Document Summaries for the week of Jan. 2, 2023

INDIVIDUALS

Taxpayer ineligible for premium tax credit based on her modified AGI

The Tax Court held that a taxpayer was not entitled to a premium tax credit (PTC) under Sec. 36B and was thus required to repay advance premium tax credit (APTC) payments she received. The court agreed with the IRS that since the taxpayer received the benefit of APTC payments totaling $7,205, she was required to include Form 8962, Premium Tax Credit (PTC), with her 2016 tax return and, on the basis of her modified adjusted gross income, she was no longer eligible for the PTC and had to repay the APTC payments in their entirety. Henry, T.C. Memo. 2023-2 (1/5/23).

Taxpayer escapes penalty for frivolous arguments with court warning

The Tax Court held that a taxpayer underreported $116,000 of income for the 2016 tax year and was thus liable for a Sec. 6662(a) accuracy-related penalty of $4,615. However, although the taxpayer initially made frivolous arguments as to why he underreported his income, the court did not impose penalties under Sec. 6673 for taking frivolous positions because it found that the taxpayer practiced restraint by ceasing to make such frivolous arguments at the beginning of his trial; but the court did warn the taxpayer that making such arguments in the future would make him subject to those penalties. Minnig, T.C. Memo. 2023-1 (1/4/23).

INTERNATIONAL

IRS issues annual international no-rulings list

The IRS updated the list of areas of the Code under the jurisdiction of the associate chief counsel (International) on which the IRS will not issue letter rulings or determination letters. Rev. Proc. 2023-7 (1/2/23).

IRS PROCEDURE

IRS updates letter ruling and information letter procedures

The IRS issued annually revised procedures for letter rulings and information letters issued by these associate chief counsel offices: Corporate; Employee Benefits, Exempt Organizations, and Employment Taxes; Financial Institutions and Products; Income Tax and Accounting; International; Passthroughs and Special Industries; and Procedure and Administration. The procedure also revises how determination letters are issued by the Large Business and International, Small Business/Self Employed, Wage and Investment, and Tax Exempt and Government Entities divisions. Rev. Proc. 2022-1 is superseded. Rev. Proc. 2023-1 (1/2/23).

TAM procedures updated

The IRS explained when and how an associate chief counsel office provides a technical advice memorandum (TAM). It also explained a taxpayer's rights when a field office requests a TAM. Rev. Proc. 2022-2 is superseded. Rev. Proc. 2023-2 (1/2/23).

IRS updates domestic no-rulings list

The IRS provided a revised list of areas of the Code under the jurisdiction of these associate chief counsel offices on which the IRS will not issue letter rulings or determination letters: Corporate; Financial Institutions and Products; Income Tax and Accounting; Passthroughs and Special Industries; Procedure and Administration; and Employee Benefits, Exempt Organizations, and Employment Taxes. Rev. Proc. 2022-3 is superseded. Rev. Proc. 2023-3 (1/2/23).

TAX-EXEMPT ORGANIZATIONS

California corporation lacked capacity to appeal revocation of its tax-exempt status

The Tax Court held that a California corporation, whose corporate powers, rights, and privileges had been suspended by the state of California, lacked the capacity to begin or maintain litigation in the Tax Court. The Tax Court thus dismissed for lack of jurisdiction the corporation's request for a declaratory judgment that the revocation of its tax-exempt status by the IRS was erroneous. XC Foundation, T.C. Memo. 2023-3 (1/5/23).

IRS issues exempt organization no-rulings list

The IRS updated the procedures that apply to requests for determination letters and private letter rulings, as well as the user fees for letter ruling requests and opinion letters on preapproved plans. Rev. Proc. 2023-4 (1/2/23).

Revised procedures issued for EO determination letters

The IRS set forth procedures for issuing determination letters on issues under the jurisdiction of the director, Exempt Organizations (EO) Rulings and Agreements. Specifically, they address tax-exempt status, private foundation status, and other determinations related to exempt organizations. The revenue procedure also provides guidance on applicable user fees for requesting determination letters. Rev. Proc. 2023-5 (1/2/23).