Treasury Department, IRS Announce Guidance to Clarify Definition of Qualifying Relative and Exemption Amount: Today, the Treasury Department and the IRS announced in Notice 2018-70 that they will issue regulations clarifying the definition of “qualifying relative” under section 152(d) for purposes of various tax code provisions, including the new $500 credit for other dependents and head of household filing status for tax years in which the section 151(d) exemption amount is zero. Under the proposed regulations, the reduction of the exemption amount to zero under section 151(d)(5)(A) for tax years 2018-2025 will not be considered in determining whether a person is a qualifying relative, and the exemption amount will be treated as $4,150 for those years.
TIGTA Releases Audit Report Regarding Compliance With Legal Guidelines Restricting the Use of Records of Tax Enforcement Results: The Treasury Inspector General for Tax Administration (TIGTA) released an audit report titled “Fiscal Year 2018 Statutory Audit of Compliance with Legal Guidelines Restricting the Use of Records of Tax Enforcement Results.” TIGTA is required under section 7803(d)(1) to determine annually whether the IRS complied with restrictions on the use of enforcement statistics to evaluate employees as set forth in the IRS Restructuring and Reform Act of 1998. TIGTA’s report found instances of noncompliance and made several recommendations, including that the IRS (i) ensure that the potential violations, documentation requirements, and noncompliance related to self-assessments identified in the report are discussed with responsible managers and employees; (ii) notify managers identified in the report to designate properly their employees and/or themselves as required under the statute; (iii) implement an outreach strategy to ensure that employees and managers understand their responsibilities under the statute. The IRS agreed with some of the recommendations.