ERC; abusive use of partnerships; tax forums; open field collection cases; and more

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e-News for Tax Professionals June 21, 2024

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Issue Number:? 2024-25

Inside This Issue

* Next phase of Employee Retention Credit work begins; review shows vast majority pose risk of being incorrect [ #First ]
* IRS unveils new measures to stop abusive use of partnerships, seeks to close major loopholes worth billions [ #Second ]
* 2024 IRS Nationwide Tax Forum: Digital services support [ #Third ]
* Tax pro reminder: Taxpayers with an open field collection case can utilize online payment options [ #Fourth ]
* IRS issues revised draft Form 6765, Credit for Increasing Research Activities? [ #Fifth ]
* Educational assistance programs: Treasury, IRS issue FAQs [ #Sixth ]
* Upcoming webinars for tax practitioners [ #Seventh ]
* News from the Justice Department?s Tax Division [ #Eighth ]
* Technical Guidance [ #Ninth ]
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*1.? Next phase of Employee Retention Credit work begins; review shows vast majority pose risk of being incorrect*

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The IRS this week announced plans to reject thousands of improper high-risk Employee Retention Credit claims [ [link removed] ] while starting a new round of processing lower-risk claims to help qualified taxpayers. The IRS recognized between 10% and 20% of claims fall into what the agency has determined to be the highest-risk group, which show clear signs of being erroneous claims for the pandemic-era credit. Tens of thousands of these will be denied in the weeks ahead. This high-risk group includes filings with warning indications that clearly fall outside the guidelines established by Congress.

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*2.? IRS unveils new measures to stop abusive use of partnerships, seeks to close major loopholes worth billions*

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The IRS has unveiled a new set of initiatives to stop abusive partnership transactions [ [link removed] ] that allow affluent taxpayers to avoid paying what they owe. The IRS wants to put an end to partnerships basis shifting, which is a method used by individuals and businesses to transfer assets to evade paying taxes. As a component of continuous initiatives to draw attention to the issues pertaining to high incomes, the IRS announced the establishment of a new dedicated group in the Office of Chief Counsel specifically focused on developing guidance on partnerships, including closing loopholes. The office will work closely with a new pass-through work group being established in the IRS Large Business and International division that will be officially established this fall.

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*3.? 2024 IRS Nationwide Tax Forum: Digital services support*

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New for 2024, attendees at the IRS Nationwide Tax Forum can join IRS experts in the Digital Account Services room to learn how to claim their IRS online accounts and gain real-time access to online services. In addition, the IRS Return Preparer Office will offer account services, giving tax professionals an on-site way to resolve issues they?re having with their practitioner accounts. Staff will assist tax pros with issues that extend beyond general program questions, such as:


* PTIN lookup
* Assistance with PTIN registration and renewal
* Assistance with PTIN account issues (e.g., name changes, address updates, PTIN compromise/misuse)
* Confirmation of CE credits earned
* Resolution of CE credit discrepancies
* Verification of Annual Filing Season Program status/eligibility Verification of Enrolled Agent status/eligibility Assistance with PTIN compliance issues (letters, outreach, etc.)

Attendees should look for the new Digital Account Services room and make their appointments on-site.

The 2024 IRS Nationwide Tax Forum begins in Chicago, July 9-11, and continues in Orlando, July 30-Aug. 1, Baltimore, Aug. 13-15, Dallas, Aug. 20-22, and San Diego, Sept. 10-12. For more information and to register, visit IRS Nationwide Tax Forum [ [link removed] ].

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*4.? Tax pro reminder: Taxpayers with an open field collection case can utilize online payment options*

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Tax pros, if you are representing clients with an open field collection case, remind them they can make electronic payments. Payments can be sent to the revenue officer assigned to their case or paid directly to the IRS by visiting irs.gov/payments [ [link removed] ]. There are several advantages to making online payments:


* Online payment options are available 24/7, allowing you and your clients to make payments at any time from the comfort of your home or office;
* The IRS online payment system uses advanced encryption and security measures to protect taxpayers' information. You can assure your clients that their personal and financial data is safe when making payments online; and
* When a payment is made online, the payer will receive instant confirmation. This immediate acknowledgment helps in maintaining accurate records and provides peace of mind that the payment has been received and applied correctly.

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*5.? IRS issues revised draft Form 6765, Credit for Increasing Research Activities?*

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The IRS made public the availability of draft form 6765 [ [link removed] ], popularly referred to as the Research Credit [ [link removed] ]. Numerous external stakeholders provided insightful feedback to the IRS, which helped the agency make several changes aimed at lightening taxpayer burden.

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*6.? Educational assistance programs: Treasury, IRS issue FAQs*

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The Department of Treasury and the IRS published frequently asked questions [ [link removed] ] (FAQs) in Fact Sheet 2024-22 [ [link removed] ], about questions pertaining to educational assistance programs under section 127 of the Internal Revenue Code (Code) (a section 127 educational assistance program). Certain educational assistance benefits that are given under an educational assistance program may be excluded by taxpayers from their gross income. Payments for tuition fees, and costs associated with books and supplies are among the benefits of the program. They also cover principal and interest payments for qualifying loans that an employer makes between March 27, 2020, and Jan. 1, 2026.?

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*7.? Upcoming webinars for tax practitioners*

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The IRS offers the upcoming live webinar to the tax practitioner community:


* *Understanding Form 2290 - Heavy Highway Vehicle Use Tax* on July 18, at 2 p.m. ET. Earn up to 2 CE credits (Federal tax). Certificates of completion are being offered.

For more information or to register, visit Webinars for tax practitioners webpage [ [link removed] ].

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*8.? News from the Justice Department?s Tax Division*

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Tax return preparer John Borgela [ [link removed] ] of Florida has been sentenced to two years in prison for preparing and filing false tax returns for others. By repeatedly understating customers? tax liabilities, the complaint alleges the United States has been harmed by Borgela?s conduct, resulting in a significant loss in tax revenue of $970,000. In addition to his prison sentence, Borgela is ordered to serve two years of supervised release and to pay $970,970 in restitution to the United States. IRS Criminal Investigation investigated the case..

Tax return preparer and business owner Salvador Gonzalez [ [link removed] ] of California pleaded guilty to aiding in the preparation of false tax returns. According to court documents and statements made in court, Gonzalez inflated his clients? tax refunds by preparing and submitting to the IRS false tax returns that claimed fraudulent tax deductions and fictitious business profits and losses. Gonzalez is scheduled to be sentenced on Oct. 7 and faces a maximum penalty of three years in prison for each of the three counts of aiding and assisting in the preparation of false tax returns. He also faces a period of supervised release, restitution and monetary penalties. IRS Criminal Investigation is investigating the case.

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*9.? Technical Guidance*

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The Department of Treasury and the IRS released final rules [ [link removed] ] on the prevailing wage and apprenticeship (PWA) requirements related to increased credit or deduction amounts for specific clean energy incentives, implemented under the Inflation Reduction Act (IRA). ?The increased credit or deduction for taxpayers meeting prevailing wage and apprenticeship requirements creates opportunities for both workers and employers,? said IRS Commissioner Danny Werfel. ?The IRS is committed to ensuring that taxpayers claiming the clean energy credits comply with all the applicable prevailing wage and apprenticeship requirements. The additional resources the IRS has received are making a difference for our efforts to ramp up taxpayer service and enforcement, and we will continue to build on these improvements.?

Notice 2024-53 [ [link removed] ] sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for May 2024 used under section 417(e)(3)(D), the 24-month average segment rates applicable for June 2024, and the 30-year Treasury rates, as reflected by the application of section 430(h)(2)(C)(iv).

Notice 2024-54 [ [link removed] ] announces that the Department of the Treasury and the IRS intend to issue two sets of proposed regulations that would provide special rules for certain transactions under sections 732, 734, 743, 755 and 1502 of the Internal Revenue Code.

Notice 2024-55 [ [link removed] ] provides guidance on the application of the exceptions to the 10 percent additional tax under section 72(t)(1) of the Internal Revenue Code (Code) for emergency personal expense distributions and domestic abuse victim distributions.

Revenue Ruling 2024-13 [ [link removed] ] provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate and the adjusted federal long-term tax-exempt rate. These rates are determined as prescribed by section 1274.

Revenue Ruling 2024-14 [ [link removed] ] advises taxpayers of the Service?s position challenging certain partnership related-party transactions under the codified economic substance doctrine in section 7701(o).

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