Document summaries for the week of Dec. 30, 2019

Tax document summaries for the week of Dec. 30, 2019–Jan. 3, 2020, covering employee benefits, individuals, IRS procedure, and more.

EMPLOYEE BENEFITS

Revised procedures issued for exempt organization employee plan determination letters

The IRS provided revised procedures for determination letters and letter rulings issued by the Tax Exempt and Government Entities Division, Employee Plans Rulings and Agreements Office. Rev. Proc. 2020-4 (1/2/20).

Covered compensation tables issued for 2020 plan year

The IRS issued the tables of covered compensation under Sec. 401(l)(5)(E) for the 2020 plan year. Rev. Rul. 2020-02 (1/3/20).

 

EXEMPT ORGANIZATIONS

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, it explains the procedures for issuing determination letters on 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. 2020-5 (1/2/20).

 

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. 2020-7 (1/2/20).

 

INDIVIDUALS

IRS lowers standard mileage rates for business, medical, and moving expenses for 2020

The IRS issued the optional standard mileage rates for 2020 for taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, or medical or moving expense purposes and to use in calculating reductions to basis for depreciation taken under the business standard mileage rate. The rates are (1) 57.5 cents per mile driven for business use, down one-half cent from the rate for 2019; (2) 17 cents per mile driven for medical or moving purposes, down 3 cents from the rate for 2019; and (3) 14 cents per mile driven in service of charitable organizations. Notice 2020-05 (12/31/19) (see related news story).

 

IRS PROCEDURE

IRS enters into new Free File agreement

The IRS has entered into a new agreement with Free File Inc. The Service says the updated agreement is designed to make the choices clearer to taxpayers who use the free online tax preparation software through the Free File program. Addendum to the Eighth Memorandum of Understanding on Service Standards and Disputes (12/30/19).

IRS revises letter ruling and information letter procedures

The IRS issued revised procedures for letter rulings and information letters issued by these associate chief counsel offices: Corporate; Financial Institutions and Products; Income Tax and Accounting; International; Passthroughs and Special Industries; Procedure and Administration; and Employee Benefits, Exempt Organizations, and Employment Taxes. 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. 2020-1 (1/2/20).

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. 2020-2 (1/2/20).

IRS revises 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 Service 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. 2020-3 (1/2/20).

Married couple not entitled to deductions or NOL and did not include IRA distributions in income

The Tax Court held that the taxpayers, a married couple, were not entitled to claim various deductions  beyond the amount allowed by the IRS on audit because they did not substantiate the expenses; that they could not deduct a net operating loss for 2007; that they failed to include over $200,000 in IRA distributions in income, and that they were liable for the additional 10% tax under Sec. 72(t) on those distributions. The court imposed an accuracy-related penalty and a penalty under Sec. 6673(a) for taking a frivolous or groundless position. The court also refused to grant the wife innocent spouse relief for the years at issue. Gebman, T.C. Memo. 2020-1 (1/2/20).

Newsletter Articles

50th ANNIVERSARY

50 years of The Tax Adviser

The January 2020 issue marks the 50th anniversary of The Tax Adviser, which was first published in January 1970. Over the coming year, we will be looking back at early issues of the magazine, highlighting interesting tidbits.

TAX RELIEF

Quirks spurred by COVID-19 tax relief

This article discusses some procedural and administrative quirks that have emerged with the new tax legislative, regulatory, and procedural guidance related to COVID-19.