On December 21, 2018, IRS and Treasury issued final regulations implementing the partnership audit regime (T.D. 9844). The final regulations largely adopt, with some changes, the proposed regulations issued in August 2018. By issuing almost 200 pages of preamble, the final regulations provide extensive discussion of which comments were incorporated and why others were
IRS Announces Voluntary Disclosure Program for Domestic and Offshore Assets
On November 20, 2018, IRS issued a memo on its new voluntary disclosure program (“Voluntary Disclosure Program” or “Program”), following the offshore voluntary disclosure program’s termination on September 28, 2018. The Voluntary Disclosure Program provides taxpayers with a process for voluntarily disclosing tax noncompliance for both domestic and offshore assets to avoid potential criminal liability and prosecution. IRS has discretion to apply the Voluntary Disclosure Program’s procedures to all domestic voluntary disclosures received on or before September 28, 2018. Taxpayers have long been able to disclose voluntarily their tax noncompliance to IRS, either pursuant to IRS’s long-standing practice of allowing voluntary disclosure, under IRM 9.5.11.9, or using the streamlined compliance procedures. However, the Voluntary Disclosure Program is arguably better for taxpayers, in that it provides precise procedures and guarantees that participant taxpayers will not be criminally prosecuted. Under the prior practice, voluntary disclosure was only a factor taken into consideration when determining whether to prosecute criminally.
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IRS Publishes Proposed Regulations on BEAT
On December 13, 2018, the IRS published proposed regulations (REG-104259-18) on the Base Erosion and Anti-Abuse Tax (the “BEAT”), a new tax regime under the Tax Cuts and Jobs Act (“TCJA”). BEAT is designed to discourage multinational corporations from profit-shifting behavior by making deductible payments to their foreign affiliates, such as interest, high-margin service payments,
IRS Makes Cryptocurrency a Compliance Priority
The Internal Revenue Service (IRS) and other global taxing authorities are continuing to focus on bringing taxpayers who hold cryptocurrencies into compliance.
As cryptocurrencies have made some investors very wealthy, concern has arisen that investors are not reporting gains to taxing authorities. Internationally, governments are committed to bringing these investors into compliance. The most important compliance-related variables are how to characterize gains and losses, and at what point a reporting obligation arises. While many questions remain to be answered, taxing authorities have issued initial guidance on the treatment of cryptocurrencies, and have scored important victories in obtaining access to information necessary to bring taxpayers into compliance.
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Podcast: Texas v. United States of America
In this Ropes & Gray podcast, Isabelle Farrar, a senior associate in the tax controversy group is joined by Harvey Cotton, a principal in the tax and benefits group, and Elizabeth Smith, counsel in the tax controversy group, to discuss the December 2018 decision from the Northern District of Texas in Texas v. United
Treasury Issues Final Rules on Partnership Representatives and New Proposed Rules Under the Partnership Audit Regime
August 2018 brought two major developments in the Department of Treasury’s race to finalize its partnership audit reform regulations before partnerships begin in early 2019 filing tax returns for the first time under the new regime. First, on August 7, the Department of Treasury (“Treasury”) issued final regulations for partnership representatives. Second, on August 13,
Rettig Starts Four-Year Term as IRS Commissioner
On October 1, Charles Rettig began his term as 49th Commissioner of the IRS. This gives the IRS a Commissioner for the first time in approximately one year, since his predecessor John Koskinen, an Obama appointee, stepped down in fall 2017. David Kautter, the Treasury Department’s assistant secretary for tax policy, had been running the IRS in the interim.
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District Court Clarifies Rules Related to IRS Formal Document Requests for Documents Outside the U.S.
In Veg Corp. v. U.S., No. 2:17-cv-02893 (D. Nev. July 30, 2018), the district court refused to analyze compliance with IRS document requests in a vacuum, and, instead, considered the parties’ understanding of the document requests.
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IRS Large Business & International Division Announces Strong Slate of International Campaigns
In November 2017, the IRS Large Business & International Division (“LB&I”) announced the expansion of its compliance campaigns, selecting eleven additional areas on which to focus. IRS LB&I now has 24 total campaigns ongoing, including the 13 campaigns originally announced in January 2017. The new slate of campaigns reflect the IRS’s continued focus on
IRS Criminal Investigation Division Announces New Programs Fully Operational in 2018
John D. “Don” Fort, the new chief of the IRS Criminal Investigation division (“IRS-CI”), announced that two new programs will be fully operational in 2018: (1) the Nationally Coordinated Investigations Unit, and (2) the International Tax Enforcement Group. Fort also explained that the Criminal Investigation division is—and will be—increasingly focusing on the use of cryptocurrencies. Read more about those programs and the focus on cryptocurrencies below.
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