Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of January 17, 2023 – January 20, 2023.
January 17, 2023: The IRS released Internal Revenue Bulletin 2023-3, which highlights the following:
- Notice 2023-10: This notice provides that calendar year 2022 will be a transition period for purposes of implementing the $600 reporting threshold for third-party settlement organizations. As a result, third-party organizations will not be required to report tax year 2022 transactions on Form 1099-K to the IRS or the payee for the lower $600 threshold amount unless the amount exceeds $20,000 and the number of transactions exceeds 200.
- Notice 2023-2: This notice provides interim guidance on the new 1% excise tax on a covered corporation’s repurchases of corporate stock under Section 4501. Section 4501 was added as part of the Inflation Reduction Act of 2022 (IRA). The notice provides an exclusive list of Section 317(b) redemption transactions that are treated as Section 317(b) redemption but are not repurchases, as well as an exclusive list of economically similar transactions. The notice applies to stock repurchases and issuances of stock made after December 31, 2022.
- Announcement 2023-1: This announcement notifies taxpayers of the applicable reference standard that must be used to determine the amount of the energy-efficient commercial building property deduction allowed under Section 179D, as amended by the IRA. This announcement identifies the existing reference standard, affirms a new one and clarifies when the two reference standards will apply.
- Notice 2023-1: This notice informs taxpayers that the IRS and the US Department of the Treasury (Treasury) intend to propose new clean vehicle credit regulations, addressing the definitions of certain terms in Section 30D.
- Notice 2023-03: This notice provides the 2023 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. As of January 1, 2023, the standard mileage rates for the use of a car, van, pickup or panel truck are:
- 5 cents per mile driven for business use
- 22 cents per mile driven for medical or moving purposes for qualified active-duty members of the armed forces
- 14 cents per mile driven in service of charitable organizations
- Notice 2023-7: This notice announces that the IRS and the Treasury plan to issue guidance on the new corporate alternative minimum tax (CAMT), which imposes a 15% minimum tax on the adjusted financial statement income of large corporations for taxable years beginning after December 31, 2022. It also clarifies which corporations the CAMT applies to and how the alternative minimum tax is calculated.
- Notice 2023-9: This notice informs taxpayers that the Treasury and the IRS have reviewed the incremental cost for all street vehicles in calendar year 2023 and the analysis shows that the incremental cost of street vehicles (other than compact car plug-in hybrid electric vehicles that have a gross vehicle weight rating of less than 14,000 pounds) will be greater than $7,500.
- Notice 2023-11: This notice provides temporary relief to certain foreign financial institutions (FFIs) who have been unable to obtain US taxpayer identification numbers (TINs) for their preexisting accounts that are US reportable accounts. As part of the relief, the FFIs will also provide information that the IRS can analyze to determine why these TINs are missing.
- Proposed Regulations 100442-22: These proposed regulations provide guidance related to the treatment of qualified foreign pension funds for purposes of the exemption from taxation afforded to foreign governments. The proposed regulations also address the determination of whether a qualified investment entity is domestically controlled, including the treatment of qualified foreign pension funds.
- Proposed Regulations 146537-06: The Treasury and the IRS are reopening the comment period for these regulations, which relate to the exemption from taxation afforded to foreign governments under Section 892.
- Revenue Procedure 2023-8: This guidance provides the procedures under Sections 446 and 1.446-1(e) of the regulations to obtain automatic consent of the IRS Commissioner to change the methods of accounting for specified research or experimental expenditures to comply with Section 174, as amended by the Tax Cuts and Jobs Act of 2017.
- Revenue Procedure 2023-10: This guidance prescribes the loss payment patterns for the 2022 determination year and the discount factors for the 2022 accident year for insurance companies computing discounted unpaid losses under Section 846 and discounted estimated salvage recoverable under Section 832.
- Revenue Procedure 2023-11: This procedure modifies audit protection terms to clarify that taxpayers do not receive audit protection with respect to the treatment of Section 174 expenditures incurred prior to making the change in the method of accounting if the year of change is the year immediately subsequent to the first taxable year in which Section 174 becomes effective.
- Treasury Decision 9771: This final regulation describes which foreign pension funds are exempt from the tax on the sale of real property located in the United States and describes how a purchaser of a real property in the United States may ascertain that the seller is a qualified foreign pension fund so that the purchaser is not required to withhold on the sale proceeds.
January 17, 2023: The IRS announced that IRS Free File, a guided tax preparation service, is live and ready for taxpayers to use. The service is available to taxpayers who earned $73,000 or less in 2022. The IRS starts accepting individual tax returns on January 23.
January 17, 2023: The IRS released Revenue Ruling 2023-3, providing the applicable federal rates for federal income tax purposes for February 2023. The short-term federal interest rate is 4.47%, the mid-term rate is 3.82% and the long-term rate is 3.86%.
January 17, 2023: The IRS released Notice 2023-12, which provides updates on the corporate bond monthly yield curve and corresponding spot segment rates for January 2023 and the 24-month average segment rates for January 2023. The notice also provides guidance as to interest rates on 30-year Treasury securities and 30-year Treasury weighted average rates.
January 18, 2023: The IRS announced that it has selected nine new IRS Advisory Council members. The council provides the IRS Commissioner with relevant feedback, observations and recommendations related to issues in tax administration.
January 18, 2023: The IRS reminded employers and businesses to file Tax Year 2022 Form W-2 and other wage statements, which are due by January 31, 2023.
January 18, 2023: The IRS released Revenue Procedure 2023-14, which provides the limitations tables on depreciation deductions for owners of passenger automobiles placed during calendar year 2023 and the dollar amounts table that must be used to determine income inclusions by lessees of passenger automobiles with a lease term beginning in calendar year 2023.
January 19, 2023: The IRS announced that victims of storms and flooding in Georgia and Alabama now have until May 15, 2023, to file various federal individual and business tax returns and make tax payments. The relief is available to anyone in an area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual or public assistance. The current list of FEMA-eligible localities is available here.
January 19, 2023: The IRS is requesting comments on Form 14767, Consent to Disclose Tax Compliance Check. Form 14767 authorizes the IRS to prepare a tax compliance report that discloses confidential tax information to a third-party appointee for federal employment. Comments should be received by March 20, 2023.
January 19, 2023: The IRS reminded taxpayers who earn wages to use the Tax Withholding Estimator to adjust their 2023 withholdings. The Tax Withholding Estimator online tool helps taxpayers determine if they may get a refund or need to make a payment directly to the IRS to avoid a tax bill and penalties.
January 20, 2023: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).
Upcoming Webinars for Tax Practitioners:
- January 31, 2023; 2:00 pm (EST): Estate and Gift Tax
- February 1, 2023; 10:00 am (EST): Streamlined Filing Procedures for U.S. Citizens Abroad
- February 7, 2023; 2:00 pm (EST): Practical Considerations – Foreign Tax Credit
- February 9, 2023; 2:00 pm (EST): K2/K3 with a Focus on the Foreign Tax Credit – Individuals
Special thanks to Sarah Raben in our Chicago office for this week’s roundup.