Overview
IRS Offers Penalty, Filing Relief for Section 965 Transition Tax: The IRS today announced that it will waive certain late-payment penalties relating to the section 965 transition tax and provided additional information for individuals subject to the section 965 transition tax regarding the due date for relevant elections. The IRS explained the relief in three new FAQs posted on the agency’s tax reform page. In general, the questions and answers indicate that:
- In some instances, the IRS will waive the estimated tax penalty for a taxpayer subject to the transition tax that improperly attempted to apply a 2017 calculated overpayment to their 2018 estimated tax, as long as the taxpayer makes all required estimated tax payments by June 15, 2018.
- For individual taxpayers who missed the April 18, 2018, deadline for making the first of the eight annual installment payments, the IRS will waive the late-payment penalty if the installment is paid in full by April 15, 2019. Absent this relief, a taxpayer’s remaining installments over the eight-year period would have become due immediately. This relief is only available if the individual’s total transition tax liability is less than $1 million. Interest will still be due. Later deadlines apply to certain individuals who live and work outside the U.S.
- Individuals who have already filed a 2017 return without electing to pay the transition tax in eight annual installments can still make the election by filing a 2017 Form 1040X with the IRS. The amended Form 1040 generally must be filed by Oct. 15, 2018.
Miscellaneous Guidance Released:
Rev. Rul. 2018–14 obsoletes deadwood guidance under Rev. Rul. 68–59, 1968 –1 C.B. 273, that was subsequently codified under section 512(b)(12).
Rev. Rul. 2018–15 obsoletes certain revenue rulings which provided deadwood guidance on the advance ruling process under former Treas. Reg. §§ 1.170A–9(e)(5) and 1.509(a)–3(d). Subsequent final regulations eliminated the advance ruling process.