Treasury and IRS Withdraw and Repropose Certain Partnership Audit Rules

Treasury and IRS Withdraw and Repropose Certain Partnership Audit Rules: Treasury and the IRS have withdrawn and reproposed certain portions of proposed regulations implementing the centralized partnership audit regime that have not been finalized to reflect the changes made by the Technical Corrections Act of 2018, contained in Title II of the Consolidated Appropriations Act of 2018 (TTCA). The centralized partnership audit regime was enacted by the Bipartisan Budget Act of 2015 (BBA) and generally applies to tax years beginning after December 31, 2017. The TTCA, enacted in March 2018, made a number of technical corrections to the rules under the centralized partnership audit regime. In light of these technical corrections, to the extent regulations have not already been finalized, the proposed regulations implementing the new regime issued in June 2017, November 2017, December 2017, and February 2018 are withdrawn and reproposed to reflect the technical corrections made by the TTCA. The regulations also include certain clarifications and corrections unrelated to the TTCA. Finally, the assumed highest rate of tax for corporations in the examples for all applicable periods is now 20 percent to more closely reflect the corporate tax rate in effect under section 11 (as amended by P.L. 115-97).  

Ninth Circuit Holds Tobacco Manufacturer on Trust Land Subject to Section 5702 Excise Tax: In United States v. King Mountain Tobacco Company, Inc., the US Court of Appeals for the Ninth Circuit affirmed the district court’s judgment in favor of the United States in an action to collect delinquent federal excise taxes and penalties for the manufacture of tobacco products under section 5701. The panel held that a tobacco manufacturer located on trust land is subject to a federal excise tax applicable to all tobacco products manufactured in the United States under section 5702. King Mountain Tobacco Company manufactures tobacco products and grows some of its own tobacco on lands held in trust by the United States, within the boundaries of the Yakama Nation. The panel was unpersuaded by King Mountain’s claim of exemption based on either the General Allotment Act of 1887 or the Treaty with the Yakamas of 1855.  

Miscellaneous Guidance:
The IRS has updated the withholding calculator on its website. The IRS encourages every employee, including those who typically receive big tax refunds, to do a “paycheck checkup” to ensure they have the appropriate amount of tax taken out of their pay.

DTU In Depth

Proposed Regulations Released Regarding Section 199A Deduction: On August 8, Treasury and the IRS issued a notice of proposed rulemaking containing proposed regulations concerning the deduction for qualified business income under section 199A, enacted by P.L. 115-97, commonly known as the Tax Cuts and Jobs Act. The proposed regulations are intended to provide taxpayers with computational, definitional, and anti-avoidance guidance regarding the application of section 199A.

Click here to read more.