Document summaries for the week of Jan. 3, 2022

Tax document summaries for the week of Jan. 3–7, 2022, covering employee benefits, exempt organizations, and more.


2022 covered compensation tables released

The IRS issued a ruling that provides tables of covered compensation under Sec. 401(l)(5)(E) for the 2022 plan year. Sec. 401(l)(5)(E)(i) defines "covered compensation" with respect to an employee as the average of the contribution and benefit bases in effect under Section 230 of the Social Security Act for each year in the 35-year period ending with the year in which the employee attains Social Security retirement age. Rev. Rul. 2022-2 (1/5/22).



IRS issues exempt organization no-rulings list

The IRS updated the procedures that apply to requests for determination letters and private letter rulings, and the user fees for letter ruling requests and opinion letters on preapproved plans. Rev. Proc. 2022-4 (1/3/22).

Revised procedures issued for EO determination letters

The IRS set forth procedures for issuing determination letters on issues under the jurisdiction of the director, Exempt Organizations (EO) Rulings and Agreements. Specifically, they address tax-exempt status, private foundation status, and other determinations related to exempt organizations. The revenue procedure also provides guidance on applicable user fees for requesting determination letters. Rev. Proc. 2022-5 (1/3/22).

IRS updates procedures for EO electronic submissions

The IRS issued a revenue procedure modifying Rev. Proc. 2022-5 by updating the procedures for exempt organization determination letters with respect to the electronically submitted Form 1024, Application for Recognition of Exemption Under Section 501(a) or Section 521 of the Internal Revenue Code, for recognition of exemption under Sec. 501(a) (other than under Sec. 501(c)(3) or Sec. 501(c)(4)) and Sec. 521. The procedure also (1) modifies which individuals or representatives are authorized to sign the Form 1024, and (2) provides that the electronic submission process is the exclusive means of submitting a completed Form 1024, except for submissions eligible for the 90-day transition relief provided in Section 4 of the revenue procedure. Rev. Proc. 2022-8 (1/3/22).



Failure to adequately substantiate expenses precludes their deduction

The Tax Court held that a taxpayer employed with the U.S. military as an additional duty first sergeant (ADFS), a position that involved unreimbursable travel between certain military bases, was not entitled to deduct various travel and other 2015 expenses as deductible business expenses because the taxpayer either (1) failed to contemporaneously record the expenses in her ledger; (2) failed to indicate if the costs were nonreimbursable costs incurred in connection with her ADFS duties; or (3) failed to establish a business purpose for the expenses. The court also rejected the taxpayer's deduction for costs incurred to purchase a refurbished iPad after noting that the taxpayer testified that she did not need the iPad to perform her work duties. Struble, T.C. Summ. 2022-1 (1/6/22).



IRS issues annual international no-rulings list

The IRS updated the list of areas of the Code under the jurisdiction of the associate chief counsel (International) on which the IRS will not issue letter rulings or determination letters. Rev. Proc. 2022-7 (1/3/22).

Treasury updates list of international boycott countries

Treasury updated the list under Sec. 999(a)(3) of countries that require or may require participation in, or cooperation with, an international boycott within the meaning of Sec. 999(b)(3). List of Countries Requiring Cooperation With an International Boycott (1/3/22).



IRS updates letter ruling and information letter procedures

The IRS issued annually revised procedures for letter rulings and information letters issued by these associate chief counsel offices: Corporate; Employee Benefits, Exempt Organizations, and Employment Taxes; Financial Institutions and Products; Income Tax and Accounting; International; Passthroughs and Special Industries; and Procedure and Administration. The procedure also revises how determination letters are issued by the Large Business and International, Small Business/Self Employed, Wage and Investment, and Tax Exempt and Government Entities divisions. Rev. Proc. 2021-1 is superseded. Rev. Proc. 2022-1 (1/3/22).

TAM procedures updated

The IRS explained when and how an associate chief counsel office provides a technical advice memorandum (TAM). It also explained a taxpayer's rights when a field office requests a TAM. Rev. Proc. 2021-2 is superseded. Rev. Proc. 2022-2 (1/3/22).

IRS updates domestic no-rulings list

The IRS provided a revised list of areas of the Code under the jurisdiction of these associate chief counsel offices on which the IRS will not issue letter rulings or determination letters: Corporate; Financial Institutions and Products; Income Tax and Accounting; Passthroughs and Special Industries; Procedure and Administration; and Employee Benefits, Exempt Organizations, and Employment Taxes. Rev. Proc. 2021-3 is superseded. Rev. Proc. 2022-3 (1/3/22).

Final regs. on the transition from interbank offered rates

The IRS issued final regulations that provide guidance on the tax consequences of the transition away from the use of certain interbank offered rates in debt instruments, derivative contracts, and other contracts. T.D. 9961 (1/4/22).

IRS provides tax relief for victims of Colorado wildfires

The IRS announced that victims of wildfires and straight-line winds in Colorado beginning Dec. 30, 2021, now have until May 16, 2022, to file various individual and business tax returns and make tax payments. CO-2022-1 (1/3/22)

IRS clarifies R&D credit documentation requirements

The IRS provided guidance to taxpayers and internally on its new documentation requirements for administrative refund claims of the Sec. 41 business tax credit for increasing research activities. Research Credit Claims (Section 41) on Amended Returns Frequently Asked Questions; LB&I-04-0122-0001 (1/5/22) (see related news story).

IRS issues annual report

The IRS issued its 2021 annual report describing its work delivering taxpayer service and its compliance efforts during the pandemic. IRS Publication 5382, Internal Revenue Service Progress Update, Putting Taxpayers First, Fiscal Year 2021 (1/7/22).

FAQs on recovery rebate credit updated

The IRS updated its frequently asked questions regarding the 2020 recovery rebate credit. IR-2022-6 (1/7/22).

IRS updates FAQs for 2020 unemployment compensation exclusion

The IRS updated Topic G, Receiving a Refund, Letter or Notice, of its frequently asked questions regarding the 2020 unemployment compensation exclusion. IR-2022-5 (1/7/22).

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