Last July, the IRS announced its Virtual Currency Compliance Campaign, designed to intensify the IRS’s efforts to counter the underreporting of income related to cryptocurrency use. Through the campaign, the IRS will address noncompliance through taxpayer education, increased audits
Tax Withholding & Reporting
The Tax Withholding & Reporting blog, published by Covington & Burling LLP, focuses on developments and guidance related to tax withholding obligations and reporting requirements under U.S. federal tax law. It covers topics such as IRS regulations on compensation deduction limitations for publicly held corporations, tax treatment of contributions and benefits under state paid family and medical leave programs, withholding rules for retirement plan distributions to U.S. taxpayers abroad, and tax implications of employer-provided work-life referral services. The blog addresses regulatory updates, compliance considerations, and practical implications for employers, employees, and payors in various withholding and reporting contexts.
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IRS Releases Updated Tax Withholding Estimator
Today, the IRS unveiled its new Tax Withholding Estimator to help employees complete the Form W-4 and ensure that withholdings are sufficient to cover their income tax liability. The new calculator was previewed in the draft 2020 Form W-4. …
IRS Rules 23andMe’s Home DNA Kit Eligible for Partial FSA Reimbursement
In May, the IRS issued a private letter ruling to an individual taxpayer regarding the deductibility of 23andMe’s at-home DNA test kits under section 213(d) of the Code, which permits the deduction of medical expenses. In the ruling, the IRS…
IRS Updates Country-by-Country Reporting Instructions
On July 10, the IRS updated the Instructions for Form 8975 and Schedule A (Form 8975). Form 8975 (Country-by-Country Report) is used by taxpayers that are the parent entity of a U.S. multinational enterprise (“U.S. MNE”) with annual revenue…
IRS Proposes Regulations under Section 1446(f) — Reporting Requirements and the “Backstop Withholding” Rules (Post 3 of 3)
In our first post regarding the proposed section 1446(f) regulations, we addressed the rules regarding which party is the withholding agent for purposes of section 1446(f). Sections 864(c)(8) and 1446(f) were adopted as part of tax reform. Section 864(c)(8) was enacted to…
IRS Proposes Regulations under Section 1446(f) — Determining the Withholding Amount (Post 2 of 3)
In our first post on the proposed regulation under section 1446(f), we discussed which party is the withholding agent and outlined the various exceptions to withholding that could apply. Sections 864(c)(8) and 1446(f) were adopted as part of tax reform. Section 864(c)(8)…
IRS Proposes Regulations under Section 1446(f) — Which Party is Required to Withhold? (Post 1 of 3)
This post is the first of three installments providing an overview of recent proposed regulations under section 1446(f) that address withholding on certain sales of partnership interests by foreign partners of a partnerships engaged in the conduct of a U.S.…
New Rule Permits Employers to Include Truncated TINs on Forms W-2 and Forms W-2c
Yesterday, the IRS released final regulations that aim to prevent identity theft by permitting, but not requiring, employers to truncate the taxpayer identification numbers (TINs) on copies of Forms W-2 and Forms W-2c furnished to employees. The regulations finalize proposed…
D.C. Starts Collecting Taxes to Fund New Paid-Leave Program
In 2017, the District of Columbia passed the Universal Paid Leave Amendment Act of 2016 (the “Act”), which called for the creation of a paid-leave program for private sector employees who work in D.C. Earlier this year, the D.C. Office…
IRS to Launch FATCA Compliance Campaign for FFIs
Last week, the Acting Director of IRS of Field Operations for the LB&I Foreign Payments Practice (“FPP”) announced that the IRS will launch a compliance campaign this summer focused on foreign financial institutions (“FFIs”) that are not satisfying their reporting…