Line items


Partnership withholding regulations postponed

In Notice 2021-51, the IRS deferred the applicability by one year to Jan. 1, 2023, of certain provisions of final regulations (T.D. 9926) under Secs. 1446(a) and (f)having to do with withholding (1) on transfers of interests in publicly traded partnerships (PTPs); (2) on distributions with respect to PTP interests; and (3) by partnerships on distributions to transferees. Generally, under Sec. 864(c)(8), gain or loss by a foreign person on the sale or exchange of an interest in a partnership engaged in a U.S. trade or business is treated as effectively connected with the conduct of a trade or business in the United States. Under Sec. 1446(f), transferees of such partnership interests must withhold 10% of the amount realized, if any portion of gain on the disposition would be treated under Sec. 864(c)(8) as effectively connected.

Automatic accounting method change procedures updated

In Rev. Proc. 2021-34, the IRS updated the list of accounting method changes to which automatic change procedures apply. They include method changes to comply with final regulations under Regs. Secs. 1.451-3, 1.451-8, and 1.1275-2(l) and for certain inventory costs to comply with Secs. 263A, 461, and 471 if such changes are made in connection with a change to comply with Regs. Sec. 1.451-3 and/or Regs. Sec. 1.451-8. The revenue procedure also modifies Rev. Proc. 2015-13 to provide procedures for a taxpayer to obtain automatic consent to change its method of accounting to comply with Regs. Sec. 1.451-3 and/or Regs. Sec. 1.451-8, as applicable, by providing rules related to cost offset method changes.

Separately, the Service issued Rev. Proc. 2021-35, modifying Rev. Proc. 2013-26, which allows a taxpayer to use a safe-harbor method of accounting for original issue discount on a pool of credit card receivables for purposes of the Sec. 1272(a)(6) "proportional method," to reflect changes made to the treatment of certain credit card fees by Sec. 451(b), as amended by the law known as the Tax Cuts and Jobs Act, P.L. 115-97, and Regs. Secs. 1.451-3 and 1.1275-2(l).

Tax Court surge causing erroneous taxpayer assessments

Some taxpayers that have filed a Tax Court petition may erroneously receive tax assessments because of delays by the court in notifying the IRS of the petition, National Taxpayer Advocate Erin Collins stated in a post on the NTA Blog (available at www.taxpayeradvocate.irs.gov). Timely filing of a Tax Court petition generally bars the IRS from assessing or collecting a contested tax deficiency while the case is pending.

The IRS released a large number of statutory notices of deficiency that it had held in 2020 as part of COVID-19 relief, causing a surge in petitions to the Tax Court at the same time the court was instituting a new case management computer system, Collins wrote. As a result, the court was taking approximately 75 days to process most petitions and notify the IRS, which typically waits 15 days after the expiration of a statutory notice period to receive any notification from the court of a petition before sending an assessment to the taxpayer, Collins wrote.

Taxpayers that have properly and timely filed a Tax Court petition but have received an erroneous assessment can email the IRS as instructed in the blog, which also advises how to check the court's docket or otherwise learn the status of a petition.

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Get your clients ready for tax season

Upon its enactment in March, the American Rescue Plan Act (ARPA) introduced many new tax changes, some of which retroactively affected 2020 returns. Making the right moves now can help you mitigate any surprises heading into 2022.

100th ANNIVERSARY

Black CPA Centennial, 1921–2021

With 2021 marking the 100th anniversary of the first Black licensed CPA in the United States, a yearlong campaign kicked off to recognize the nation’s Black CPAs and encourage greater progress in diversity, inclusion, and equity in the CPA profession.