Document summaries for the week of Oct. 5, 2020
Tax document summaries for the week of Oct. 5–9, 2020, covering employee benefits, individuals, and more.
SIFL cents-per-mile rates issued
The IRS issued the standard industry fare level (SIFL) cents-per-mile rates and terminal charge in effect for the second half of 2020 for purposes of Regs. Sec. 1.61-21(g), relating to the rule for valuing noncommercial flights provided as an employee fringe benefit on employer-provided aircraft. Rev. Rul. 2020-21 (10/5/20).
IRS extends deadline to apply for economic impact payment
The IRS is giving individuals who do not normally file a tax return and have not received an economic impact payment until Nov. 21 to enter their information on the Non-Filer: Enter Payment Info Here tool on the IRS website. IR-2020-229 (10/6/20) (see related news story).
Court upholds levy against attorney owing more than $1.2 million
The Tax Court granted summary judgment to the IRS and upheld a notice of intent to levy in a Collection Due Process case involving an attorney who owed more than $1.2 million in tax liabilities and interest for 2015 and 2016. The court held that an IRS settlement officer did not abuse her discretion in sustaining the proposed levy. Spagnoletti, T.C. Memo. 2020-140 (10/8/20).
Cash-method taxpayer cannot deduct accrued interest before payment
The Eleventh Circuit affirmed a Tax Court decision holding that a taxpayer used the cash method and therefore could not deduct accrued interest due on loans that he had not paid. Ronning, No. 19-14312 (11th Cir. 10/9/20).
IRS did not abuse its discretion in rejecting whistleblower claim
The Tax Court held that, at an evidentiary hearing, the taxpayer did not make a substantial showing with clear evidence that his Form 211, Application for Award for Original Information, had been provided to an IRS agent examining the target of the taxpayer’s Form 211 or that any information he provided was omitted from the administrative record. The court found that the IRS Whistleblower Office did not abuse its discretion when it determined that the taxpayer’s Form 211 should not be forwarded to the examining agent, that the information provided by the taxpayer did not result in the collection of any proceeds, and that the taxpayer was thus not eligible for a whistleblower award. Neal, T.C. Memo. 2020-138 (10/5/20).
Low-income housing credit carryover allocations published
The IRS published the amounts of unused housing credit carryovers allocated to qualified states under Sec. 42(h)(3)(D) for calendar year 2020. Rev. Proc. 2020-42 (10/5/20).
IRS abused its discretion in denying whistleblower claim
The Tax Court held that a determination by the IRS Whistleblower Office (WBO) to reject a whistleblower claim on the purported basis that the IRS Criminal Investigation Division did not take any action for purposes of Sec. 7623(b)(1) was not supported by the administrative record and thus constituted an abuse of discretion. The court also found that because the WBO’s determination was not based on the noncollection of proceeds, the IRS could not rely on that supposed ground to defend its rejection of the claim. Doyle, T.C. Memo. 2020-139 (10/8/20).
Tax Court cannot compel Whistleblower Office to act as taxpayer wants
The Tax Court rejected a taxpayer’s request to order the IRS Whistleblower Office (WBO) to analyze his whistleblower claims after the court found that the record did not show that the WBO never analyzed the taxpayer’s claim and because, the Tax Court said, it could not compel the WBO to act as the taxpayer requested. However, the Tax Court also rejected the IRS’s motion for summary judgment because it found that the WBO’s final determination letter was equivocal as to whether it constituted a threshold rejection based on the face of the taxpayer’s whistleblower claim or a substantive denial. Worthington, T.C. Memo. 2020-141 (10/8/20).
IRS procedure facilitates market transition away from interbank offered rates
The IRS issued a revenue procedure aimed at facilitating the market’s transition away from the London Interbank Offered Rate and other interbank offered rates by mitigating certain potential tax consequences of adopting fallback language recommended by the Alternative Reference Rates Committee (ARRC) and the International Swaps and Derivatives Association (ISDA). The revenue procedure generally provides that modifying certain contracts to incorporate the ARRC’s and ISDA’s recommended fallback language will not result in a realization event and, generally, such modifications will not result in legging out of an integrated transaction or in the disposition or termination of either leg of a hedging transaction. Rev. Proc. 2020-44 (10/9/20).
Final regs. on withholding on transfers of partnership interests
The IRS issued final regulations on the operation of Sec. 1446(f), which requires withholding on the transfer of a partnership interest described in Sec. 864(c)(8) (gain or loss of foreign persons from the sale or exchange of certain partnership interests). T.D. 9926 (10/8/20) (see related news story).
Final regs. on sale of a partnership interest that is treated as effectively connected income
The IRS issued final regulations under Sec. 864(c)(8) that provide guidance for certain foreign persons in determining the gain or loss from the sale or exchange of an interest in a partnership that is treated as effectively connected with a trade or business within the United States, including certain rules that coordinate Sec. 864(c)(8) with other relevant sections of the Code. T.D. 9919 (10/8/20) (see related news story).
Advice on civil fraud penalty procedures for syndicated conservation easements
The IRS Office of Chief Counsel issued advice on the method by which the IRS applies the Sec. 6663(a) civil fraud penalty for partnerships that participated in syndicated conservation easement transactions when the partnership is subject to the Tax Equity and Fiscal Responsibility Act of 1982, P.L. 97-248, partnership audit procedures. AM 2020-010 (10/9/20).