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February, 2021 – IRS Tax Law Update Report

On Behalf of | Feb 11, 2021 | IRS Updates |

IRS Small Business/Self-Employed Division (SB/SE) temporarily modifies levy procedures for Paycheck Protection Program loans whereby employees are to (1) if the taxpayer secured a PPP loan, the amount; and (2) where and when the funds were deposited.  Further, SB/SE employees are not to knowingly levy on a bank account that contains the proceeds of a PPP loan the taxpayer received within 24 weeks prior to the levy. Were this to occur, the levy on the PPP funds must be released unless exigent circumstances in which case the matter must be brought to the attention of the Area Director or Campus Director.

IRC §§ 1471-1474 (Foreign Account Tax Compliance Act or FATCA) generally requires withholding agents to withhold tax on certain payments to a foreign financial institution (FFI) unless applicable agreements with the U.S. exist.  Nevertheless, the IRS may request from PFFIs information about certain U.S. citizens or residents regardless of an agreement existing with the PFFI’s jurisdiction. SeeFTC 2d/FIN ¶O-13300 et seq.

Virtual Currency: Now Form 1040 asks explicitly whether a taxpayer has received or acquired a financial interest in virtual currency. Regardless of the specific instructions, if a taxpayer purchased/acquired a financial interest in virtual currency, the taxpayer must answer yes to the virtual currency question on the Forms, sign under penalties of perjury.  And another compliance initiative is instituted.

IRC § 951A introduces GILTI, designed to discourage multinationals from shifting income from intangible assets to controlled foreign corporations based in low-tax countries.  When their controlled-foreign corporations pay less than 13.125% in taxes offshore, multinational companies can get hit with the federal 10.5% levy under tax code Section 951A.  Maryland and several others direct taxpayers to include 50% of GILTI in their tax bases.  See, https://news.bloombergtax.com/daily-tax-report/a-dozen-states-puzzling-out-how-to-tax-foreign-income

 IRC § 7402: In U.S. v. Goodrich, DC CA, 127 AFTR 2d ¶2021-408, the US Govt. was allowed per its motion to impose additional terms to tax compliance/injunction orders that included for the taxpayer/business owner to pay employment taxes before paying himself, his wife, or other employees, or from otherwise taking distributions from the business.