Document Summaries for the week of June 27, 2022
Tax document summaries for the week of June 27–July 1, 2022, covering individuals; IRS procedure; and more.
Guidance on alternative minimum funding standards for newspaper pension plans
The IRS issued guidance regarding the changes made by Section 9707 of the American Rescue Plan Act of 2021, P.L. 117-2, to the election of Sec. 430(m) alternative minimum funding standards for a defined benefit pension plan that is a community newspaper plan or any other plan that is sponsored by an eligible newspaper plan sponsor. Notice 2022-31 (6/29/22).
ESTATES, TRUSTS & GIFTS
Proposed regs. issued on present value of various estate deductions
The IRS issued proposed regulations incorporating present-value principles by which an estate may deduct certain expenses and claims against the estate under Sec. 2053. REG-130975-08 (6/27/22) (see related news story).
IRS acted fairly in rejecting taxpayer's OIC and placing account in CNC status
The Tax Court held that an IRS settlement officer (SO) did not abuse her discretion in rejecting a taxpayer's offer in compromise and upholding a Notice of Federal Tax Lien (NFTL). The court noted that (1) the SO had, of her own volition, placed the taxpayer's account in currently-not-collectible (CNC) status, thus ensuring that the IRS would engage in further collection efforts only if the taxpayer's income substantially increased, and (2) while the taxpayer's account remained in CNC status, a home in which the taxpayer had sufficient equity to pay the liability but in which his disabled child resided would not be levied upon. Serna, T.C. Memo. 2022-66 (6/27/22).
Court upholds tax lien against taxpayer who failed to file tax return
The Tax Court held that the IRS did not abuse its discretion in sustaining a Notice of Federal Tax Lien against a taxpayer who failed to file his 2014 federal income tax return and owed more than $63,000 in taxes. The court said it could not fault the IRS settlement officer for not providing the taxpayer with additional time to assemble documentation in support of his challenge to the assessed tax liability when the taxpayer did not ask for additional time. Kotrides, T.C. Memo. 2022-67 (6/28/22).
Taxpayer fails to support deductions of purported employee business expenses
The Tax Court held that a taxpayer who worked as a project manager and oversaw multiple construction projects was not entitled to deduct unreimbursed employee business expenses because he failed to substantiate the expenses. He also failed to show that his employer would not have reimbursed some of the expenses at issue, which were for vehicle use, parking fees, tolls, transportation expenses, travel, and meals and entertainment. Pedersen, T.C. Summ. 2022-11 (6/28/22).
Fifth Circuit denies charitable deduction for gift of airplane
The Fifth Circuit affirmed a Tax Court decision denying a taxpayer a charitable deduction for the donation of an airplane. The court concluded that the taxpayer failed to satisfy the substantiation requirements of Sec. 170(f)(12) because he did not provide a contemporaneous written acknowledgment from the donee organization meeting the requirements of Sec. 170(f)(12)(B). Izer, No. 21-60679 (5th Cir. 6/29/22).
IRS to amend regulations under Secs. 59A and 6038A
The IRS issued a notice announcing its intention to amend the regulations under Secs. 59A and 6038A to defer until tax years beginning on or after Jan. 1, 2025, the applicability of certain provisions of the regulations relating to the reporting of Sec. 59A qualified derivative payments. The IRS said that taxpayers may rely on the notice before it amends the final regulations and that the notice supersedes Notice 2021-36. Notice 2022-30 (6/27/22).
Revenue procedure addresses requests relating to Superfund taxable substances list
The IRS issued a revenue procedure that provides the exclusive procedures for requesting a determination under Sec. 4672(a)(2) that a substance be added to, or removed from, the list of taxable substances under Sec. 4672(a). The sale or use of any such taxable substances by their importers is subject to the so-called Superfund excise tax imposed by Sec. 4671(a), with certain exceptions. Rev. Proc. 2022-26 (6/28/22) (see related news story).
Tax lien can attach to alimony payments being made by purchaser of taxpayer's business
The Office of Chief Counsel advised that a federal tax lien can attach to monthly alimony payments being paid to a taxpayer's ex-wife by an individual who purchased a business from the taxpayer. According to the Chief Counsel's Office, the payments being made for the sale of the taxpayer's business are part of the compensation given to the taxpayer in exchange for his business interests, and the taxpayer's instructions to have the payments directed to his ex-wife and not the taxpayer himself do not prevent attachment of the lien. CCA 202226010 (7/1/22).
IRS updates Fact Sheet FAQ procedures
The IRS Office of Chief Counsel announced that the Chief Counsel Directives Manual is being revised to reflect updated procedures for the review and posting of frequently asked questions (FAQs) on the IRS website. FAQs subject to the new procedures — Fact Sheet FAQs — will include standard disclaimer language and a link to a new webpage providing public information on the issue of reliance on Fact Sheet FAQs. CC-2022-006 (6/30/22).