965(h)(3) and Section 965(i)(2)(c). For our prior coverage related to the election to pay the transition tax under Code Section 965, see here, here and here. November 7, 2018: The IRS in IRS Tax Tip 2018-173 reminds taxpayers of the blended tax rate as a result of tax reform and provides guidance on the computation of the blended rate. November 8, 2018: The IRS in a notice announced that the charter for the Internal Revenue Service Advisory Council has been renewed for two years beginning October 17, 2018. November 9, 2018: The IRS released its weekly list of written determinations (e.g., Private...

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Tax Reform Insight: IRS Slams Door on Refunds/Credits for Taxpayers with Section 965 Transition Tax Liability

The Internal Revenue Service (IRS) has issued PMTA 2018-016, reaffirming its position that for taxpayers making an election under Internal Revenue Code (Code) Section 965(h) to pay the transition tax over eight years through installment payments, any overpayments of 2017 tax liabilities cannot be used as credits for 2018 estimated tax payments or refunded, unless and until the overpayment amount exceeds the full eight years of installment payments. The IRS’s position has affected many taxpayers, and practitioners expressed their concerns to the IRS to no avail. Access the full article.  

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LB&I Announces Five New Campaigns

On July 2, 2018, the Internal Revenue Service (IRS) Large Business and International (LB&I) Division announced the identification and selection of five new campaigns. These new campaigns follow the initial 13 campaigns announced on January 31, 2017, followed by 11 campaigns announced on November 3, 2017, 5 campaigns announced on March 13, 2018, and six campaigns announced on May 21, 2018. The following are the five new LB&I campaigns by title and description: Restoration of Sequestered AMT Credit Carryforward LB&I is initiating a campaign for taxpayers improperly restoring the sequestered Alternative Minimum Tax (AMT) credit to the subsequent tax year. Refunds issued or applied to a subsequent year’s tax, pursuant to IRC Section 168(k)(4), are subject to sequestration and are a permanent loss of refundable credits. Taxpayers may not restore the sequestered amounts to their AMT credit carryforward. Soft letters will be mailed to taxpayers who are...

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News of Wayfair Decision Breaks during Tax in the City® New York

The first New York meeting of McDermott’s Tax in the City® initiative in 2018 coincided with the June 21 issuance of the US Supreme Court’s (SCOTUS) highly anticipated Wayfair decision. Just before our meeting, SCOTUS issued its opinion determining that remote sellers that do not have a physical presence in a state can be required to collect sales tax on sales to customers in that state. McDermott SALT partner Diann Smith relayed the decision and its impact on online retailers to a captivated audience. Click here to read McDermott’s insight about the decision. The event also featured a CLE/CPE presentation on the ethical considerations relative to tax reform by Kristen Hazel, Jane May and Maureen O’Brien, followed by a roundtable discussion on recent tax reform insights led by Britt Haxton, Sandra McGill, Kathleen Quinn and Diann Smith. Below are a few takeaways from last week’s Tax in the City® New York: Supreme Court Update: Wayfair – Jurisdiction to Tax –...

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