e-News for Tax Professionals 2020-17

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Issue Number:  2020-17

Inside This Issue

1. Treasury, IRS deliver 88 million Economic Impact Payments in program’s first three weeks
2. VA, SSI recipients with eligible children need to act by May 5 to quickly add money to their automatic Economic Impact Payment; ‘Plus $500 Push’ continues
3. Guidance available on travel disruptions arising from the COVID-19 emergency
4. IRS seeks nominations for the Internal Revenue Service Advisory Council through June 12
5. IRS, Treasury issue guidance for applying UBTI "silo" rules for tax-exempt organizations by identifying separate trades or businesses
6. Common errors to avoid when filing Form 7200, Advance Payment of Employer Credits Due to COVID-19 
7. Technical Guidance

The Treasury Department and the IRS released state-by-state figures for Economic Impact Payments, with 88 million individuals receiving payments worth nearly $158 billion in the program’s first three weeks. More payments are being delivered each week.

“The IRS, Treasury and partner agencies are working non-stop to get these payments out in record time to Americans who need them,” said IRS Commissioner Chuck Rettig. “Tens of millions of people across the country are receiving these payments, and millions more are on the way. We encourage people to visit IRS.gov for the latest information, FAQs and updates on the payments.”

IRS.gov has a variety of tools and resources available to help individuals and businesses navigate Economic Impact Payments and get the information they need about EIP and other CARES Act provisions. Visit IRS.gov to review the frequently updated FAQs on various questions about Economic Impact Payments, ranging from eligibility to timing or to review the Economic Impact Payments totals by state.

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The IRS issued a special alert for Supplemental Security Income (SSI) and Department of Veterans Affairs beneficiaries to act by May 5 if they did not file a tax return in 2018 or 2019 and have dependents so they can quickly receive the full amount of their Economic Impact Payment. The $1,200 payments will be issued soon and, in order to add the $500 per eligible child amount to these payments, the IRS needs the dependent information before the payments are issued. Otherwise, their payment at this time will be $1,200 and, by law, the additional $500 per eligible child amount will be paid in association with a return filing for tax year 2020.

“We want to ‘Plus $500’ these groups so they can get their maximum Economic Impact Payment of $1,200 and their $500 for each eligible child as quickly as possible,” said IRS Commissioner Chuck Rettig. “They’ll get $1,200 automatically, but they need to act quickly and use the Non-Filer tool on IRS.gov to get the extra $500 per child added to their payment. Everyone should share this information widely and help others with the Plus $500 Push, so that more Americans get more money as fast as possible.”

A quick trip to a special non-filers tool on IRS.gov by May 5 for these groups may help put all of their eligible Economic Income Payment into a single payment. Additionally, to help spread the word to recipients with children about this special “Plus $500 Push,” the IRS has additional material available on a special partners page that can be shared with friends, family members and community groups.

General IRS information about the Economic Impact Payments is available on IRS.gov.

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The Treasury Department and the IRS issued guidance that provides relief to individuals and businesses affected by travel disruptions arising from the COVID-19 emergency. The guidance includes:

• Revenue Procedure 2020-20, which provides that, under certain circumstances, up to 60 consecutive calendar days of U.S. presence that are presumed to arise from travel disruptions caused by the COVID-19 emergency will not be counted for purposes of determining U.S. tax residency and for purposes of determining whether an individual qualifies for tax treaty benefits for income from personal services performed in the United States
• Revenue Procedure 2020-27, which provides that qualification for exclusions from gross income under Internal Revenue Code section 911 will not be impacted as a result of days spent away from a foreign country due to the COVID-19 emergency based on certain departure dates
• An FAQ, which provides that certain U.S. business activities conducted by a nonresident alien or foreign corporation will not be counted for up to 60 consecutive calendar days in determining whether the individual or entity is engaged in a U.S. trade or business or has a U.S. permanent establishment, but only if those activities would not have been conducted in the United States but for travel disruptions arising from the COVID-19 emergency.

The Treasury Department and the IRS continue to monitor these and other issues related to the COVID-19 emergency, and updated information about relief will be posted on Coronavirus Tax Relief on IRS.gov.

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The IRS is accepting applications for the Internal Revenue Service Advisory Council (IRSAC) through June 12. The IRSAC serves as an advisory body to the Commissioner of the IRS and provides an organized public forum for discussion of relevant tax administration issues between IRS officials and representatives of the public.

More information, including the application form, is available on IRS.gov.

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The Treasury Department and IRS issued proposed regulations under the Tax Cuts and Jobs Act (TCJA) that provide guidance for tax-exempt organizations that are subject to the unrelated business income tax with more than one unrelated trade or business on how to calculate their unrelated business taxable income (UBTI). The proposed regulations provide guidance on identifying separate trades or businesses, including investment activities, as well as certain other amounts included in UBTI.

Changes under the TCJA require tax-exempt organizations subject to the UBTI tax to compute UBTI, including any NOL deduction, separately for each trade or business.

Updates on the implementation of the TCJA can be found on the Tax Reform page of IRS.gov.

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To improve efficiency in receiving an advance employer credit, the IRS provides the following common errors tax preparers should avoid when preparing Form 7200, Advance Payment of Employer Credits Due to COVID-18: 

• Missing or inaccurate Employer Identification Number (EIN). Each EIN on a tax return should be exact. 
• Check only one box for applicable calendar quarter. Only one box should be checked for the correct quarter. 
• Check only one box for Part 1, Line A. Likewise, only one box should be checked in Part 1, Line A.
• Complete Part 1, Line B. In Part 1, Line B check either “Yes” or “No”.
• Complete Part II. Complete all the lines in Part II.  
• Complete Part II, Lines 1-8. Part II should be completed using dollar amounts, not the number of eligible employees. All lines in Part II should be completed with an actual dollar amount.  
• Check the math. Check the math on lines 4, 7 and 8. 
• Sign the form. Failure to sign the form will result in an automatic rejection.

For more information, visit Coronavirus Tax Relief or Employer credits on IRS.gov.

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Revenue Ruling 2020-08 suspends Rev. Rul. 71-533 pending reconsideration of whether the ten-year limitations period provided by section 6511(d)(3)(A) of the Internal Revenue Code applies to claims for refund or credit of an overpayment resulting from a foreign tax credit (FTC) carryback arising as a result of a net operating loss (NOL) carryback from a subsequent year.

Revenue Procedure 2020-25 provides guidance allowing a taxpayer to change its depreciation under section 168 for certain qualified improvement property. This revenue procedure also allows a taxpayer to make a late election, or to revoke or withdraw an election, under section 168(g)(7), (k)(5), (k)(7) or (k)(10) of the Code for certain years.

Announcement 2020-05 provides additional guidance on an issue not addressed in 2017 and 2018 IRB guidance on prematurely deteriorating concrete foundations due to the presence of the mineral pyrrhotite in the concrete mixture used to pour the foundations.

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