Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of January 20 – 24, 2020.
January 20, 2020: The IRS released new Instructions to IRS Form 1120-S, US Income Tax Return for an S Corporation. These changes conform to the new regulations, which changed the qualified business income deduction, addressed qualified opportunity fund investments, and removed the AMT refundable credit. In conjunction with these changes, the IRS also released updated Instructions to Form 1065, Partner’s Share of Income, Deductions, Credits, etc., so that it complied with the new rules regarding the qualified business income deduction.
January 21, 2020: The IRS issued a notice updating both the corporate bond weighted average interest rates and the permissible range of interest rates used to calculate pension plan minimum funding for plan years beginning in January 2020. The IRS updated various projections, including the yield curve, 24-month segment rates, 30-year Treasury securities interest rates, and the minimum present value segment rates.
January 22, 2020: The IRS issued interim guidance to its appeals employees regarding employer shared responsibility payment (ESRP) cases under IRC section 4980H, which requires applicable large employers to provide minimum essential coverage to a certain percentage of their employees. The guidance affects IRM 8.7.21 and is effective immediately.
January 22, 2020: The IRS released a Large Business and International Concept Practice Unit addressing payments of Fixed Determinable Annual Periodic (FDAP) income. The Unit focuses on the statistical sampling and projection procedures that IRS agents utilize when auditing a US withholding agent, focusing especially one that has a large number of Forms 1042-S (regarding a foreign person’s US source income subject to withholding) or FDAP payments, whether or not those payments had been reported.
January 23, 2020: The IRS issued a news release announcing that various global tax chiefs undertook a multi-country day of action dedicated to investigating the facilitation of offshore tax evasion. The day of action involved evidence and intelligence collection activities such as search warrants, interviews and subpoenas. It is expected that further criminal, civil and regulatory action will arise from these actions.
January 23, 2020: The IRS released an issue snapshot about third-party payer arrangements, focusing specifically on professional employer organizations (PEOs) and their related employment tax responsibilities under IRC section 3511. The IRS provided tax resources to help taxpayers address issues that arise when a common law employer’s employment tax obligations are shared by or shifted to a PEO. The IRS also provided audit tips to these taxpayers.
January 24, 2020: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).
Special thanks to Jenni Saperstein in our Chicago office for this week’s roundup.