Document summaries for the week of April 27, 2020
Tax document summaries for the week of April 27–May 1, 2020, covering individuals and international tax.
Proposed updates to Sec. 501(c) group exemption letter program
The IRS issued a proposed revenue procedure that sets forth updated procedures under which recognition of exemption from federal income tax for organizations described in Sec. 501(c) may be obtained on a group basis for subordinate organizations affiliated with, and under the general supervision or control of, a central organization. While Rev. Proc. 80-27 continues to apply until publication of the final revenue procedure, the IRS stated that it will not accept any requests for group exemption letters starting on June 17, 2020, until publication of the final revenue procedure or other guidance in the Internal Revenue Bulletin. Notice 2020-36 (5/1/20).
Tax Court: Taxpayer cannot ‘bamboozle’ his way to procedural victory
The Tax Court held that the IRS, relying on former Sec. 6231(g)(2), reasonably determined that the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), P.L. 97-248, procedures did not apply to a taxpayer’s limited liability company for the 2011 and 2012 tax years. The taxpayer argued that it was impossible for the IRS to make a determination about whether TEFRA applied because the returns at issue were internally inconsistent and irreconcilable. The court responded that the taxpayer could not “litter his returns with misleading and inaccurate information, selectively rely upon the information, and then expect to bamboozle his way to a procedural victory.” Bridges, T.C. Memo. 2020-51 (4/27/20).
IRS extends FATCA certification deadline
The IRS announced on its FATCA FAQs page that it will grant an automatic extension of time to submit a FATCA certification for entities with a certification due date of July 1, 2020. FATCA — FAQs General: FATCA Certifications, Q21 (4/29/20).
Taxpayers can electronically submit private letter ruling and other requests
The IRS modified the procedures in Rev. Proc. 2020-1 to temporarily allow for the electronic submission of requests for private letter rulings, closing agreements, determination letters, and information letters under the jurisdiction of the IRS Office of Chief Counsel, and for determination letters issued by the IRS Large Business and International Division (LB&I). Until modified or superseded, both paper and electronic requests for advice described in the new procedure will be accepted. Rev. Proc. 2020-29 (4/30/20) (see related news story).
No deduction allowed for expenses reimbursed by forgiven Paycheck Protection Program loans
The IRS advised that no deduction is allowed for an expense that is otherwise deductible in a taxpayer's trade or business if the payment of the expense results in forgiveness of a Paycheck Protection Program loan and the income associated with the forgiveness is excluded from gross income. In reaching its conclusion, the IRS cited Sec. 265 and Regs. Sec. 1.265-1, which generally provide that no deduction is allowable where the deduction is allocable to a class of income exempt from tax. Notice 2020-32 (4/30/20) (see related news story).
Business meal deductions after the TCJA
This article discusses the history of the deduction of business meal expenses and the new rules under the TCJA and the regulations and provides a framework for documenting and substantiating the deduction.
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.