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Issue Number:? 2023-15

Inside This Issue

1. Early filers who reported certain state tax refunds as taxable should review return, consider filing amended return
2. Taxpayers face deadline to claim tax year 2019 refunds
3. Find filing season facts on IRS.gov
4. Reminder: Estimated tax payment deadline is April 18
5. What to do if Form 1099-K is received in error or with incorrect information
6. Tax relief for Tennessee storm victims
7. IRS releases fiscal year 2022 Data Book
8. IRS issues FAQs on compensation payments made by states for forced sterilization
9. Treasury, IRS proposed regulations identifying micro-captive transactions as abusive transactions
10. Safe harbor deed language for extinguishment, boundary line adjustment clauses
11. News from the Justice Department?s Tax Division
12. Technical Guidance

Taxpayers who filed their taxes early in this year?s filing season and reported certain state 2022 tax refunds as taxable income, may need to consider filing an amended return. On Feb. 10, 2023, the IRS provided details clarifying the federal tax status involving special payments made to taxpayers by 21 states in 2022. Taxpayers can see a listing of individual states and the federal tax treatment of their special state refunds or rebates listed on this State Payments chart. Encourage your clients who filed before Feb. 10 in these areas and meet these requirements to check their tax return to make sure they paid tax on a state refund before filing an amended return. This news release is also available in Spanish and Simplified Chinese.

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Nearly 1.5 million people across the nation have unclaimed refunds for tax year 2019 but face a July 17, 2023, deadline to submit their tax return. Under the law, taxpayers usually have three years to file and claim their tax refunds. If they don't file within three years, the money becomes the property of the U.S. Treasury. This news release is also available in Spanish and Simplified Chinese.

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With the April 18 deadline quickly approaching, the IRS wants to debunk common myths with facts about filing taxes, finding refund information and adjusting withholding. This news release is also available in Spanish and Simplified Chinese.

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Remind your clients that Tax Day, April 18, is also the deadline for first quarter estimated tax payments for tax year 2023. These payments are normally made by self-employed individuals, retirees, investors, businesses, corporations and others that do not have taxes withheld or employees that don't have enough taxes withheld by their employers throughout the year. This news release is also available in Spanish and Simplified Chinese.

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The IRS offers tips for taxpayers who receive an incorrect Form 1099-K, Payment Card and Third Party Network Transactions, or receive one of these forms in error. Also, visit IRS.gov for more information about how to report these transactions on a tax return.

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Tennessee storm victims now have until July 31, 2023, to file various federal individual and business tax returns and make tax payments. The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA) due to tornadoes, severe storms and straight-line winds that occurred starting on March 31. The current list of eligible localities is available on the Tax Relief in Disaster Situations webpage on IRS.gov. This news release is also available in Simplified Chinese.

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The IRS issued its annual Data Book detailing the agency's activities during fiscal year 2022 (Oct. 1, 2021 ? Sept. 30, 2022), including revenue collected and tax returns processed. In many areas, the statistics in the 2022 Data Book reflect the impact that past resource constraints had on the agency's ability to provide adequate taxpayer service and address compliance issues, including audits of higher income taxpayers, partnerships and large corporations. The IRS also issued a statement about the examination coverage rates in the 2022 Data Book.

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The IRS issued frequently asked questions (FAQs) to provide guidance for victims who have received state compensation payments for forced, involuntary or coerced sterilization. The FAQs address the federal income tax consequences of these payments.

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The Treasury Department and the IRS issued proposed regulations identifying certain micro-captive transactions as "listed transactions" and certain other micro-captive transactions as "transactions of interest." Listed transactions are abusive tax transactions that must be reported to the IRS. Transactions of interest are tax transactions that have the potential for tax avoidance or evasion that must also be reported to the IRS. See Announcement 2023-11 in the Technical Guidance section below for more information.

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The Treasury Department and the IRS issued Notice 2023-30 providing safe harbor deed language for extinguishment and boundary line adjustment clauses as required by the SECURE 2.0 Act of 2022. Section 605(d)(2) of the SECURE 2.0 Act provides donors the opportunity to amend certain conservation easement deeds to substitute the safe harbor language for the corresponding language in the original deed. Taxpayers will have until July 24, 2023, to record their safe harbor deed amendments. See additional information about Notice 2023-30 in the Technical Guidance section below.

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Tax return preparer Samir Patel of Georgia pleaded guilty to evading the proper assessment of his personal federal income taxes. He faces a maximum penalty of five years in prison, as well as a period of supervised release, restitution and monetary penalties.

The U.S. District Court for the Eastern District of Michigan entered a preliminary injunction against Detroit-area tax return preparers Herman ?Eddie? Simmons, Richmond Simmons and the business Profile Income Tax Co. (doing business as Simmons Income Tax Company), enjoining the defendants from preparing federal income tax returns for others through the resolution of their case on the merits.

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Announcement 2023-11 will be released in conjunction with proposed regulations identifying certain micro-captive transactions as listed transactions, and certain other micro-captive transactions as transactions of interest. The announcement explains that the regulations are being proposed in light of certain court decisions holding that the APA requires the IRS to identify listed transactions through notice-and-comment rulemaking, and that the IRS intends to issue further regulations identifying other listed transactions, to be finalized in 2023.

Notice 2023-30 sets forth the safe harbor deed language for extinguishment and boundary line adjustment clauses required by section 605(d)(1) of the SECURE 2.0 Act of 2022 (SECURE 2.0 Act), enacted as Division T of the Consolidated Appropriations Act, 2023, Public Law 117-328, 136 Stat. 4459 (Dec. 29, 2022). This notice also describes the process certain donors may use to amend an original eligible easement deed to substitute the safe harbor language for the corresponding language in the original deed, as provided by section 605(d)(2) of the SECURE 2.0 Act.

Revenue Procedure 2023-15 provides a safe harbor method of accounting that taxpayers may use to determine whether expenses to repair, maintain, replace, or improve natural gas transmission and distribution property must be capitalized.

Revenue Ruling 2023-08 obsoletes Revenue Ruling 58-74. Revenue Ruling 58-74 allowed taxpayers to file a claim for refund or amended return to deduct research or experimental expenditures that for prior taxable years the taxpayer had failed to deduct and for which the expense method under former section 174(a) was applicable.

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