While taxpayers have a right to take disputes to the U.S. Tax Court and payment of the amount due is delayed until the proceeding is complete, under IRC §6673 the Court is authorized to impose up to a $25,000 penalty if it appears the Court was being used primarily to delay payment.  In the case of The Community Law Firm Inc. v. Commissioner, TC Memo 2018-198 the taxpayer was warned that their history suggested they were filing in the Tax Court principally to delay action and that continuing this practice could lead to the imposition of the penalty.

In the case of Thrasys, Inc. v. Commissioner, TC Memo 2018-199, the Tax Court found that the IRS was not entitled to summary judgment on the agency’s argument that the taxpayer had engaged in a prohibited change of accounting method.

A taxpayer is prohibited from changing an accounting method without IRS permission.  As the Tax Court explained:

A taxpayer generally “may adopt any permissible method of accounting” when filing his first return. Id. para. (e)(1); see Pac. Nat'l Co. v. Welch, 304 U.S. 191, 194 (1938). But a taxpayer who “changes the method of accounting on the basis of which he regularly computes his income in keeping his books shall, before computing his taxable income under the new method, secure the consent of the Secretary.” Sec. 446(e); see Silver Queen Motel v. Commissioner, 55 T.C. 1101, 1105 (1971) (“[T]he notion of changes in accounting method necessarily implies that a new accounting method is being substituted for a previously regularly used accounting method.”).

After deciding in September 2018 to give up on the revisions to Form W-4 found in the draft 2018 Forms W-4 released in June, the IRS in Notice 2018-92 has decided to continue for the most part with interim rules that were found in Notice 2018-14 for the 2018 tax year and, in the case of one such rule, until April 30, 2019.

The IRS, facing criticism regarding the more complex draft Form W-4 initially proposed, had indicated on September 20, 2018, that implementation of the revised Form W-4 fully incorporating changes made in the Tax Cuts and Jobs Act (TCJA) would be delayed until 2020.  The IRS will be releasing a 2019 Form W-4 before the end of this year that will make “minimal changes to the 2018 Form W-4.”

After having faced criticism for not addressing the clawback issue in previous tax laws, Congress granted the IRS explicit authority[1] to issue regulations to prevent “clawback” of prior gifts if the increased basic exclusion amount (BEA) provided for in the Tax Cuts and Jobs Act (TCJA) reverts to a lower amount after 2025 as also provided for in TCJA.  The IRS has issued proposed regulations (REG-106706-18) to provide information on the anti-clawback protect to be provided for the estates of those “unlucky” enough to live to see 2026.

The IRS has released the 2019 inflation adjusted numbers in Revenue Procedure 2018-57.

An article with the major inflation adjusted items can be downloaded here:

Inflation Numbers for 2019

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Since the passage of the Tax Cuts and Jobs Act, the meetings of the American Bar Association Section of Taxation have produced comments from officials with the Treasury and the IRS that have given hints to the shape of future guidance to be issued on the law.  The October meeting in Atlanta has produced new information about the application of the provisions of §199A.

The proposed regulations issued earlier this year provided for a de minimis rule where the performance of what would be in the category of a specified service trade or business would not cause the underlying business to be treated as such if the gross receipts were below specific floors.  For a business with gross receipts of $25 million or less, the floor is set at 10% or less of gross receipts.  For businesses with gross receipts above $25 million, the floor drops to 5% or less of gross receipts.

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In Information Letter INFO 2018-0024 the IRS responded to an individual who wished to take a distribution from a §457 retirement plan to help with repairs that were made necessary due to damages caused by Hurricane Irma in 2017.

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The IRS announced in Notice 2018-76 transitional guidance on the treatment of business meals following the revisions made to IRC §274 by the Tax Cuts and Jobs Act.

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Guidance has been issued by the IRS for employers looking to claim a credit under IRC §45S for paid family and medical leave in Notice 2018-71.  This provision was added to the law for two years as part of the Tax Cuts and Jobs Act (TCJA) enacted in late 2017.

Under the Family and Medical Leave Act of 1993 (FMLA) an employee is required to grant covered employees up to 12 weeks of leave for certain medical issues arises related to their health or that of certain related persons.  However, an employer is not required to pay employees while on such leave.  Rather, FMLA was meant to assure the employee had a job to return after coming back from such leave.

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Employer reimbursement of an employee’s moving expenses are no longer excludable from income under the Tax Cuts and Jobs Act.  But the law was not totally clear on whether the exclusion would apply for reimbursements paid in 2018 for moves conducted in 2017.  In Notice 2018-75 the IRS clarified that reimbursements made by an employer in 2018 for amounts paid in 2017 would continue to be excludable under the pre-TCJA rules.

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