Revenue Ruling 2020-18 provides the rates for interest determined under Section 6621 of the code for the calendar quarter beginning October 1, 2020, will be 3 percent for overpayments (2 percent in the case of a corporation), 3 percent for underpayments, and 5 percent for large corporate underpayments. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 will be 0.5 percent.

Revenue Ruling 2020-18 will be published in Internal Revenue Bulletin 2020-39 on Sept. 21, 2020

WASHINGTON — The Internal Revenue Service announced today that Rachel Leiser Levy is the new Associate Chief Counsel, Employee Benefits, Exempt Organizations and Employment Taxes (EEE).

Levy has served as a principal at Groom Law Group in Washington, D.C., since 2015. She has an extensive background on issues including employee benefits, employment taxes and exempt organizations, including work at the Treasury Department and the Joint Committee on Taxation. She begins in her new role Sept. 29.

“Rachel brings a strong set of skills from both inside and outside the government to this critical position for Chief Counsel and the IRS,” said Mike Desmond, IRS Chief Counsel. “We look forward to her coming on board and are fortunate to have her join our staff.”

EEE provides published guidance, field support and taxpayer advice on a wide array of topic areas including qualified retirement plans, health and welfare and other employee benefits, executive compensation and fringe benefits, tax-exempt entities, employment tax, state and local governments and Indian tribal governments.

Previously, Levy was an attorney-advisor and then associate benefits tax counsel with the Office of Tax Policy, U.S. Department of the Treasury, from March 2012 to February 2015. In this capacity, she developed policies and guidance related to the taxation of employee benefits, employment taxes and exempt organizations and coordinated with IRS, Department of Labor, U.S. Department of Health and Human Services and the Domestic Policy Counsel on all aspects of health care reform implementation.

She also was a legislation counsel for the Joint Committee on Taxation from August 2008 to March 2012. She assisted in the development and drafting of the Affordable Care Act; the Health Care and Education Reconciliation Act of 2010; the American Workers, State and Business Relief Act of 2010; the American Jobs and Closing Tax Loopholes Act of 2010; the American Recovery and Reinvestment Act of 2009; the Emergency Economic Stabilization Act of 2008 and the Worker, Retiree and Employer Recovery Act of 2008.

In addition to her government service, Levy has extensive private-sector experience.

In addition to serving as principal at Groom Law Group in Washington, D.C., she also was an associate with Covington & Burling LLP and with Sonnenschein Nath & Rosenthal LLP.

Levy received her B.A. in literature from Yeshiva University and her J.D. from the University of Chicago Law School where she was a member of the Law Review.

Notice 2020-69 announces that the Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) intend to issue regulations addressing the application of §§ 951 and 951A of the Internal Revenue Code (Code) to certain S corporations with accumulated earnings and profits.  For those S corporations electing this treatment, global intangible low-taxed income (GILTI) inclusions would create AAA. This notice also announces that the Treasury Department and the IRS intend to issue regulations addressing the treatment of qualified improvement property (QIP) under the alternative depreciation system (ADS) of § 168(g) for purposes of calculating qualified business asset investment (QBAI) for purposes of the foreign-derived intangible income (FDII) and GILTI provisions. These rules when issued would implement recent clarifications enacted as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).  All of these provisions were originally part of the 2017 Tax Cuts and Jobs Act (TCJA).

Notice 2020-69 will be published in Internal Revenue Bulletin 2020-39 on Sept. 21, 2020.

WASHINGTON — The Internal Revenue Service issued final regulations today providing additional guidance on the base erosion and anti-abuse tax (BEAT). 

To limit profit-shifting, the Tax Cuts and Jobs Act (TCJA) added a new tax, the BEAT. The BEAT focuses on large U.S. corporations that make deductible payments to related foreign parties.

The final regulations provide detailed guidance regarding how to compute certain BEAT calculations for groups of related taxpayers. The final regulations also contain rules permitting taxpayers to waive deductions for purposes of the BEAT, and additional guidance regarding partnerships and anti-abuse rules.

Updates on the implementation of the TCJA can be found on the Tax Reform page of IRS.gov.

WASHINGTON- The IRS announces the launch of the Bi-Partisan Budget Act (BBA) Centralized Partnership Audit Regime website.

The Centralized Partnership Audit Regime replaces the Tax Equity and Fiscal Responsibility Act (TEFRA) and the electing large partnership rules. The centralized partnership audit regime, or BBA, is generally effective for tax years beginning January 2018. Under the BBA, the IRS generally assesses and collects any understatement of tax (called an imputed underpayment) at the partnership level. 

A partnership is subject to BBA unless it is an eligible partnership and makes an annual election out of BBA on a timely filed Form 1065.  An eligible partnership is one with 100 or fewer partners, all of whom are either individuals, C corporations, foreign entities that would be treated as a C corporation if it were domestic, S corporations or estates of deceased partners.

The new webpage is intended to be a one-stop location for anything BBA-related, including regulations and other guidance and instructions related to the Partnership Representative (PR), electing out of the centralized audit regime, Administrative Adjustment Requests (AARs) and what to expect during a BBA administrative proceeding.

Taxpayers are encouraged to visit the website often for information, including electronic submission instructions of forms related to a BBA examination when those instructions are available.

WASHINGTON — The Internal Revenue Service is holding a free webinar designed to give an overview of Opportunity Zones and to discuss related tax benefits for investors. Opportunity Zones are an economic development tool that allows people to invest in distressed areas in the United States.

This free 75-minute webinar will take place on Thursday, Sept. 3 at 2 p.m. Eastern Time. It is open to investors, tax professionals, government agencies and anyone else interested in the tax rules that affect Opportunity Zones.

In addition to the overview, topics to be covered include:

• Investor reporting elections

• Annual investor reporting requirements

• Impact of disaster relief on Opportunity Zones

The webinar will feature a live question and answer session and will be closed captioned for viewers who are deaf or hearing impaired. Anyone interested in attending can register online.

For more information on Opportunity Zones, visit the general Opportunity Zone page and the Opportunity Zone Frequently Asked Questions.

Archived versions of past IRS webinars are available at www.irsvideos.gov.

WASHINGTON — Victims of Hurricane Laura that began Aug. 22 now have until Dec. 31, 2020, to file various individual and business tax returns and make tax payments, the Internal Revenue Service announced today.

The IRS is offering this relief to any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual assistance. Currently this includes Allen, Beauregard, Calcasieu, Cameron, Jefferson Davis and Vernon parishes in Louisiana, but taxpayers in localities added later to the disaster area will automatically receive the same filing and payment relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

The tax relief postpones various tax filing and payment deadlines that occurred starting on Aug. 22, 2020. As a result, affected individuals and businesses will have until Dec. 31, 2020, to file returns and pay any taxes that were originally due during this period. This means individuals who had a valid extension to file their 2019 return due to run out on Oct. 15, 2020, will now have until Dec. 31, 2020, to file. The IRS noted, however, that because tax payments related to these 2019 returns were due on July 15, 2020, those payments are not eligible for this relief.

The Dec. 31, 2020 deadline also applies to quarterly estimated income tax payments due on Sept. 15, 2020, and the quarterly payroll and excise tax returns normally due on Nov. 2, 2020. It also applies to tax-exempt organizations, operating on a calendar-year basis, that had a valid extension due to run out on Nov. 16, 2020. Businesses with extensions also have the additional time including, among others, calendar-year corporations whose 2019 extensions run out on Oct. 15, 2020.

In addition, penalties on payroll and excise tax deposits due after Aug. 22 and before Sept. 8, will be abated as long as the deposits are made by Sept. 8, 2020.

The IRS disaster relief page has details on other returns, payments and tax-related actions qualifying for the additional time.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Therefore, taxpayers do not need to contact the agency to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2020 return normally filed next year), or the return for the prior year (2019). Be sure to write the FEMA declaration number – 4559 − for Hurricane Laura in Louisiana on any return claiming a loss. See Publication 547 for details.

The tax relief is part of a coordinated federal response to the damage caused by this storm and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.

WASHINGTON – As part of a continuing effort to combat abusive transactions, the Internal Revenue Service announced today the completion of the first settlement under its initiative to resolve certain docketed cases involving syndicated conservation easement transactions.

On June 25, 2020, the IRS Office of Chief Counsel announced that it would offer to settle certain cases involving abusive syndicated conservation easement transactions. Since then, Chief Counsel has sent letters to dozens of partnerships involved in these transactions whose cases are pending before the U.S. Tax Court.

“We are seeing movement on these settlements,” said IRS Chief Counsel Mike Desmond. “Given the potential for significant penalties, we anticipate more taxpayers will take similar actions and ultimately accept these offers, and we encourage them to do so.”

The IRS will continue to actively identify, audit and litigate these abusive transactions as part of its vigorous effort to combat abuse in this area. These transactions undermine the public's trust in tax incentives for private land conservation and in tax compliance in general. Ending these abusive schemes remains a top priority for the IRS. The IRS continues to strongly recommend that participants seek the advice of competent, independent advisors in considering the potential resolution of their matter.

The settlement requires a concession of the tax benefits claimed by the taxpayers and imposes penalties:

• All partners in an electing partnership must agree to settle to receive these terms, and the partnership must make a lump-sum payment representing the aggregate tax, penalties and interest for all of the partners before settlement is accepted by the IRS.

• Chief Counsel will allow investors to deduct the cost of acquiring their partnership interests but it will require a penalty of at least 10 percent.

• Partners who are promoters of conservation easement schemes are not allowed any deductions and must pay the maximum penalty asserted by IRS (typically 40 percent).

• If less than all the partners agree to settle, the IRS may settle with those partners but will normally impose less favorable terms on the settling partners.

This week, the first settlement under the terms of the initiative was finalized. Coal Property Holdings, LLC and its partners agreed to a disallowance of the entire $155 million charitable contribution deduction claimed for an easement placed on a 3,700- acre tract of land in Tennessee. On October 28, 2019, the Tax Court issued its Opinion (153 T.C. 126) granting the government’s motion for partial summary judgment holding that the "judicial extinguishment" provisions of the easement deed did not satisfy the requirements of section 1.170A-14(g)(6), Income Tax Regs.

Under the terms of the settlement, the investor partners were permitted to deduct their cost of investing in the conservation easement transactions and paid a 10 percent penalty, whereas the promoter partner was denied any deduction and paid a 40% penalty. The taxpayers also fully paid all tax, penalties, and interest in conjunction with the settlement. The settlement will be reflected in a stipulated decision document entered by the Tax Court and in a separately entered closing agreement. A public statement acknowledging the settlement was part of the agreement between the IRS and the taxpayer.

IRS Commissioner Chuck Rettig thanked the trial team for their exceptional dedication and work on the case: “The IRS is pleased that the partnership in the Coal Property transaction has agreed to this settlement, and we encourage other participants in qualifying easement cases to accept the terms of the Chief Counsel’s initiative,” Rettig said.

Coal Property was represented by Christopher S. Rizek and Scott D. Michel of the Washington, D.C. law firm Caplin & Drysdale. “In light of the significance of the Court’s ruling on the perpetuity issue, our client decided to take advantage of an assured penalty reduction in the IRS initiative and settle this matter under the IRS’s terms, and it is pleased that this case is resolved,” Rizek said.

WASHINGTON – The Department of Treasury and Internal Revenue Service today issued guidance implementing the Presidential Memorandum issued on Aug. 8, 2020, allowing employers to defer withholding and payment of the employee’s portion of the Social Security tax if the employee’s wages are below a certain amount.

Notice 2020-65, posted today on IRS.gov, makes relief available for employers and generally applies to wages paid starting Sept. 1, 2020, through Dec. 31, 2020. 
 
The employee Social Security tax deferral may apply to payments of taxable wages to an employee that are less than $4,000 during a bi-weekly pay period, with each pay period considered separately. No deferral is available for any payment to an employee of taxable wages of $4,000 or above for a bi-weekly pay period.

Today’s notice postpones the time for employers to withhold and pay employee Social Security taxes.

Additional tax relief related to the COVID-19 pandemic can be found on IRS.gov.

WASHINGTON – To protect the health of taxpayers and tax professionals, the Internal Revenue Service today announced it will temporarily allow the use of digital signatures on certain forms that cannot be filed electronically.

The change will help to reduce in-person contact and lessen the risk to taxpayers and tax professionals during the COVID-19 pandemic, allowing both groups to work remotely to timely file forms.

“We take the health and safety of the nation’s taxpayers, the tax professional community and our employees very seriously,” said IRS Commissioner Chuck Rettig. “Expanding the use of digital signatures is an important step during COVID-19 to help tax professionals. We understand the importance of digital signatures to the tax community, and we will continue to review our processes to determine where long-term actions can help reduce burden for the tax community, while appropriately balancing that with critical security and protection against identity theft and fraud.”

The Form 1040, U.S. Individual Income Tax Return, already uses an electronic signature when it is filed electronically, either by using a taxpayer self-selected PIN, if self-prepared, or a tax-preparer selected PIN, if using a tax professional. More than 90% of Form 1040s are filed electronically. The IRS recommends all taxpayers consider e-filing forms this year, whenever possible, because of COVID-19.

The below list of forms is available at IRS.gov and through tax professional’s software products. These forms cannot be e-filed and generally are printed and mailed. The IRS will not specify which digital signature product tax professionals must use. There are several commercial products available.

The following forms can be submitted with digital signatures if mailed by or on Dec. 31, 2020:
• Form 3115, Application for Change in Accounting Method;
• Form 8832, Entity Classification Election;
• Form 8802, Application for U.S. Residency Certification;
• Form 1066, U.S. Income Tax Return for Real Estate Mortgage Investment Conduit;
• Form 1120-RIC, U.S. Income Tax Return For Regulated Investment Companies;
• Form 1120-C, U.S. Income Tax Return for Cooperative Associations;
• Form 1120-REIT, U.S. Income Tax Return for Real Estate Investment Trusts;
• Form 1120-L, U.S. Life Insurance Company Income Tax Return;
• Form 1120-PC, U.S. Property and Casualty Insurance Company Income Tax Return; and
• Form 8453 series, Form 8878 series, and Form 8879 series regarding IRS e-file Signature Authorization Forms.

The IRS will closely monitor this temporary option for e-signatures and determine if additional steps are needed.