In Notice 2018-99 the IRS has provided guidance to employers and tax-exempt organizations attempting to deal with provisions in the Tax Cuts and Jobs Act dealing with employer-provided parking.

As the Notice explains:

As amended by the Act, § 274(a)(4) generally disallows a deduction for expenses with respect to QTFs provided by taxpayers to their employees, and § 512(a)(7) generally provides that a tax-exempt organization’s UBTI is increased by the amount of the QTF expense that is nondeductible under § 274.

The notice provides guidance on computing the amount of disallowed deduction (for taxable entities) and UBTI (for tax-exempt organizations) to be recognized under this provision.

Notice 2018-97 provides guidance to taxpayers about issues related to IRC §81(i), a provision added by the Tax Cuts and Jobs Act that allows employees in certain situations to defer recognition of income when receiving stock or having an interest in such stock vest.

The Notice as meant to provide some additional clarity in the application of this provision for three areas:

• The application of the requirement in section 83(i)(2)(C)(i)(II) that grants be made to not less than 80% of all employees who provide services to the corporation in the United States,

• The application of federal income tax withholding to the deferred income related to the qualified stock, and

• The ability of an employer to opt out of permitting employees to elect the deferred tax treatment even if the requirements under section 83(i) are otherwise met.

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The IRS has addressed how taxpayers will gain permission to change their methods of accounting to comply with changes made by Congress in the Tax Cuts and Jobs Act to IRC §451 (found at IRC §451(b)) that require a taxpayer with an “applicable financial statement” (AFS) who is recognizing revenue for tax purposes under the accrual basis using the all events test to treat the test as satisfied no later than when revenue is recognized in the AFS.  The guidance is found in Revenue Procedure 2018-60.

Beginning in 2010 cellular telephones were no longer considered “listed property” subject to the strict substantiation rules of IRC §274(d).  But, as was noted, in the case of Archuleta v. Commissioner, TC Summary Opinion 2018-55, that doesn’t mean that a taxpayer should not have documentation of the expense and what portion related to business use.

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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