Document Summaries for the week of Oct. 24, 2022
Tax document summaries for the week of Oct. 24–28, 2022, covering individuals, IRS procedure, and more.
In-home care payments are subject to employment taxes
The IRS Office of Chief Counsel advised that certain in-home care payments from a state program or agency to a service provider are subject to FICA and FUTA taxes. The Chief Counsel's Office also stated that a parent who receives payments as a service provider for the care of their child cannot choose to "opt out" of an applicable statutory exclusion and have the payments subject to FICA tax. CCA 202243009 (10/28/22).
ESTATES, TRUSTS & GIFTS
Trust's failure to file refund claim for correct year was a fatal procedural error
The Tax Court held that a trust was not entitled to a refund of taxes it claimed to have overpaid in 2009 and 2010 because it never filed a refund claim for those years and instead filed a claim for 2014. This procedural defect, the court concluded, was fatal to the trust's position that it had a right to the refund. Richard J. O'Neill Trust, T.C. Memo. 2022-108 (10/27/22).
Couple liable for premium tax credit related deficiency
The Tax Court held that the IRS was correct in increasing a married couple's income tax liability by the amount of an excess advance premium tax credit (PTC) benefit that was applied against their monthly health insurance premium. According to the court, the IRS was not precluded from issuing the couple a deficiency notice after issuing them a refund for the year at issue. After calculating the alternative marriage-year computation for the PTC, the court determined the couple were liable for the tax increase imposed by the IRS. Manzolillo, T.C. Memo. 2022-107 (10/24/22).
IRS issues general rules and specifications for substitute forms and schedules
The IRS issued a procedure that supersedes Rev. Proc. 2021-42 and provides guidelines and general requirements for the development, printing, and approval of the 2022 substitute tax forms. This procedure will be reproduced as the next revision of IRS Publication 1167, General Rules and Specifications for Substitute Forms and Schedules. Rev. Proc. 2022-31 (10/21/22).
IRS publishes unused housing credit carryovers allocated to qualified states
The IRS issued a revenue procedure with the amounts of unused housing credit carryovers allocated to qualified states under Sec. 42(h)(3)(D) for calendar year 2022. The revenue procedure is effective for allocations of housing credit dollar amounts attributable to the national pool component of a qualified state's housing credit ceiling for calendar year 2022. Rev. Proc. 2022-37 (10/21/22).
Pilot program aims to stop PPS phone-line jumping
The IRS announced a pilot program meant to thwart third-party services that let callers who pay the services a fee move ahead in the IRS's Practitioner Priority Service (PPS) phone queue. Practitioner Priority Service (10/25/22) (see related news story).
Interest continues to accrue during closed years on excise tax on self-dealing loan
The IRS Office of Chief Counsel advised that interest on a Sec. 4941(a)(1) excise tax on a self-dealing loan that accrues during closed years is included in the loan balance to compute the amount involved for the deemed acts of self-dealing in open years. According to the Chief Counsel's Office, although the IRS may not assess the Sec. 4941 excise tax for acts of self-dealing that occurred in closed years, any accrued interest and principal payments from closed years affect the loan balance going forward and must be accounted for to determine the amount involved for deemed acts of self-dealing that occur in open years. CCA 202243008 (10/28/22).
IRS hires 4,000 new employees to answer phones