Document summaries for the week of Dec. 14, 2020
Tax document summaries for the week of Dec. 14–18, 2020, covering employee benefits, IRS procedure, and more.
Final regs. on excess executive compensation
The IRS issued final regulations on Sec. 162(m), which disallows a deduction by any publicly held corporation for employee remuneration paid to any covered employee to the extent that the employee’s remuneration for the tax year exceeds $1 million. T.D. 9932 (12/18/20) (see related news story).
Updated mortality rates and tables for minimum funding requirements
The IRS issued updated the mortality improvement rates and static mortality tables that are used for determining minimum funding requirements under Sec. 430(h)(3) for 2022 and minimum present value under Sec. 417(e)(3) for distributions with annuity starting dates that occur during stability periods beginning in the 2022 calendar year. Notice 2020-85 (12/14/20).
IRS delays mandatory e-filing requirement of Form 4720 by private foundations
The IRS announced a delay, pursuant to Section 3101(d)(2) of the Taxpayer First Act of 2019, P.L. 116-25, of the application of Sec. 6033(n) with respect to the requirement for private foundations under Sec. 509(a) to e-file Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code. Simultaneously, the IRS announced that it intends to remove Regs. Sec. 53.6011-1(c) because the Taxpayer First Act made it unfeasible under Sec. 6104 and Sec. 6033 for a private foundation and other persons to jointly e-file the same Form 4720. Notice 2021-01 (12/16/20).
IRS extends e-signature acceptance for certain forms
The IRS extended until June 30, 2021, the period during which it will accept a number of forms for which it will temporarily allow required signatures in electronic or digital form. Memorandum for All Services and Enforcement Employees (12/11/20) (see related news story).
IRS’s receipt and auditing of taxpayer’s Virgin Islands returns does not start limitation period
The Eighth Circuit reversed a Tax Court decision and held that, even though the IRS received the taxpayer’s tax returns from the U.S. Virgin Islands Bureau of Internal Revenue, audited the returns, and issued notices of deficiency, those facts were irrelevant for statute of limitation purposes. The taxpayer had not filed a return with the IRS, and the IRS’s actual knowledge of the returns did not create a filing. Coffey, No. 18-3256 (8th Cir. 12/15/20).
Guidance issued on Round 3 of Phase III of the Sec. 48A qualifying advanced coal project program
The IRS issued a notice that updates and amplifies the procedures for the allocation of Sec. 48A Phase III credits by announcing the beginning of Round 3 of the Sec. 48A Phase III Program. To be considered in Round 3 of the Sec. 48A Phase III Program, the notice provides that applications must be submitted to the Department of Energy (DOE) (Application for DOE Certification) and to the IRS (Application for Sec. 48A Certification) on or before the date that is 90 days after the date of publication of the notice in the Federal Register. Notice 2020-88 (12/14/20).
IRS issues applicable federal rates for January 2021
The IRS issued the applicable federal rates for January 2021 for purposes of Sec. 1274(d), Sec. 1288(b), and Sec. 382(f). The ruling also contains the appropriate percentages for determining the low-income housing credit described in Sec. 42(b)(1) for buildings placed in service during the current month; the federal rate for determining the present value of an annuity, an interest for life or for a term of years, or a remainder or a reversionary interest for purposes of Sec. 7520; and the deemed rate of return for a transfer made during calendar year 2021 to pooled income funds described in Sec. 642(c)(5) that have been in existence for less than three tax years immediately preceding the tax year in which the transfer was made. Rev. Rul. 2021-1 (12/16/20).
Failure to sign returns dooms taxpayers’ refund claim
The Court of Federal Claims dismissed a suit claiming a tax refund because the taxpayers failed to sign the amended tax returns that were the basis for the refund claim or to properly authorize a representative to do so on their behalf. The court also denied the taxpayers’ contention that the IRS waived the signature requirement by investigating their returns. Therefore, the court held, it lacked subject-matter jurisdiction to hear the suit. Brown, No. 19-848 (Fed. Cl. 12/15/20).
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.