For some time, the IRS has cautioned taxpayers about filing false or fraudulent ERC claims. More recently, on September 14, 2023, the IRS issued a News Release, IR-2023-169, indicating that it would no longer process ERC claims from September 14, 2023, through “at least” December 31, 2023. Significantly, this only relates to new ERC
On September 8, 2023, the IRS announced a multitude of compliance initiatives aimed at high-income taxpayers, partnerships, digital assets, FBARs and labor brokers. According to the announcement, the IRS has finalized its “top-to-bottom review” of current enforcement efforts and intends to zero in on these matters in the near future. As expected, the impetus for change—according to the announcement—was Congress’s decision to provide the IRS with additional funding through its passage of the Inflation Reduction Act (IRA).
For some time, promoters have shopped around an arrangement known as a “section 643(b) trust,” known alternatively as a “non-grantor, irrevocable, complex, discretionary, spendthrift trust.” On August 9, 2023, IRS Chief Counsel issued a Memorandum that shoots down many of the contentions raised by the promoters relating to the tax benefits of these arrangements. The full Memorandum can be found here. Taxpayers who have entered into these types of arrangements should take careful note of the IRS Chief Counsel Memorandum and should discuss its implications with a tax professional.
Section 2301 of the CARES Act, as amended, permits employers to claim employee retention credits (“ERCs”) if they meet certain requirements. Under one of those requirements, an employer may claim an ERC if the employer’s trade or business operations were fully or partially suspended due to a federal or state COVID-19 governmental order (the “Business Suspension Test”).
Monetized installment sale transactions (“MISTs”) have been on the IRS’s radar for some time. On May 7, 2021, IRS Chief Counsel issued an advice memorandum, contending such transactions were “problematic” and “flawed”.[1] And shortly thereafter, on July 1, 2021, MISTs found themselves on the annual IRS “Dirty Dozen” list, or the publication the IRS uses to alert the public of abusive transactions.[2] The IRS’s “Dirty Dozen” list for 2022 and 2023 also includes MISTs.[3]
Deadlines are important, particularly in federal tax law. Many taxpayers are aware, for example, of the significant penalties that the IRS may impose upon them for failure to timely file an income tax return or timely pay all taxes owed. But fewer taxpayers have an understanding or appreciation for the deadline rules associated with filing a timely petition with the United States Tax Court.