Overview
Treasury, IRS Issue Proposed Regulations on Charitable Contributions and State and Local Tax Credits: Today, the Treasury Department and the IRS released proposed regulations providing rules on the availability of charitable contribution deductions when the taxpayer receives or expects to receive a corresponding state or local tax credit. Under the proposed regulations, taxpayers who make payments or transfers property to entities eligible to receive tax deductible contributions must reduce their charitable deductions by the amount of any state or local tax credit the taxpayers receive or expect to receive. The preamble to the proposed regulations states that “the Treasury Department and the IRS believe that when a taxpayer receives or expects to receive a state or local tax credit in return for a payment of transfer to an entity listed in section 170(c), the receipt of this tax benefit constitutes a quid pro quo that may preclude a full deduction under section 170(a).”
Office of Management and Budget Reviews GILTI Tax Regulations: The White House’s Office of Management and Budget (OMB) is reviewing proposed regulations on global intangible low-taxed income, one of the TCJA provisions. The OMB received the regulation on August 22 and has not provided a date for completion of its review.
TIGTA Issues Reporting Regarding Reducing Refund Losses Associated with Business Identify Theft: The Treasury Inspector General for Tax Administration (TIGTA) released a report titled “Additional Actions Can Be Taken to Further Reduce Refund Losses Associated with Business Identify Theft” dated August 20, 2018. The report found that employment tax returns are not being evaluate for potential identify theft, the IRS had not locked tax accounts associated with suspicious EINs, and some business identity theft cases were not always accurately processed by the IRS. Based on these findings, TIGTA made 10 recommendations, including expanding the use of business identity theft filters to employment tax returns, reviewing and updating the Suspicious EIN Listing on a periodic basis, ensuring all EINs deemed to be bogus or fictitious are locked, developing processes and procedures to ensure that tax examiners accurately process business identify theft cases, and developing processes to ensure that refunds associated with Processing Year 2016 identify theft tax returns remain frozen. The full report can be found by clicking here.