WASHINGTON — The Internal Revenue Service issued proposed regulations on the business expense deduction for meals and entertainment following changes made by the Tax Cuts and Jobs Act (TCJA).

The 2017 TCJA eliminated the deduction for any expenses related to activities generally considered entertainment, amusement or recreation. It also limited the deduction for expenses related to food and beverages provided by employers to their employees.

These proposed regulations address the elimination of the deduction for expenditures related to entertainment, amusement or recreation activities and provide guidance to determine whether an activity is considered to be entertainment. The proposed regulations also address the limitation on the deduction of food and beverage expenses.

The proposed regulations affect taxpayers who pay or incur expenses for meals or entertainment. These proposed regulations generally follow Notice 2018-76, issued on Oct. 15, 2018, which provided transitional guidance on the deductibility of expenses for certain business meals.

Taxpayers affected by this change and other interested parties may submit comments on the proposed regulations. The IRS will hold a public hearing on these proposed regulations on April 7, 2020.

Notice 2020-13 provides for adjustments to the limitation on housing expenses for purpose of section 911 of the Internal Revenue Code.  These adjustments are made on the basis of geographic differences in housing costs relative to housing costs in the United States.  Further, if the limitation on housing expenses is higher for taxable year 2020 than the adjusted limitations on housing expenses provided in Notice 2019-24, qualified taxpayers may apply the adjusted limitations for taxable year 2020 to their 2019 taxable year.  

Notice 2020-13 will be in IRB:  2020-11, dated March 9, 2020.

Revenue Procedure 2020-13 provides procedures applicable to a taxpayer in a farming business regarding the application of § 263A of the Internal Revenue Code (Code).  Prior to the enactment of Public Law 115-97, 131 Stat. 2054 (December 22, 2017), commonly referred to as the Tax Cut and Jobs Act (TCJA), a taxpayer in a farming business could elect under § 263A(d)(3) to have § 263A not apply to certain plants produced by the taxpayer’s farming business.  Section 13102 of the TCJA added new § 263A(i) to the Code, which provides that § 263A does not apply to a taxpayer, other than a tax shelter (as defined in § 448(d)(3) of the Code), for a taxable year in which the taxpayer qualifies as a small business taxpayer by satisfying the gross receipts test in § 448(c) of the Code.  This revenue procedure provides the exclusive procedures for a taxpayer that qualifies for the § 263A(i) small business taxpayer exemption to revoke its prior election under § 263A(d)(3) and apply the exemption under § 263(i) in the same taxable year.  In addition, this revenue procedure provides the exclusive procedures for a taxpayer that qualified for and wishes to make an election under § 263A(d)(3) in the same taxable year that it no longer qualifies for the exemption under § 263A(i).

Revenue Procedure 2020-13 will be in IRB:  2020-11, dated March 9, 2020.

WASHINGTON – The Treasury Department and Internal Revenue Service today issued Revenue Procedure 2020-13 providing procedures for farmers who have elected out of certain capitalization rules and want to apply the small business taxpayer exemption in the same taxable year.

The Tax Cuts and Jobs Act (TCJA) added a provision exempting small business taxpayers from the capitalization rules under section 263A. A taxpayer, other than a tax shelter, qualifies as a small business taxpayer by satisfying the gross receipts test for the taxable year. To satisfy the gross receipts test, a farming business must have gross receipts of $25 million or less for taxable years beginning in 2018, and $26 million or less for taxable years beginning in 2019.  

Unlike the section 263A(d)(3) election, the small business taxpayer exemption does not require the special rules for the use of the Alternative Depreciation System (ADS) or characterization of certain property as section 1245 property.

Today’s guidance provides procedures for farmers to revoke their election under section 263A(d)(3) and apply the small business taxpayer exemption under section 263A(i) in the same taxable year. It also provides procedures for eligible farmers that want to make an election under section 263A(d)(3) in the same taxable year that they no longer qualify as small business taxpayers.

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

Notice 2020-11 provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under § 417(e)(3), and the 24-month average segment rates under § 430(h)(2) of the Internal Revenue Code.  In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under § 431(c)(6)(E)(ii)(I), as reflected by the application of § 430(h)(2)(C)(iv). 

Notice 2020-11 will be in 2020-11, dated March 9, 2020.

WASHINGTON — The Internal Revenue Service reminds farmers and fishermen who chose to forgo making quarterly estimated tax payments that they must file their 2019 Form 1040 along with a payment for all taxes owed by Monday, March 2, 2020.

This special rule normally applies to taxpayers whose farming or fishing income was at least two-thirds of their total gross income in either the current or the preceding tax year. Farmers and fishermen can avoid the estimated tax penalty by both filing and paying all taxes due by March 2. Those who chose to make an estimated tax payment, on or before Jan. 15, 2020, can instead wait and file by the regular April 15 deadline.

IRS Direct Pay is safe, free
The IRS urges farmers and fishermen to take advantage of the speed, convenience and security of IRS Direct Pay to pay their taxes. Anyone can use this free online service to quickly make federal individual income tax payments or quarterly estimated tax payments directly from their checking or savings account. There are no IRS fees and no pre-registration.

IRS Direct Pay is available seven days a week and payments can be scheduled up to 30 days in advance. Users receive instant confirmation after they submit a payment or they can opt in to receive email notifications.

IRS Direct Pay cannot be used to pay the federal highway use tax, payroll taxes or other business taxes. Anyone wishing to pay these business taxes electronically can enroll in the Electronic Federal Tax Payment System (EFTPS). Like IRS Direct Pay, EFTPS is also a free service.

For more information about these and other payment options,  visit IRS.gov/payments.

Related items

• Tax Topic 416, Farming and Fishing Income
• Publication 5034, Need to Make a Tax Payment? (English and Spanish)

WASHINGTON — The Internal Revenue Service today announced it is seeking civic-minded volunteers to serve on the Taxpayer Advocacy Panel (TAP).

The TAP is a federal advisory committee that listens to taxpayers, identifies major taxpayer concerns, and makes recommendations for improving IRS service and customer satisfaction.

Taxpayers interested in serving on the panel may apply through March 30.

“To meet the needs of the taxpaying public, it is critical that the IRS listen to taxpayers to hear what their needs and preferences are,” said Bridget T. Roberts, the Acting National Taxpayer Advocate. “The citizen volunteers who serve on the TAP hear from taxpayers and then bring their collective voice and recommendations to the IRS.

The TAP reports annually to the Secretary of the Treasury, the IRS Commissioner and the National Taxpayer Advocate. The Office of the Taxpayer Advocate is an independent organization within the IRS that provides support for and oversight of the TAP.

To the extent possible, the TAP includes members from all 50 states, the District of Columbia, Puerto Rico and one member representing international taxpayers. Each member is appointed to represent the interests of taxpayers in their geographic location as well as taxpayers overall. For the TAP, “international taxpayers” are broadly defined to include U. S. citizens working, living, or doing business abroad or in U.S. territories.

The TAP is seeking members in the following locations: Alabama, Alaska, Arizona, the District of Columbia, Georgia, Idaho, Illinois, Maryland, Nevada, New Hampshire, New Jersey, New York, North Dakota, Pennsylvania, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia and Wyoming.

The panel is seeking alternates in the following locations: Alabama, Alaska, Arizona, California, Delaware, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming.

Federal advisory committees are required to have a balanced membership in terms of points of view represented. As such, applicants from under-represented groups, such as Native Americans and non-tax professionals, are particularly encouraged to apply. All timely applications, however, will be given consideration.

New TAP members will serve a three-year term starting in Dec. 2020. Applicants chosen as alternate members will be considered to fill any vacancies that open in their areas during the next three years.

To be a member of the TAP, a person must be a U.S. citizen, be current with his or her federal tax obligations, be able to commit 200 to 300 volunteer hours during the year, and pass a Federal Bureau of Investigation criminal background check. Members cannot be federally registered lobbyists. Current Department of the Treasury or IRS employees cannot serve on the panel, and former Department of the Treasury or IRS employees and former TAP members must have a three-year separation from their service to be considered for appointment. Tax practitioner applicants must be in good standing with the IRS (meaning not currently under suspension or disbarment).

For additional information about the TAP or the application process, visit www.improveirs.org or call 888-912-1227 (a toll-free call) and select prompt number five. Callers outside the U.S. may call 214-413-6523 (not a toll-free call) or email the TAP staff at taxpayeradvocacypanel@irs.gov.

A video is available with more information about the TAP and how to contribute to this dynamic group of volunteers.

WASHINGTON — The Internal Revenue Service today issued guidance to help businesses understand how legislation passed in 2018 may benefit those claiming carbon capture credits. Today’s guidance addresses the definition of “beginning of construction” and provides a safe harbor for partnership allocations of the credit.

After the enactment of the Bipartisan Budget Agreement in February 2018, the IRS issued Notice 2019-32 requesting comments from taxpayers regarding the changes to the carbon capture credit in the new law. After carefully considering the comments, the IRS is issuing guidance to provide clarity, especially regarding the definition of “beginning of construction.”

In Notice 2020-12, the IRS provides guidance to help businesses determine when construction has begun on a qualified facility or on carbon capture equipment that may be eligible for the carbon capture credit. This notice provides broad guidance in lieu of taxpayers requesting private letter rulings in this area.

In Revenue Procedure 2020-12, the IRS creates a safe harbor for the allocation rules for carbon capture partnerships similar to the safe harbors developed for partnerships receiving the wind energy production tax credit and the rehabilitation credit. The safe harbor simplifies the application of carbon capture credit rules to partnerships able to claim the credit.

The IRS anticipates issuing further guidance in the near future on issues ranging from secure geological storage to utilization to recapture of the credit for those claiming credits for carbon capture.

Notice 2020-12 addresses the definition of “beginning of construction” for purposes of the carbon oxide sequestration credit under section 45Q. The Notice provides guidance to help businesses determine when construction has begun on a qualified facility or on carbon capture equipment that may be eligible for the section 45Q credit.

Revenue Procedure 2020-12 provides a safe harbor for partnerships to make valid allocations of the carbon oxide sequestration credit under section 45Q. The safe harbor is similar to those developed for partnerships receiving the wind energy production tax credit and the rehabilitation credit. The safe harbor simplifies the application of section 45Q credit rules to partnerships able to claim the credit.

Notice 2020-12 and Revenue Procedure 2020-12 will be published in Internal Revenue Bulletin 2020-11 on March 9, 2020.

WASHINGTON – As part of a larger effort to ensure compliance and fairness, the Internal Revenue Service today announced that it will step up efforts to visit high-income taxpayers who in prior years have failed to timely file one or more of their tax returns.

Following the recent and ongoing hiring of additional enforcement personnel, IRS revenue officers across the country will increase face-to-face visits with high-income taxpayers who haven’t filed tax returns in 2018 or previous years. These visits are primarily aimed at informing these taxpayers of their tax filing and paying obligations and bringing these taxpayers into compliance.

“The IRS is committed to fairness in the tax system, and we want to remind people across all income categories that they need to file their taxes,” said Paul Mamo, Director of Collection Operations, Small Business/Self Employed Division. “These visits focusing on high-income taxpayers will be taking place across the country.  We want to ensure taxpayers know their options to get right with their taxes and avoid bigger issues later.”

For the current tax season, the IRS reminds taxpayers that everyone should file their 2019 tax return by the April 15 filing deadline regardless of whether they can pay in full. Six-month filing extensions are also available, although that does not extend the April deadline for paying any taxes owed.

“Taxpayers having delinquent filing or payment obligations should consult a competent tax advisor before waiting to be contacted by an IRS revenue officer, Mamo said. “It is always worthwhile to take advantage of various methods of getting back into filing or payment compliance before being personally contacted by the IRS.”

For the new visits taking place, high-income non-filers taxpayers are those who generally received income in excess of $100,000 during a tax year and did not file a tax return with the IRS. Taxpayers who exercise their best efforts in filing their tax returns and paying or entering into agreements to pay their taxes deserve to know that the IRS is aggressively pursuing others who have failed to satisfy their filing and payment obligations.

During the visits, IRS revenue officers will share information and work with the taxpayer to hopefully resolve the tax issue.

How to pay

There are many payment options for people having trouble paying their tax bill. Payment plans can be set up quickly online.

Once returns are filed or an assessment occurs, there are various online payment options available at IRS.gov, including direct pay through a bank account or using a debit or credit card. Other ways to pay include the Electronic Federal Tax Payment System (best option for businesses or large payments; enrollment required), Electronic Funds Withdrawal (using during e-filing), same-day wire (bank fees may apply), check or money order or cash (at a participating retail partner). Those who can’t pay immediately may be able to meet their tax obligation in monthly installments by applying for a payment plan (including installment agreements and those who owe less than $50,000), they can find out if they qualify for an offer in compromise  (a way to settle their tax debt for less than the full amount), or request that the IRS temporarily delay collection until their financial situation improves.

For those who refuse to pay, the IRS has a number of options available under the law, ranging from a series of civil enforcement actions and, when appropriate, pursuing criminal cases against taxpayers. IRS compliance personnel are also now working more closely with IRS criminal investigators on priority compliance issues, including high-income cases.

 “These compliance visits underscore the importance of people filing their taxes this April, even if they can’t pay the full amount of tax due,” said Hank Kea, Director of Field Collection Operations, Small Business/Self Employed Division. “Not filing because you don’t believe you can pay at the time of filing makes the problem worse, as interest and penalties mount over time. We have many payment options available on IRS.gov to help taxpayers. It’s better to work on these issues up front rather than ignoring it and ultimately getting to the point of the IRS taking more serious action. Our continued use of ever-changing technologies, coupled with additional enforcement personnel, would suggest that waiting is not a viable option for delinquent taxpayers.”

What’s a revenue officer’s job?
Revenue officers are trained IRS civil enforcement employees who work to resolve compliance issues, such as missing returns or taxes owed. Revenue officers conduct interviews to gather financial information and provide taxpayers with the necessary steps to become and remain compliant with the law. When necessary, they will take the appropriate enforcement actions to collect the amount owed, following the law while respecting taxpayer rights and following the law.

Don’t be confused: Visits are not a scam
For this new initiative, these high-income taxpayers have typically received numerous letters from the IRS over an extended period of time, so they generally realize they have a tax issue.

Revenue officer visits shouldn’t be confused with scams. Here’s what to look for: