Document Summaries for the week of Feb. 21, 2022
Tax document summaries for the week of Feb. 21–25, 2022, covering employee benefits and IRS procedure.
Proposed regulations issued on required minimum distributions
The IRS issued proposed regulations that would update existing regulations under Secs. 401(a)(9), 402(c), 403(b), 457, and 4974 to reflect recent legislative changes. They would also replace the Q&A format of the current regulations under Secs. 401(a)(9), 402(c), 408, and 4974 with a standard format. REG-105954-20 (2/23/22) (see related news story).
Noncustodial parent is entitled to child-related credit and deduction due to shared parenting plan
The Tax Court held that, because it determined that a noncustodial parent was treated as having one qualifying child within the meaning of Sec. 152(c) for the 2014 tax year, it followed that the parent was also entitled to the child tax credit for one child for that year. In reaching its holding, the court noted that Prop. Regs. Sec. 1.152-5(e)(2)(i) permitted the taxpayer to substantiate his claim to a dependency exemption by submitting a shared parenting plan to the IRS even though it was not attached to his original tax return. Hicks, T.C. Memo. 2022-10 (2/23/22).
IRS updates FAQs on premium tax credit
The IRS updated its online frequently asked questions regarding the premium tax credit. FS-2022-13 (2/24/22).
IRS offers alternative to facial recognition to verify taxpayer identity
The IRS announced that taxpayers signing up for and using IRS online services can now authenticate their identities with a new alternative to uploading a "selfie" photo, and if they do use facial recognition or have done so in the past, their photos will be deleted. The new option allows taxpayers to verify their identity during a live, virtual interview with agents. IRS Statement (2/21/22) (see related news story).
Chief Counsel offers views on restitution-based assessment and other issues in TAS case
In a highly redacted memorandum, the IRS Office of Chief Counsel discussed a conference call that was held on Oct. 21 to discuss restitution-based assessment, interest, and Sec. 6511 in a Taxpayer Advocate Service (TAS) case. The Chief Counsel's Office advised that it had spent a great deal of time looking at the facts in the case and provided its views in the memorandum, which it noted should likely be shared with the IRS to get payments moved from excess collection. CCA 202208016 (2/25/22).
Disclosures proposed by IRS appraiser are permissible in certain situations
The IRS Office of Chief Counsel advised that certain disclosures proposed to enable an IRS appraiser to complete his investigation into property to ascertain a possible tax liability are necessary to evaluate the highest and best use of property. Thus, the IRS appraiser can disclose certain return information to those having special knowledge that would assist the IRS; such disclosures are authorized under Sec. 6103. The Chief Counsel's Office also stated that the IRS appraiser should only disclose the minimum amount of return information possible to obtain the information needed. CCA 202208014 (2/25/22).
IRS issues quarterly interest rates for tax overpayments and underpayments
The IRS issued the rates for interest on tax overpayments and underpayments for the second calendar quarter of 2022. The rates for interest determined under Sec. 6621 for the calendar quarter beginning April 1, 2022, will be 4% for overpayments (3% in the case of a corporation), 4% for underpayments, 6% for large corporate underpayments, and 1.5% on the portion of a corporate overpayment exceeding $10,000. Rev. Rul. 2022-05 (2/25/22).
Final regs. raise EA exam fee
The IRS issued final regulations that increase the amount of the user fee for each part of the special enrollment examination for enrolled agents to $99 (plus an amount payable to a third-party contractor). T.D. 9962 (2/25/22).
IRS proposes higher EA enrollment and renewal fees
The IRS issued proposed regulations that would increase the enrollment and renewal fees for enrolled agents and the renewal fee for enrolled retirement plan agents from $67 to $140. REG-114209-21 (2/25/22).
Partnership that sold NBA team cannot reduce sale price by deferred compensation liability
The Tax Court held that a partnership, which owned and operated the National Basketball Association's Memphis Grizzlies until they sold the team in 2012, was not entitled to an additional deduction of $10,673,327 for the deferred compensation liability assumed by the purchaser of the team. The court concluded that the partnership had to include the deferred compensation liability in its amount realized on the 2012 sale. Hoops LP, T.C. Memo. 2022-9 (2/23/22).
Including a person's title on Form 8979 does not invalidate eligibility to be a representative
The Office of Chief Counsel was asked whether adding a title, such as "Member," on the signature line of Form 8979, Partnership Representative Revocation, Designation, and Resignation, would affect the legitimacy of a person's appointment as a partnership representative (PR). Citing Regs. Sec. 301.6233-1(b), the Chief Counsel's Office advised that a PR's current or previous connection to a Bipartisan Budget Act partnership is not a determinative factor when considering a person's (or entity's) eligibility to serve as a PR, and, thus, appointment as PR on Form 8979 is not invalidated by a person's inclusion of the word "Member" after his or her name. CCA 202208015 (2/25/22).