Weekly Report from Washington, D.C.

During the week of July 9, the House Ways and Means Committee approved 11 health care-related tax bills. Additionally, the IRS issued final regulations that target tax-motivated inversion transactions and certain post-inversion tax avoidance transactions.

Congress

House Republicans and the Trump Administration are working together to craft a tax cut “2.0” outline, the House’s top tax writer has said. House Ways and Means Committee Chairman Kevin Brady, R-Tex., told reporters that House tax writers and the White House are currently working to finalize the “framework,” (TAXDAY, 2018/07/12, C.1).

The House Ways and Means Committee approved 11 health care-related tax bills. A majority of the bills focus on expanding health savings accounts (HSAs), (TAXDAY, 2018/07/13, C.1).

House tax writers prepared to discuss 11 health-care related tax bills. House Ways and Means Committee Chairman Kevin Brady, R-Tex., announced the markup on the evening of July 9, (TAXDAY, 2018/07/11, C.1).

A Democratic staff report was released alleging that homeowners will be hurt by last year’s tax reform. Real estate developers will primarily benefit from several real estate-related tax provisions, the report notes, (TAXDAY, 2018/07/09, C.1).

Treasury

FATCA. The IRS is still not prepared to enforce compliance with the Foreign Account Tax Compliance Act (FATCA) despite spending nearly $380 million, according to a report by the Treasury Inspector General for Tax Administration (TIGTA). TIGTA initiated this audit to evaluate the Service’s efforts to ensure that taxpayers, foreign financial institutions (FFIs) and withholding agents comply with the FATCA, (Ref. No. 2018-30-040; TAXDAY, 2018/07/10, T.1).

Disaster relief. The IRS took timely actions to provide disaster relief tax assistance to individuals and businesses affected by Hurricanes Harvey, Irma and Maria, according to a report by the Treasury Inspector General for Tax Administration (TIGTA). Taxpayers and tax practitioners might require tax relief to enable them to meet their tax obligations for filing returns or paying taxes following major disasters and emergencies, (Ref. No. 2018-40-049; TAXDAY, 2018/07/09, T.1).

IRS

CCDM. The IRS has advised taxpayers that the Chief Counsel Directives Manual (CCDM) is being revised to reflect updated procedures for identifying and handling Tax Court petitions filed by taxpayers under audit before the issuance of a notice of deficiency, to ensure timely assessment of income, estate, gift and certain excise taxes, (Chief Counsel Notice CC-2018-008; TAXDAY, 2018/07/13, I.1).

Tax Benefits. The IRS has informed taxpayers of summertime activities that may qualify for tax credits or deductions and recommends checking the amount of withholding taxes to avoid surprises next filing season, (IR-2018-149; TAXDAY, 2018/07/13, I.2).

Guidance. The IRS has released a revenue procedure containing specifications for the private printing of red-ink and black-and-white substitutes for the 2018 revisions of Forms W-2 and W-3 that are filed with the IRS and the Social Security Administration. Substitute forms are those forms that are not printed by the IRS, (Rev. Proc. 2018-37; TAXDAY, 2018/07/13, I.3).

IRB. The IRS has released I.R.B. 2018-29, dated July 16, 2018, (TAXDAY, 2018/07/13, I.4).

Tax Tip. The interactive tax assistant helps answer many tax questions, (TAXDAY, 2018/07/13, I.5).

Regulation. The IRS has issued final regulations that target tax-motivated inversion transactions and certain post-inversion tax avoidance transactions. The final regulations retain the thresholds and substantiation requirements of the 2016 final, temporary and proposed regulations (the 2016 regulations), but make limited changes to the 2016 regulations to improve clarity and reduce unnecessary complexity and burdens on taxpayers. These changes also ensure that the final regulations do not impact cross-border transactions that are economically beneficial and not tax-motivated, (T.D. 9834; TAXDAY, 2018/07/12, I.1).

Disability Severance Payments. The IRS has urged certain veterans who received disability severance payments after January 17, 1991, and included that payment as income that they should file Form 1040X, Amended U.S. Individual Income Tax Return, to claim a credit or refund of the overpayment attributable to the disability severance payment, (IR-2018-148; TAXDAY, 2018/07/12, I.2).

Tax Tip. The deadline for taxpayers who requested an extension to file their 2017 tax return is Monday, October 15, 2018. Taxpayers can avail of many helpful IRS resources on IRS.gov, (TAXDAY, 2018/07/12, I.4).

Data Security. The IRS has urged tax professionals to utilize the Service’s 10-week campaign, Tax Security 101, an expanded guide that illustrates specific steps to protect client data. The campaign has been initiated to provide tax professionals with basic information to protect taxpayer data so that filing of fraudulent tax returns can be prevented all together. This series, somewhat expands, earlier Summit awareness campaigns aimed at tax professionals and taxpayers, (IR-2018-147; TAXDAY, 2018/07/11, I.1).

Disaster Notice. The president has declared a federal disaster area in Texas. The disaster is due to severe storms and flooding beginning on June 19, 2018, (Texas Disaster Relief Notice (TX-2018-05); TAXDAY, 2018/07/11, I.2).

Tax Tip. Retirees can access resources on filing returns on IRS website, (TAXDAY, 2018/07/11, I.3).

Per Diem. The U.S. State Department has released a listing of maximum travel per diem allowances for travel in foreign areas. The rates apply to all government employees and contractors, and are effective as of July 1, 2018, (TAXDAY, 2018/07/10, I.1).

Announcement. The IRS’s Office of Professional Responsibility has published the names of attorneys, certified public accountants (CPAs), enrolled agents, enrolled actuaries, enrolled retirement plan agents and appraisers who have been disbarred from practice before the IRS, have consented to suspensions from practice, have been placed under suspension from practice under the expedited proceeding provisions, or have consented to the issuance of a censure, (Announcement 2018-11; TAXDAY, 2018/07/10, I.2).

Tax Tip. Income from sharing economy activities may affect taxes, (TAXDAY, 2018/07/10, I.3).

TAP Meetings. The following Taxpayer Advocacy Panels (TAPs) have scheduled open meetings. Unless otherwise specified, the agenda will include various IRS topics, (TAXDAY, 2018/07/09, I.1).

Ruling. The IRS has identified rulings addressing issues arising under Code Sec. 3121(b)(8)(B) of the Internal Revenue Code of 1954 (the 1954 Code), which provided an exemption from Federal Insurance Contributions Act (FICA) tax for tax-exempt organizations, and Code Sec. 3121(k) of the 1954 Code, which provided for a waiver of the exemption. These 1954 Code sections were amended and repealed by the Social Security Amendments of 1983. The revenue rulings were identified under the Service’s review program as no longer being determinative, (Rev. Rul. 2018-20; TAXDAY, 2018/07/09, I.2).

IRB. The IRS has released I.R.B. 2018-28, dated July 9, 2018, (TAXDAY, 2018/07/09, I.3).

Delegation Order. IRS Chief Counsel William Paul has delegated the authority to hear and decide appeals of disciplinary cases under Circular 230 to Kirk M. Paxson, appellate authority. The delegation of authority includes all powers of the administrative law judge (ALJ), except that an ALJ decision might not be reversed unless that decision was clearly erroneous in light of the evidence in the record and applicable law, (TAXDAY, 2018/07/09, I.4).

FACTA. On September 15, 2016, the Government of the United States of America and the Government of the Dominican Republic signed an intergovernmental agreement (“IGA”) entitled, “Agreement between the Government of the United States of America and the Government of the Dominican Republic to Improve International Tax Compliance and to Implement FATCA,” (TAXDAY, 2018/07/09, I.5).

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CCHTaxGroup

All stories by: CCHTaxGroup