Document summaries for the week of July 5, 2021

Tax document summaries for the week of July 5–9, 2021, covering individuals, IRS procedure, and more.


IRS addresses special financial assistance from the Pension Benefit Guaranty Corp.

The IRS issued a notice providing guidance under Sec. 432(k) to sponsors of multiemployer defined benefit pension plans that are required to reinstate certain previously suspended benefits as a condition of receiving special financial assistance under Section 4262 of the Employee Retirement Income Security Act of 1974 (ERISA), as amended. The notice also (1) provides guidance on whether makeup payments with respect to previously suspended benefits under Sec. 432(k)(2)(A)(ii) are eligible to be rolled over to another eligible retirement plan under Sec. 402(c); and (2) provides guidance on how to apply the rule in Sec. 432(k)(2)(D)(i) under which any special financial assistance received by the plan is not taken into account in determining contributions required under Sec. 431. Notice 2021-38 (7/9/21).


Court upholds deficiency after finding taxpayer’s arguments frivolous

The Tax Court held that a taxpayer, who received compensation for his services as an independent contractor but reported zero income and zero taxes due on his tax return, was liable for federal income tax and self-employment tax on the income reported to him on Form 1099-MISC. The court noted that the taxpayer’s overall theory that only those performing “the functions of a public office” need to pay federal income tax has been consistently rejected as a common, frivolous, tax-protestor argument of no merit. Delgado, T.C. Memo. 2021-84 (7/7/21).

IRS examination employee cannot deduct unreimbursed business expenses

The Tax Court held that an IRS examination employee, who lived in Nevada but worked in California, was not entitled to unreimbursed business expense deductions for his mileage and other business expenses incurred in traveling back and forth from Nevada to California because he was not “away from home” within the meaning of Sec. 162(a)(2). However, the Tax Court rejected the IRS’s request to find the taxpayer negligent after the IRS conceded the Sec. 6662 penalties it had assessed on the taxpayer. Warque, T.C. Summ. 2021-18 (7/8/21).

Tax Court lacks jurisdiction over taxpayer’s untimely filed petition

The Tax Court held that, because a taxpayer failed to file a timely Tax Court petition with respect to IRS notices of deficiency, the court did not have jurisdiction over the matter. Thus, the court granted the IRS’s motion to dismiss the taxpayer’s petition for lack of jurisdiction. Mathews, T.C. Memo. 2021-85 (7/8/21).

Dentist willfully failed to pay withheld employment taxes

The Fifth Circuit held that a taxpayer willfully failed to pay taxes withheld from employees of his dentistry practice over to the IRS, affirming a district court decision. Williams, No. 20-10433 (5th Cir. 7/6/21).

Proposed regulations to protect consumers from surprise medical bills

The IRS issued proposed regulations designed to protect consumers from surprise medical bills for emergency services, air ambulance services furnished by nonparticipating providers, and nonemergency services furnished by nonparticipating providers at participating facilities in certain circumstances. REG-107706-21 (7/6/21).


IRS Whistleblower Office did not abuse its discretion in denying taxpayer’s claim

The Tax Court held that the IRS Whistleblower Office did not abuse its discretion in denying a taxpayer’s claim for a whistleblower award where the IRS had neither initiated an administrative or judicial action nor collected any proceeds from the target taxpayer on the basis of the information furnished by the taxpayer. The court rejected the taxpayer’s argument that the IRS erred in not pursuing the target taxpayer after noting that it did not have the authority to compel the IRS to initiate any action against the target taxpayer. Peterfreund, T.C. Memo. 2021-83 (7/7/21).

Tax Insider Articles


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.