e-News for Tax Professionals Issue 2019-34

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Issue Number:  2019-34

Inside This Issue

1. Settlement Offer for Micro-Captive Insurance Schemes
2. Preparing Your Client for Assistance after a Disaster
3. Help Your Clients Understand IRS Notices
4. Technical Guidance

The IRS this week announced a time-limited settlement offer for certain taxpayers under audit who participated in abusive micro-captive insurance transactions. Following wins in three recent U.S. Tax Court cases, the IRS has decided to offer settlements to taxpayers currently under exam and began sending notices to approximately 200 taxpayers. Taxpayers eligible for this offer will be notified by letter with the applicable terms.

"The IRS is taking this step in the interests of sound tax administration," IRS Commissioner Chuck Rettig said. "We encourage taxpayers under exam and their advisors to take a realistic look at their matter and carefully review the settlement offer, which we believe is the best option for them given recent court cases. We will continue to vigorously pursue these and other similar abusive transactions going forward.

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Disaster can strike without warning, causing damage and destruction. But before the IRS can authorize tax relief, the President must declare a federal disaster. Here’s a rundown of tax-related things that can help your client after a disaster:

• Receive more time to file and pay. If your client is located in a disaster area, he may have extra time to file returns and pay taxes. The IRS’s Twitter accounts and disaster assistance page provide disaster updates and links to resources or contact the IRS’s disaster line at 866-532-5227.

• Qualify for a casualty loss tax deduction. If your client has damaged or lost property due to a federally declared disaster, he may qualify to claim a casualty loss deduction. He can claim this deduction on his current or prior-year tax return, which may result in a larger refund.
  
• File for a disaster loan or grant. The Small Business Administration offers financial help to business owners, homeowners and renters. This help is for those in a federally declared disaster area. To qualify your client must have filed all required tax returns.

• Request a tax return transcript. Clients affected by a disaster can get copies or transcripts of past tax returns for free by submitting either Form 4506, Request for Copy of Tax Return or Form 4506-T, Request for Transcript of Tax Return.

• Submit a change of address. If your client temporarily relocates after a disaster, he should notify the IRS of the new address by submitting Form 8822, Change of Address.

For more information and tips, visit disasterassistance.gov.

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Did your client receive a letter or notice from the IRS? The Understanding Your IRS/Notices web page on IRS.gov explains in detail what certain IRS notices mean and how to respond. Key in the notice or letter number in the “Notices and Letters” search box to obtain a clear explanation of the notice or letter and obtain answers to common questions.

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Notice 2019-52 expands the emergency housing and compliance monitoring relief provided in Rev. Proc. 2014-49, 2014-37 I.R.B. 535, and Rev. Proc. 2014-50, 2014-37 I.R.B. 540, in response to the devastation caused by the 2018 California Wildfires to Butte, Los Angeles, and Ventura counties in the State of California.

Revenue Ruling 2019- 23 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, the adjusted federal long-term tax-exempt rate.

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