In an email response (ECC 201319015[1]), the Internal Revenue Service (IRS) conducted an examination of the scenario where a Professional Employer Organization (PEO) submits a claim for refund on behalf of one of its clients regarding the Employee Retention Credit (ERC). This examination specifically explored the implications when the PEO possesses outstanding tax liabilities. The conclusion reached in the response asserts that the IRS holds the authority to allocate the refund towards the PEO’s outstanding tax obligations.

In Chief Counsel Advice (CCA) 202317020[1], the IRS examines the consequences of specific reimbursement policies adopted as part of an IRC §125 cafeteria plan's health flexible spending account (FSA) and/or dependent care account. Specifically, in some cases, the IRS determines that the policy leads to the inclusion of reimbursements in the employee's income.

The taxpayer in the case of Bright v. Commissioner,[1] Tax Court Docket No. 10095-22, discovered that he was going to be stuck with total gambling income that was reported on his original return, even though he had no idea where his tax preparer had come up with that number.

With the increasing use of electronic filing for tax documents, many filings that were previously sent by mail can now be submitted online. Although the Internal Revenue Code (IRC) §7502 considers mail submissions timely filed if postmarked by the US Postal Service by the due date, electronic filings can be more complex to date-stamp, especially when the filer and the recipient are in different time zones. How can we determine the date of filing for an electronic document under these circumstances?

The Tax Court case Nutt v. Commissioner, 160 TC No. 10,[1] addressed a specific issue regarding the timing of filing a petition with the court. The case examined the time by which a taxpayer residing in the Central Time Zone must electronically file a petition to the Tax Court in order for it to be considered timely, given that the court itself has its offices in the Eastern Time Zone.

In the case of Gage v. Commissioner, TC Memo 2023-47[1], a taxpayer found that even though they believed they had paid an $875,000 settlement to the Department of Housing and Urban Development by the end of 2012, in fact the payment was rather treated as made in 2013 for income tax purposes.

In Notice 2023-34[1], the IRS has modified Notice 2014-21.  While the modification recognizes that some jurisdictions now treat Bitcoin as legal tender, it merely removes that statement from the background section but does not modify the Notice’s position that such currencies are treated as property and not foreign currency for US tax purposes.

The IRS determined that holding units of a cryptocurrency that undergoes a change from using a proof of work consensus mechanism to a proof of stake consensus mechanism does not create a sale or exchange nor any other sort of income recognition event under IRC §61 in Chief Counsel Advice 202316008.[1]

In the case of Gerhardt v. Commissioner,[1] the Tax Court found no support for a taxpayer’s claim that the charitable remainder annuity trust structure the taxpayers had entered into virtually eliminated any tax on the gain inherent in low-basis property contributed to a charitable remainder annuity trust (CRAT) which then sold the property and purchased an annuity product that paid the CRAT annuity amount to the taxpayers.

In the case of Lucas v. Commissioner, T.C. Memo. 2023-9, a taxpayer found that his diabetes diagnosis did not either cause his distribution from a §401(k) plan to be exempt from the regular income tax nor exempt it from the 10% tax on a premature distribution under IRC §72(t).

In Revenue Procedure 2023-14[1] the IRS has released the depreciation limits on automobiles under IRC §280F for 2023.

An article in Tax Notes Today Federal reported that Ken Corbin, the IRS’s taxpayer experience officer and Wage and Investment Division Commissioner, stated that the IRS was now answering phone calls to the practitioner helpline in under 10 minutes.  Mr. Corbin made this statement in a virtual event hosted by the California Society of Enrolled Agents on January 18, 2023.[1]

On January 12, 2023 the IRS released a draft of revised instructions[1] for Form 6765, Credit for Increasing Research Activities that now contains the guidance the IRS announced previously regarding what must be submitted with an amended income tax return claiming a credit under IRC §41 for increasing research activities.

If a taxpayer makes a charitable contribution of cryptocurrency valued at more than $5,000, a qualified appraisal is required the IRS held in Chief Counsel Advice 202302012.[1]  The IRS finds that cryptocurrency fails to fall into any category of property exempted from the qualified appraisal rules of §170(f)(11)(C).

The crypto winter of 2022 has a number of those burned by the drop in price looking to see if there may be some sort of tax benefit they can claim based on their holdings dropping in some cases to virtually worthless.  But it turns out merely being virtually worthless virtual currency won’t deliver any sort of tax benefit, at least in the conclusions given in IRS Chief Counsel Advice 202302011.[1]

A government contractor could not exclude the value of employer provided housing from his income under IRC §119 per a Tax Court ruling in the case of Smith v. Commissioner, TC Memo 2023-6.[1]

The IRS announced that it plans to issue regulations defining specific terms for the revised and renamed clean vehicle credit under IRC §30D in Notice 2023-1.[1]  The notice even provides the expected content for these terms.  But, interestingly, nowhere in the Notice does it say taxpayers may rely on these definitions until the regulations are issued.

The qualified commercial clean vehicle credit at IRC §45W added by the Inflation Reduction Act of 2022 that takes effect beginning in 2023 requires taxpayers to reference the incremental cost of their qualified vehicle as one of the factors that can limit the credit.  However, in no case can the credit exceed $7,500 for a vehicle with a gross vehicle weight of less than 14,000 pounds, so if the incremental cost is more than $7,500 then it would not serve to limit the amount of the credit.

In Notice 2023-9,[1] the IRS has issued guidance for determining the incremental cost of vehicles for purposes of the credit under IRC §45W, providing for safe harbor values taxpayers may use based on the Department of Energy’s (DOE) 2022 Incremental Purchase Cost Methodology and Results for Clean Vehicles.[2]

The annual update for tax-related automobile mileage rates for 2023 was published by the IRS in Notice 2023-03.[1]

The IRS posted the final version of the 2022 partnership Schedule K-2 and K-3 instructions to their 2022 forms site on December 28, 2022.[1] No changes appear to have been made to the Domestic Filing Exception when compared to the second draft version of the instructions that were issued in early December.

The IRS announced in Announcement 2023-2[1] that the agency will not require reporting on digital assets by brokers as required by the Infrastructure Investment and Jobs Act until regulations are issued implementing Section 80603 of the Act modifying IRC §§6045 and 6045A.