Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 12, 2022 – September 16, 2022.

September 12, 2022: The IRS released Internal Revenue Bulletin 2022-37, which highlights the following:

• Treasury Decision 9965: These regulations establish certain requirements regarding the implementation of protections against balance billing provided under the No Surprise Act.

• Notice 2022-37: This guidance assists taxpayers in complying with the final regulations under Section 871(m). The US Department of the Treasury (Treasury) and the IRS intend to amend Section 871(m) regulations, which will delay the effective date of certain rules in the final regulations and extend the phase-in period provided in Notice 2020-2 for two years.

September 12, 2022: The IRS released COVID Tax Tip 2022-139, reminding taxpayers of recently issued Notice 2022-36, which provides penalty relief from certain failure to file penalties in taxable years 2019 and 2020. The relevant penalties will be waived, abated, refunded or credited. The relief is designed to help struggling taxpayers affected by the COVID-19 pandemic and to allow the IRS to focus resources on processing backlogged tax returns and taxpayer correspondence.

September 12, 2022: The Treasury Inspector General for Tax Administration (TIGTA) released the Fiscal Year 2022 Statutory Review of Compliance With Notice of Federal Tax Lien Filing Due Process Procedures. TIGTA is required to determine annually whether lien notices issued by the IRS comply with the legal requirements set forth in the Internal Revenue Code. TIGTA recommended that the Director of Collection Policy for the Small Business/Self-Employed Division (1) reinforce Internal Revenue Manual (IRM) guidance to ensure that taxpayers’ representatives are notified of Notice of Federal Tax Lien filings and (2) correct an IRM reference on Written Communication to a Taxpayer’s Authorized Representative. The IRS agreed.

September 12, 2022: TIGTA released its report entitled, Reliance on Self-Certifications Resulted in Federal Agencies Awarding Contracts and Grants to Entities With Delinquent Federal Taxes; However, the IRS Is Making Progress on Establishing the Federal Contractor Tax Check System. TIGTA performed this audit because in Calendar Years 2015 and 2016, federal contracts were awarded to thousands of contractors with unpaid taxes that were most likely delinquent. Between October 2018 and December 2019, the federal government awarded 2.1 million federal contracts to more than 83,000 awardees. More than 3,000 contractors that received contracts owned $621.8 million in delinquent federal taxes, and 938 grantees received $22.7 billion in federal grants while owning $269.2 million in delinquent federal taxes.

September 12, 2022: The IRS issued minor corrections to Treasury Decision 9964, originally published August 16, 2022. The regulations define guidance for states regarding the process by which they may obtain or inspect certain returns and return information for the purpose of administering state laws governing certain tax-exempt organizations and their activities.

September 13, 2022: The IRS issued Notice 2022-39, providing rules related to the Inflation Reduction Act of 2022. Claimants must follow this guidance in order to make a one-time claim for the credit and payment allowable for alternative fuels sold or used during the first, second and third calendar quarters of 2022.

September 13, 2022: The IRS reminded taxpayers who still haven’t filed a 2021 tax return to file them electronically and avoid common mistakes.

September 13, 2022: TIGTA released the Fiscal Year 2022 Statutory Review of Potential Fair Tax Collection Practices Violations. TIGTA identified 25 potential Fair Debt Collection Practices Act violations and one potential Fair Tax Collection Practices (FTCP) violation by private collection agency employees. TIGTA recommended that the IRS (1) review miscoded cases to ensure a proper analysis of the FTCP violation is conducted and the correct issue code is applied; (2) issue a memorandum to collection managers reinforcing the procedures to be used when addressing taxpayer complaints on IRS employee misconduct; and (3) remind group managers of their annual mandatory observation review requirement. IRS management agreed with all three recommendations.

September 13, 2022: The IRS proposed regulations that would expand access to its Independent Office of Appeals (IRS Appeals). The proposed rules would establish how to manage matters that do not require litigation, as well as guidance for requesting a referral to IRS Appeals following the issuance of a notice of deficiency. Comments must be received by November 14, 2022.

September 14, 2022: The IRS released Revenue Procedure 2022-36, providing the domestic asset/liability percentages and domestic investment yields needed by foreign life insurance companies and foreign property and liability insurance companies to compute their minimum effectively connected net investment income under Section 842(b) for taxable years beginning in 2021.

September 14, 2022: The IRS released Tax Tip 2022-151, advising taxpayers of the next steps if they receive a notice or letter from the IRS.

September 15, 2022: The IRS announced the opening of the Compliance Assurance Process (CAP) program application period for 2023. The purpose of CAP is to employ real-time issue resolution with transparent and cooperative interaction between taxpayers and the IRS, resolving issues prior to the filing of a tax return. Applicants must have assets of $10 million or more and be a US publicly traded corporation. The IRS will notify applicants in February 2023 if they are accepted into the program.

September 15, 2022: US Secretary of the Treasury Janet Yellen spoke at the IRS facility in New Carrollton, Maryland. Secretary Yellen took a tour of the technology facilities and called it “a model for the IT modernization that has long been needed at the IRS.” She also added that the new IRS funding from the Inflation Reduction Act will make those types of investments possible.

September 15, 2022: The IRS reminded taxpayers that IRS Free File is available through the tax return extension deadline of October 17, 2022, but not to wait until the last minute.

September 16, 2022: The IRS issued Notice 2022-42, proposing to amend the regulations under Section 901, with respect to the application of the noncompulsory payment regulations to certain amended Puerto Rico tax decrees. Comments must be received by January 9, 2023.

September 16, 2022: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

Upcoming Events:

• A webinar to discuss Innocent Spouse Relief is scheduled for September 20, 2022, at 12:30 pm (CDT). The program will discuss the innocent spouse relief provision, allocation of deficiency (also known as separation of liability) and equitable relief.

• The IRS Office of Chief Counsel is hosting a webinar, “Bankruptcy and the IRS Presented by Chief Counsel” on September 20, 2022, at 1:00 pm (CDT).

• The IRS Office of Chief Counsel is hosting a webinar, “Understanding Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding” on September 22, 2022, at 1:00 pm (CDT). The webinar will provide an overview of Forms 1042-S and 1042-T and discuss common errors made on Form 1042-S.

• The IRS will hold a closed meeting of the Art Advisory panel on September 22, 2022. The meeting agenda includes review and evaluation of the acceptability of fair market value appraisals involved in federal income, estate and gift tax returns. The meeting is not open to the public.

• The following Taxpayer Advocacy Panel Committees are scheduled to meet in October:

  • October 11, 2022: Notices and Correspondence Project Committee

  • October 11, 2022: Tax Forms and Publications Project Committee

  • October 11, 2022: Toll-Free Phone Lines Project Committee

  • October 12, 2022: Special Projects Committee

  • October 12, 2022: Taxpayer Communications Project Committee

  • October 13, 2022: Taxpayer Assistance Center Improvements Project Committee

• The 28th Annual Tax Practitioner and IRS Fall Seminar is scheduled for October 26, 2022, at 10:00 am (CDT). Topics include IRS Operations, Federal Ethics, Tax Pro Account, Offer In Compromise and Estate and Gift Tax.

Special thanks to Sarah Raben in our Chicago office for this week’s roundup.