Five-Minute Tax Briefing®
January 10, 2023
Item for Tuesday, January 3, 2023
Interim Guidance on the New Corporate AMT: The Inflation Reduction Act of 2022 amended IRC Sec. 55, which imposes a new 15% Corporate Alternative Minimum Tax (CAMT) imposed on the “adjusted financial statement income” of an applicable corporation. The IRS has released a notice to provide interim guidance regarding the application of the new CAMT for tax years beginning after 12/31/22. Sections 3 through 7 of the notice describe rules that address the CAMT and certain issues regarding (1) subchapters C and K of the Code, troubled corporations, and affiliated groups that file as consolidated groups; (2) depreciation; (3) a safe harbor method; (4) the treatment of certain tax credits; and (5) the determination of corporate status involving certain partnerships. Taxpayers may rely upon the notice until the issuance of the proposed regulations. The notice also solicits comments on the rules contained in the notice and certain other issues. News Release IR 2022-229 and Notice 2023-7.
Items for Friday, December 30, 2022
FAQs on Energy Efficient Home Improvements and Residential Clean Energy Property Credits: The IRS has released Frequently Asked Questions (FAQs) about energy efficient home improvements and residential clean energy property tax credits. These credits were amended by the Inflation Reduction Act of 2022. The FAQs provide details on the changes to these tax credits, information on eligible expenditures, and provide examples of how the credit limitations work. The energy efficient home improvement credit is increased for years after 2022, with an annual credit of generally up to $1,200. The credit is allowed for qualifying property placed in service on or after 1/1/23 and before 1/1/33. The residential clean energy property credit is a 30% credit for certain qualified expenditures made by a taxpayer for residential energy efficient property. The credit has been extended through 2034. The fact sheet can be found at www.www.irs.gov/pub/taxpros/fs-2022-40.pdf . FS 2022-40 and News Release IR 2022-225.
Interim Guidance on the New Corporate Stock Repurchase Excise Tax: The Inflation Reduction Act of 2022 created new IRC Sec. 4501, which imposes a 1% excise tax on the aggregate fair market value of stock repurchased by certain corporations during the taxable year, subject to adjustments. The IRS has released interim guidance regarding the application of the corporate stock repurchase excise tax until the issuance of proposed regulations. A notice has been issued to provide certainty to taxpayers in advance of 1/1/23, the date on which the new excise tax will apply to stock repurchases. Taxpayers may rely upon the notice until the issuance of the forthcoming proposed regulations. The notice also solicits comments on the rules contained in the notice and certain other issues. News Release IR 2022-228 and Notice 2023-2 .
Item for Thursday, December 29, 2022
Omnibus Spending Package Passes: Congress has passed the Consolidated Appropriations Act of 2023 and it will be signed by President Biden soon. The bill contains the Setting Every Community Up for Retirement 2.0 Act of 2022 (SECURE 2.0), which includes dozens of retirement-related provisions intended to build on reforms passed in late 2019. Among the key retirement provisions in the Act are: (1) expanding automatic enrollment in retirement plans; (2) increasing the age for the required beginning date for mandatory distributions; (3) a higher catch-up limit to apply at age 60, 61, 62, and 63; and (4) elimination of the additional tax on corrective distributions of excess contributions. The Act also includes a number of smaller non-retirement tax provisions including changes to Achieving a Better Life Experience (ABLE) accounts under IRC Sec. 529A and modifications to the rules governing charitable conservation easements under IRC Sec. 170. The bill doesn’t include the traditional set of tax extenders. H.R. 2617.
Item for Wednesday, December 28, 2022
Delayed Form 1099-K Reporting Requirement: The IRS has announced a delay in revised reporting thresholds for Third-party Settlement Organizations (TPSOs) under the American Rescue Plan Act. Beginning 1/1/23, a TPSO is required to report third-party network transactions paid in 2022 with any participating payee that exceed a minimum threshold of $600 in aggregate payments, regardless of the number of transactions. The IRS has issued a notice delaying the reporting of transactions in excess of $600 to transactions that occur after calendar year 2022. More details on the delay will be available soon with additional information to help taxpayers and the industry with compliance. The existing Form 1099-K (Payment Card and Third Party Network Transactions) reporting threshold of $20,000 in payments from over 200 transactions will remain in effect. News Release IR 2022-226 and Notice 2023-10 .
Item for Tuesday, December 27, 2022
List of Countries Requiring Cooperation with an International Boycott: The U.S. Treasury Department released for publication in the Federal Register a list of countries that require or may require participation in, or cooperation with, an international boycott [within the meaning of IRC Sec. 999(b)(3) ]. The Treasury release is provided under the U.S. international boycott rules and contains the same list of countries as provided under the prior list-no new countries are added, and no countries are removed from the prior quarterly list. The countries on the current list are: (1) Iraq, (2) Kuwait, (3) Lebanon, (4) Libya, (5) Qatar, (6) Saudi Arabia, (7) Syria, and (8) Yemen. The notice can be found at www.public-inspection.federalregister.gov/2022-27923.pdf .
Item for Friday, December 23, 2022
Withholding on Transfers of Publicly Traded Partnership Interests: The IRS has released a notice that provides additional guidance for brokers to comply with final regulations under IRC Sec. 1446(f) related to withholding on the transfer of an interest in a Publicly Traded Partnership (PTP). The IRS has determined that the burden on brokers to determine whether a foreign entity that trades on a foreign market is a PTP would likely be disproportionate to the amount of gain subject to IRC Sec. 864(c)(8) on the transfer of such interests. The IRS intends to issue proposed regulations amending the final regulations to allow a broker that effects a sale of an interest in a foreign-traded entity to presume that the entity is not a PTP for U.S. tax purposes unless the broker has actual knowledge otherwise. Additionally, the IRS will allow brokers to rely on late certifications for withholding purposes and will provide an exception to withholding on a PTP short sale, subject to certain limitations. Notice 2023-8.
Item for Thursday, December 22, 2022
2023 Indexing Factor for Use by Group Health Plans and Health Insurance Issuers: The IRS has released a notice that provides the indexing factor to be used by group health plans and health insurance issuers to calculate the Qualifying Payment Amount (QPA) for items or services provided on or after 1/1/23 and before 1/1/24. The No Surprises Act provides protection against balance-billing for certain out-of-network items or services provided to patients. The QPA is the basis for determining individual cost sharing for items and services covered by the balance-billing protections of the Act. The QPA is generally defined as the plan’s median contracted rate for the same or similar item or service. Regulations issued in July 2021 set forth the methodology for calculating the QPA, which is indexed annually for inflation. The combined percentage increase to adjust the median contracted rate is 1.0768582128 for 2023. Notice 2023-4.
Item for Wednesday, December 21, 2022
Tax Relief for Victims of Hurricane Nicole: The IRS has provided tax relief for victims of Hurricane Nicole beginning 11/7/22 in Florida. The relief is provided to individuals and households that reside or have a business in Brevard, Duval, Flagler, Indian River, Lake, Martin, Nassau, Palm Beach, Putnam, St. Johns, St. Lucie, and Volusia counties. Affected individuals and businesses now have until 3/15/23 to file returns and pay any taxes that were originally due during the relief period. This includes all returns normally due on or after 11/7/22 and before 3/15/23 including (1) quarterly estimated income tax payments and (2) quarterly payroll and excise tax returns. In addition, penalties on payroll and excise tax deposits due on or after 11/7/22 and before 11/22/22 will be abated, as long as the deposits were made by 11/22/22. News Release FL 2022-20.
Item for Tuesday, December 20, 2022
New Sustainable Aviation Fuel Credit Guidance: The IRS has issued a notice regarding the Sustainable Aviation Fuel (SAF) credit created by the Inflation Reduction Act of 2022. The credit applies to a qualified fuel mixture containing sustainable aviation fuel for certain sales or uses in calendar years 2023 and 2024. The notice explains the eligibility requirements for the fuel credit, the various methods by which the credit may be claimed, and which parties must be registered for the different processes. The SAF credit is $1.25 per gallon of fuel in a qualified mixture. The SAF must have a minimum reduction of 50% in lifecycle greenhouse gas emissions. There is a supplemental credit of $.01 for each percent that the reduction exceeds 50%. A claimant may choose how to claim the credit either through the excise tax system or as a nonrefundable general business credit. News Release IR 2022-223 and Notice 2023-6 .
Item for Monday, December 19, 2022
Final Qualified Intermediary Withholding Agreement Issued: The IRS has issued the final Qualified Intermediary (QI) withholding agreement that applies beginning 1/1/23 (the 2023 QI agreement ). The 2023 QI agreement allows certain persons to enter into an agreement with the IRS to simplify their obligations as withholding agents under Chapters 3 and 4 and as payors under IRC Sec. 3406 for amounts paid to their account holders and allows certain persons to act as qualified derivatives dealers and assume primary withholding and reporting responsibilities on all dividend equivalent payments they make. The 2023 QI agreement also allows foreign persons to enter into the agreement for purposes of the withholding and reporting required under IRC Secs. 1446(a) and 1446(f) with respect to their account holders holding interests in publicly traded partnerships. The 2023 QI agreement supersedes the 2017 QI agreement that expires on 12/31/22. Rev. Proc. 2022-43 .
Item for Friday, December 16, 2022
Applicable Federal Rates for January: The Section 7520 rate for January 2023 is 4.60%, while the Applicable Federal Rates (AFRs) are as follows (Rev. Rul. 2023-1):
|Short-term (≤ 3 years)||4.50%||4.45%||4.43%||4.41%|
|Mid-term (> 3 years but ≤ 9 years)||3.85%||3.81%||3.79%||3.78%|
|Long-term (> 9 years)||3.84%||3.80%||3.78%||3.77%|
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