Document Summaries for the week of Nov. 14, 2022
Tax document summaries for the week of Nov. 14–18, 2022, covering individuals, IRS procedure, and more.
Disabled taxpayer entitled to innocent spouse relief
After reviewing factors enumerated in Rev. Proc. 2013-34, the Tax Court held that because a disabled taxpayer was unable to work and depended on Social Security disability payments as his only income, he was entitled to equitable innocent spouse relief under Sec. 6015(f) due to financial hardship. The court concluded that, although the taxpayer knew of the income that gave rise to the deficiency at issue, he credibly testified that he made a good-faith effort, despite confusing advice and reporting documents, to comply with the tax law but erroneously believed that settlement funds he and his wife received were not taxable. Parker, T.C. Memo. 2022-110 (11/15/22).
The IRS issued a ruling providing tables of prescribed rates for federal income tax purposes for December 2022. Table 1 contains the short-term, midterm, and long-term applicable federal rates (AFRs) for purposes of Sec. 1274(d). Table 2 contains the short-term, midterm, and long-term adjusted AFRs for purposes of Sec. 1288(b). Table 3 sets forth the adjusted federal long-term rate and the long-term tax-exempt rate described in Sec. 382(f). Table 4 contains the appropriate percentages for determining the low-income housing credit described in Sec. 42(b)(1) for buildings placed in service during December 2022 (although, under Sec. 42(b)(2), the applicable percentage for non–federally subsidized new buildings placed in service after July 30, 2008, is not less than 9%). Table 5 contains the rate for determining the present value of an annuity, an interest for life or for a term of years, or a remainder or a reversionary interest for purposes of Sec. 7520. Rev. Rul. 2022-22 (11/15/22).
IRS announces recent disciplinary sanctions against practitioners
The IRS Office of Professional Responsibility announced recent disciplinary sanctions involving attorneys, CPAs, enrolled agents, enrolled actuaries, enrolled retirement plan agents, and appraisers who are subject to Treasury Circular 230, Regulations Governing Practice Before the Internal Revenue Service (31 C.F.R. Part 10). Announcement 2022-21 (11/14/22).
IRSAC annual report released
The IRS Advisory Council released its annual report making recommendations to the IRS. Publication 5316, Internal Revenue Service Advisory Council Public Report, November 2022 (11/16/22) (see related news story).
IRS issues adjusted applicable dollar amount for determining PCORTF fee
The IRS announced that the adjusted applicable dollar amount for purposes of calculating the fee imposed by Sec. 4375 (on issuers of a specified health insurance policy) and Sec. 4376 (on sponsors of an applicable self-insured health plan) for policy and plan years ending on or after Oct. 1, 2022, and before Oct. 1, 2023, is $3, an increase from the prior amount of $2.79. The fee helps to fund the Patient-Centered Outcomes Research Trust Fund (PCORTF) and is calculated by multiplying the average number of lives covered under the policy or plan by the applicable dollar amount for the policy or plan year. Notice 2022-59 (11/14/22).
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.