Document Summaries for the week of July 4, 2022

Tax document summaries for the week of July 4–8, 2022, covering individuals and IRS procedure.


IRS addresses merger involving multiemployer plan that received special financial assistance

The IRS ruled that if a multiemployer defined benefit pension plan that has received special financial assistance (SFA) from the Pension Benefit Guaranty Corporation is merged into a multiemployer defined benefit pension plan that has not received SFA, and the plan that has not received SFA is designated as the ongoing plan after the merger, the ongoing plan is not deemed to be in critical status under Sec. 432(b)(7) solely as a result of the merger. The IRS noted that Sec. 432(b)(7), which provides for deemed critical status, applies only to an eligible multiemployer plan described in Sec. 432(k)(3) that applies for and receives SFA. Rev. Rul. 2022-13 (7/7/22).



IRS extends time for certain estates to make portability election

The IRS issued a revenue procedure that provides a simplified method for certain taxpayers to obtain an extension of time under Regs. Sec. 301.9100-3 to make a portability election under Sec. 2010(c)(5)(A). The procedure, which applies to estates where the decedent has a surviving spouse and where the estate is not required by Sec. 6018(a) to file an estate tax return, supersedes Rev. Proc. 2017-34 and extends the period within which an estate may make the portability election to the fifth anniversary of the decedent's date of death. Rev. Proc. 2022-32 (7/8/22) (see related news story).



Appeals court affirms false tax returns conviction

The Fourth Circuit affirmed the conviction of an individual on 33 counts of aiding and assisting in the preparation of false tax returns and five counts of wire fraud. The court rejected her arguments that there was insufficient evidence to support the jury's verdict, that the government made inappropriate references to her prior convictions that prejudiced her defense, and that the district court should have severed the tax-preparation counts from the wire fraud counts. Tull, No. 21-4196 (4th Cir. 7/6/22).

Couple who did not preserve their tax records failed to meet burden of proof requirement

The Tax Court held that a couple who pleaded guilty to tax evasion and other crimes, and did not preserve their financial and tax records, failed to meet their burden of proof with respect to their liability for tax deficiencies and additions to tax under Sec. 6651 and Sec. 6654 assessed by the IRS. The court noted that the one issue pertaining to additions to tax that the parties reserved for decision was whether the IRS complied with the supervisory approval requirement of Sec. 6751(b), but the court noted that this requirement does not apply to any addition to tax under Sec. 6651 or Sec. 6654. Barrington, T.C. Memo. 2022-68 (7/6/22).

IRS not precluded by law from asserting excise tax liability for excess IRA contributions

The Tax Court denied a taxpayer's motion for summary judgment. The court found no merit in the taxpayer's argument that the IRS was precluded as a matter of law from asserting excise tax liability under Sec. 4973 because it failed to issue him a notice of deficiency challenging his income tax treatment of the transactions that generated his excess individual retirement account (IRA) contributions. In this case, the IRS had determined that the taxpayer owed an excise tax of more than $8.4 million plus penalties and interest on excess IRA contributions of more than $25 million. Couturier, T.C. Memo. 2022-69 (7/6/22).

Failure to substantiate expenses precludes deductions, but taxpayer escapes penalties

The Tax Court held that a taxpayer and the estate of his deceased wife, of which he was the executor, failed to substantiate purported business expenses totaling $34,627 and $31,261 for tax years 2016 and 2017, respectively, and, consequently, were not entitled to deduct those amounts under Sec. 162(a). The court also held that the taxpayer was not liable for an accuracy-related penalty for tax year 2017 because the IRS did not satisfy its burden of production with respect to Sec. 6751(b)(1), which requires written supervisory approval for the assessment of the penalties. Wolpert, T.C. Memo. 2022-70 (7/7/22).



IRS provides specifications for private printing of information returns

The IRS provided specifications for the private printing of red-ink substitutes for the 2022 revisions of certain information returns. This procedure will be reproduced as the next revision of IRS Publication 1179, General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498, and Certain Other Information Returns. Rev. Proc. 2021-325 is superseded. Rev. Proc. 2022-25 (7/5/22).

Tax relief for Montana severe storm and flooding victims

The IRS announced that victims of a severe storm and flooding in Carbon, Park, and Stillwater counties in Montana beginning June 10, 2022, now have until Oct. 17, 2022, to file various individual and business tax returns and make tax payments. MT-2022-01 (7/5/22).

Tax relief for Oklahoma severe storms, tornadoes, and flooding victims

The IRS announced that victims of severe storms, tornadoes, and flooding in designated parts of Oklahoma beginning May 2, 2022, now have until Sept. 1, 2022, to file various individual and business tax returns and make tax payments. OK-2022-02 (7/5/22).

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.