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EIN applicants now limited to holders of SSNs and ITINs

In May, the IRS began accepting employer identification number (EIN) applications only from individual taxpayers who have either a Social Security number or an individual taxpayer identification number, as the responsible party on the EIN application (see IRS News Release IR-2019-58).

EINs are nine-digit tax identification numbers assigned to sole proprietors, corporations, partnerships, estates, trusts, employee retirement plans, and other entities for tax filing and reporting purposes. Formerly, entities could use their EIN to obtain additional EINs. The change is intended to provide greater security. Generally, the responsible party for an entity is the person who owns or controls the entity or who exercises effective control over the entity. Only government entities and the military are exempt from the responsible-person requirement.

However, there is no change in the rules for tax professionals who are third-party designees and apply for EINs for their clients.
 

Pro sports trades get safe harbor

In Rev. Proc. 2019-18, the IRS provided guidance including a valuation safe harbor for professional sports teams that trade player contracts and draft picks. Acknowledging that valuing players' future performance is highly subjective, the IRS in the safe harbor allows teams to treat certain contracts and draft rights as having a zero value for determining gain or loss for tax purposes from a trade transaction. The revenue procedure applies to agreements entered into after April 10, 2019, but can be applied to any open tax year.
 

More prop. regs. issued on opportunity zone funds

The IRS released supplemental proposed regulations (REG-120186-18) in April on new Sec. 1400Z-2, establishing qualified opportunity funds, which invest in designated qualified opportunity zones in low-income communities. Topics covered in the latest proposed regulations include matters reserved in regulations the Service proposed in October (REG-115420-18).

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These year-end tax planning strategies address recent tax law changes enacted to help taxpayers deal with the pandemic, such as tax credits for sick leave and family leave and new rules for retirement plan distributions, as well as techniques for putting your clients in the best possible tax position.

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