Consistent with its stance from 2021 to 2023, the Internal Revenue Service (IRS) has announced, via Notice 2024-35[1], that penalties will not be imposed on taxpayers who fail to take the required minimum distributions (RMDs) from most individual retirement accounts (IRAs) and defined contribution plans inherited from decedents who passed away post-2019.

The Proposed Regulations released in 2022, addressing the amended RMD regulations for IRAs and defined contribution plans as instituted by the SECURE Act, stipulated that taxpayers inheriting an IRA or defined contribution account from an individual who passed away after 2019, and who had reached their required beginning date for distributions, were mandated to receive distributions based on the life expectancy of the designated beneficiary. This was to occur each year for the nine years following the decedent's death, with the total remaining balance to be distributed by the end of the tenth year.

On January 19, 2024, the House of Representatives’ Ways and Means Committee advanced HR 7024, titled “Tax Relief for American Families and Workers Act of 2024,” with a decisive vote of 40-3. This bill represents a consensus reached earlier in the week between Chairman Smith of the Ways and Means Committee and Chairman Wyden of the Senate Finance Committee.

In an article by Cady Stanton and Doug Sword, published on the Tax Notes Today website on January 19, 2024, under the title “W&M Advances Tax Deal; May Vote in Late January or Early February (subscription required),” the authors suggest that the bill could potentially be presented on the House floor as early as the week of January 29.

The SECURE 2.0 Act of 2022 introduced the option for sponsors of §401(k), §403(b), or government §457(b) defined contribution plans to incorporate a Pension-Linked Emergency Savings Account (PLESA) feature. Notice 2024-22 from the IRS delivers preliminary guidance concerning the anti-abuse rules applicable to these plans.

In IRS News Release IR-2024-11, released at the same time as the Notice, the IRS provides a brief summary of the reasons for the notice:

Guidance on reasonable measures employers who offer PLESAs can take to discourage potential manipulation of the PLESA matching contribution rules can be found in Notice 2024-22, posted today on IRS.gov. The notice also requests public comment and explains how to submit comments.

In 2019, the Taxpayer First Act (TFA) amended IRC §6011(e), granting the IRS authority to mandate electronic filing requirements for non-individual taxpayers filing a lower number of information returns than previously triggered mandatory electronic filing. Notice 2024-18 offers guidance on the specific circumstances under which taxpayers may secure a waiver from these electronic filing requirements, simultaneously rendering Notice 2010-13 obsolete and modifying guidance provided in Notice 2023-60.

In Notice 2024-19, the IRS has offered relief to partnerships mandated to disclose extra information on Form 8308. This pertains to the sales or exchanges of partnership interests under the “hot asset” provisions of IRC §751(a).

The Notice begins:

This notice provides relief from penalties under § 6722 of the Internal Revenue Code1 for failures to furnish correct payee statements solely for failure of a partnership with unrealized receivables or inventory items described in § 751(a) (§ 751 property) to furnish Part IV of Form 8308, Report of a Sale or Exchange of Certain Partnership Interests, to the transferor and transferee in a § 751(a) exchange (described in section II of this notice) that occurred in calendar year 2023 by the due date specified in § 1.6050K-1(c)(1). This relief applies only if the partnership furnishes to the transferor and transferee by the due dates specified in section III of this notice (1) a correct copy of Parts I, II, and III of Form 8308, or a statement that includes the same information, and (2) a correct copy of the complete Form 8308, including Part IV, or a statement that includes the same information and any additional information required under § 1.6050K-1(c).

In News Release IR-2024-02, dated January 5, 2024, the IRS declared a temporary extension for clean vehicle dealers to submit time-of-sale reports, as stipulated in Revenue Procedure 2023-38. These reports must be submitted through the IRS Energy Credits Online (IRS ECO) website.

In Chief Counsel Advice 202352018, dated December 29, 2023, the IRS issued guidance explicitly stating that it no longer upholds the stance outlined in Private Letter Ruling (PLR) 201647001. The focal issue is the determination of gift (and possible subsequent estate) tax consequences arising from the modification of an intentionally defective grantor trust. This modification entails adding a provision that permits the trust to reimburse the grantor for taxes paid on the trust’s income.

What are the implications when the Internal Revenue Service (IRS) erroneously states the filing deadline for a petition in the Tax Court to contest a notice of deficiency? In a situation where this error significantly favored the taxpayer, the Tax Court determined that the taxpayer was entitled to rely on the date specified in the initial notice, despite the IRS issuing a corrected notice the following day. (Dodson v. Commissioner, 162 TC No. 1)

The Financial Crimes Enforcement Network (FinCEN) on January 1, 2024 launched its electronic filing platform, [ https://boiefiling.fincen.gov/ ] designed specifically for submitting Beneficial Ownership Reports as mandated by the Corporate Transparency Act.  A news release was provided at the same time describing the filing requirements. [“U.S. Beneficial Ownership Information Registry Now Accepting Reports,” FinCEN website, January 1, 2024, https://www.fincen.gov/news/news-releases/us-beneficial-ownership-information-registry-now-accepting-reports ]

The IRS has announced in  Notice 2024-7 the waiver of specific failure-to-pay penalties, pertaining to the suspension period of certain notices initiated during the COVID-19 pandemic.

In the case of Nguyen v. Commissioner, TC Memo 2023-151, the taxpayer’s choice of an incorrect delivery service resulted in the filing of their Tax Court petition beyond the designated final filing date.

In Announcement 2024-3 the IRS has released its Employee Retention Credit Voluntary Disclosure Program (VDP) to be used by those who have received a refund of taxes under the program and who now wish to return those funds.  The IRS released News Release IR-2023-247 at the same time to describe the program, along with Form 15434 (December 2023) that must be used to apply to enter the program.

The program will be open for three months, ending on March 22, 2024.

Before going on holiday break, the United States House of Representatives passed HR 5119, the Protect Small Business and Prevent Illicit Financial Activity Act, by a vote of 420-1.

The bill can be found at https://www.congress.gov/bill/118th-congress/house-bill/5119/text.

In 2021, the Infrastructure Investment and Jobs Act led to the addition the law of IRC §7451(b) by Congress. This provision was first examined in the Tax Court during the case of Sall v. Commissioner, 161 T.C. No. 13.[1]  The case presented an opportunity for an in-depth analysis of the application of this newly added section.

In Private Letter Ruling (PLR) 202348007,[1] the IRS denied a taxpayer’s petition for an extension of time to submit a request for a change in accounting method.

The potentially pivotal role of the phrase “as such” in determining whether state law limited partners are automatically exempt from recognizing self-employment income from the partnership was underscored in Soroban Capital Partners LP et al. v. Commissioner, 161 TC No. 12.[1]

The Financial Crimes Enforcement Network (FinCEN), in coordination with the IRS Criminal Investigation Division (CI), has issued an alert[1] to financial institutions concerning fraud schemes associated with the Employee Retention Credit (ERC). This alert includes a list of 10 red flags for financial institutions to identify, prevent, and report suspicious transactions that may indicate ERC fraud.

The IRS has once more postponed the implementation date for the expanded reporting requirements on Form 1099-K, as announced in Notice 2023-74.[1] Previously, the IRS had deferred the effective date of Internal Revenue Code (IRC) §6050W(e), which was initially set to commence in 2022, extending it to 2023.

Additionally, in Fact Sheet 2023-27,[2] the IRS indicated plans to implement a threshold of $5,000 for 2024 as part of phasing in the new law, though this planned threshold was not mentioned in the Notice.

The Internal Revenue Service (IRS) has provided clarifications of its position on a widely promulgated theory by numerous Employee Retention Credit (ERC) consultants, which has implications for a significant cohort of employers claiming eligibility for the ERC. This clarification pertains to interpretations of guidance issued by the Occupational Safety and Health Administration (OSHA), as detailed in the IRS General Legal Advice Memorandum (GLAM) AM-2023-007.[1]

Although the General Legal Advice Memorandum (GLAM) does not constitute official guidance that binds the IRS, taxpayers, or the judiciary, it offers employers valuable perspective on the probable stances IRS agents may adopt in response to claims predicated on the OSHA directives outlined within the memorandum.

The estate of actor James Caan contended that he had accurately rolled over the entire balance of an IRA from UBS to Merrill Lynch. The IRS largely concurred with this stance, save for the transfer of an interest in a non-publicly traded hedge fund. This asset encountered numerous challenges during its transfer from UBS to Merrill Lynch. Ultimately, the hedge fund interest was liquidated, and the proceeds were transferred to Merrill Lynch—nearly a year after UBS reported the fund’s distribution to Mr. Caan.

In Estate of Caan v. Commissioner,[1] the estate posited two potential explanations: either UBS never actually disbursed the hedge fund from the IRA, or the IRS unjustly declined to grant late rollover relief through a private letter ruling request. The Tax Court did not concur with either proposition. It determined that UBS had indeed disbursed the amount in 2015. Moreover, the IRS’s denial of relief was deemed appropriate since the exact asset distributed from the UBS IRA was not the one transferred to the new Merrill Lynch IRA, thus contravening the stipulations of IRC §408(d)(3)(A)(i).