Document Summaries for the week of Oct. 3, 2022
Tax document summaries for the week of Oct. 3–7, 2022, covering international and IRS procedures.
Final RMD regs. to apply no earlier than the 2023 distribution calendar year
The IRS announced its intention to issue final regulations relating to required minimum distributions (RMDs) under Sec. 401(a)(9) that will apply no earlier than the 2023 distribution calendar year. The IRS noted that, because of some confusion regarding the proposed regulations, it has received requests for transition relief for failures to take distributions that were RMDs due in 2021 or 2022 pursuant to Sec. 401(a)(9)(H) in the case of the death of an employee (or designated beneficiary) in 2020 or 2021. Notice 2022-53 (10/7/22).
ESTATES, TRUSTS & GIFTS
Daughter cannot be substituted for deceased mother in deficiency proceeding
The Tax Court held that a daughter, who became the sole trustee of a trust established by her deceased mother, was not authorized to be a substitute for the decedent in a tax deficiency proceeding. The court found that because the decedent died as a resident of Florida and the daughter had not been appointed a personal representative of the mother's estate by a Florida probate court, the daughter could not be substituted for her mother in the deficiency proceeding. Sander, T.C. Memo. 2022-103 (10/6/22).
No reasonable cause existed for failing to meet substantiation requirements for gift of art
The Tax Court held that a taxpayer who failed to satisfy the substantiation requirements of Sec. 170(f)(11) with respect to a charitable contribution deduction for a gift of art did not have reasonable cause for failing to meet the substantiation requirements. The court found that, if the taxpayer had reviewed the Form 8283, Noncash Charitable Contributions, as he testified, it would have been obvious to him that it was defective in many respects. Schweizer, T.C. Memo. 2022-102 (10/6/22).
IRS updates procedure addressing countries with information exchange agreements
The IRS announced that Turkey has been added to the list of jurisdictions with which Treasury and the IRS have determined it is appropriate to have an automatic exchange relationship with respect to the information collected under Regs. Secs. 1.6049-8 and 1.6049-4(b)(5). Rev. Proc. 2021-32 is updated and superseded. Rev. Proc. 2022-35 (10/3/22).
Proposed regs. would raise enrolled actuary user fee
The IRS issued proposed regulations that would increase both the renewal and enrollment user fees for enrolled actuaries from $250 to $680. REG-100719-21 (10/3/22).
IRS revises initial contact letters
The IRS announced that it is revising the initial contact letters sent by Appeals. The revised letters will clarify that, generally, taxpayers and representatives can choose telephone, video, or in-person conferences when they meet with Appeals. Also, the letters will provide the name and phone number of the Appeals officer's manager in addition to the Appeals officer's contact information. IR-2022-170 (10/4/22).
Regulations on low-income housing credit average income test
The IRS issued final, temporary, and proposed regulations regarding the average income test for purposes of the Sec. 42 low-income housing credit. T.D. 9967; REG-113068-22 (10/7/22).
IRS requests comments on credits for clean vehicles
The IRS issued a notice announcing its plan to issue guidance under Sec. 30D and Sec. 25E, as amended by the Inflation Reduction Act of 2022, P.L. 117-169. The notice requests general comments on questions under Sec. 25E and the amendments to Sec. 30D, as well as specific comments involving questions described in Section 3 of the notice. Notice 2022-46 (10/5/22).
IRS requests comments on energy security tax credits for manufacturing
The IRS issued a notice announcing its intention to issue guidance regarding the advanced manufacturing production credit under Sec. 45X and the qualifying advanced energy project credit under Sec. 48C, as added and amended, by the Inflation Reduction Act of 2022, P.L. 117-169. The notice requests general and specific comments on questions pertaining to the implementation and administration of Sec. 45X and Sec. 48C, which will help to inform the development of guidance implementing Sec. 45X and Sec. 48C. Notice 2022-47 (10/5/22).
IRS requests comments on incentive provisions for improving the energy efficiency of buildings
The IRS issued a notice announcing its intention to issue guidance on the provisions of Secs. 25C, 25D, 45L, and 179D, as amended by the Inflation Reduction Act of 2022, P.L. 117-169. The notice requests general comments on questions arising because of these amendments, as well as specific comments involving questions listed in the notice. Notice 2022-48 (10/5/22).
IRS requests comments on certain energy generation incentives
The IRS issued a notice announcing its plan to issue guidance on Secs. 45, 45U, 45Y, 48, and 48E, as amended or added by the Inflation Reduction Act of 2022, P.L. 117-169. The notice requests general as well as specific comments on issues arising under Secs. 45, 45U, 45Y, 48, and 48E that will be used to help inform development of guidance implementing those provisions. Notice 2022-49 (10/5/22).
IRS requests comments on elective payment and transfers of certain credits
The IRS anticipates issuing guidance to implement the elective payment provisions under Sec. 6417 and the elective credit transfer provisions under Sec. 6418, as added by the Inflation Reduction Act of 2022, P.L. 117-169. As a result, it issued a notice requesting general comments on questions arising under new provisions, as well as specific comments on questions listed in Section 3 of the notice. Notice 2022-50 (10/5/22).
IRS requests comments on prevailing wage, apprenticeship, and certain other requirements
The IRS issued a notice announcing its plan to issue guidance regarding the provisions of Secs. 30C, 45, 45L, 45Q, 45U, 45V, 45Y, 45Z, 48, 48C, 48E, and 179D, as amended or added by the Inflation Reduction Act of 2022, P.L. 117-169. The notice requests comments on general as well as specific questions pertaining to the prevailing wage, apprenticeship, domestic content, and energy community requirements for increased or bonus credit (or deduction) amounts under those respective provisions of the Code. Notice 2022-51 (10/5/22).
Additional relief provided from certain Sec. 42 requirements due to supply chain issues
The IRS issued guidance that modifies Notice 2022-5 by providing additional temporary relief from certain requirements under Sec. 42 for qualified low-income housing projects. According to the IRS, it has received numerous inquiries relating to unavoidable labor and supply chain disruptions delaying the construction, rehabilitation, and restoration of properties throughout the United States and, in view of the unique circumstances resulting from these disruptions and their effect on the existing relief provided in Notice 2022-5, it is appropriate to provide additional temporary relief. Notice 2022-52 (10/7/22).
IRS can use an aggregation or disaggregation approach to determine if economic substance exists
The IRS Office of Chief Counsel advised that whether the economic substance doctrine, which was codified in Sec. 7701(o)(5)(D) on March 30, 2010, applies to a transaction is a factual inquiry. Citing Notice 2014-58, the Chief Counsel's Office stated that the IRS can use an aggregation or disaggregation approach to determine whether a transaction lacks economic substance and noted that such an approach interprets "transaction" to include all of the steps taken together when a plan that generates a tax benefit involves a series of interconnected steps. CCA 202240019 (10/7/22).
Chief Counsel's Office addresses extension date of Form 5500 series
In response to a highly redacted request, the IRS Office of Chief Counsel advised that Regs. Sec. 1.6081-11(a) provides that an administrator or sponsor of an employee benefit plan required to file a return under the provisions of Chapter 61 or the regulations under that chapter on Form 5500 (series), Annual Return/Report of Employee Benefit Plan, will be allowed an automatic extension of time to file the return until the 15th day of the third month following the date prescribed for filing the return, if the administrator or sponsor files an application under this section in accordance with Regs. Sec. 1.6081-11(b). The Chief Counsel's Office also noted that Regs. Sec. 1.6081-11(b) provides that to satisfy this paragraph, an administrator or sponsor must (1) submit a complete application on Form 5558, Application for Extension of Time to File Certain Employee Plan Returns, or in any other manner as may be prescribed by the commissioner; and (2) file the application with the IRS office designated in the application's instructions on or before the date prescribed for filing the information return. CCA 202240018 (10/7/22).
Chief Counsel addresses taxpayer's arguments relating to intercompany transaction regs.
The IRS Office of Chief Counsel supplemented CCA 201726012 in response to a taxpayer's protest dated July 20, 2018. The advice strictly focuses on the taxpayer's arguments relating to the intercompany transaction regulations in Regs. Sec. 1.1502-13. CCA 202240017 (10/7/22).
Tax relief for Hurricane Ian victims in North Carolina
The IRS announced that victims of Hurricane Ian, which began Sept. 28, who reside or have a business in North Carolina now have until Feb. 15, 2023, to file various individual and business tax returns and make tax payments. NC-2022-10 (10/5/22).
Tax relief for Hurricane Ian victims in South Carolina
The IRS announced that victims of Hurricane Ian, which began Sept. 25, who reside or have a business in South Carolina now have until Feb. 15, 2023, to file various individual and business tax returns and make tax payments. SC-2022-06 (10/5/22).
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.