Treasury and IRS Guidance Plan Highlights Some Key Procedural Issues

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Each year, the Treasury Department’s Office of Tax Policy and the IRS release at least one compilation where they highlight tax issues that should be addressed through regulations, revenue rulings, revenue procedures, notices, and other published administrative guidance.  Last week, Treasury and IRS released the 2022-23 Guidance Priority List and it flags issues for prioritizing agency resources during the 12-month period from July 1, 2022 through June 30, 2023.

As the release notes, the Guidance Priority List “focuses resources on guidance items that are most important to taxpayers and tax administration” The list includes many substantive areas but also 26 specific projects under the header “tax administration.”

As one might expect, items on the list often relate to relatively recent legislation. Many of the tax administration items fall in that category, including highly anticipated regulations addressing reporting requirements relating to digital assets, regulations under §7602(c)(1) regarding notifications of third-party contacts as updated by the Taxpayer First Act, more guidance on the BBA partnership audit regime, and clarification on the recent legislative changes addressing mandatory e-filing of certain returns.

There were a few items on the list that jumped out at me, some of which we have discussed many times on PT, including a project relating to supervisory approval of proposed penalties under § 6751(b), and the authority to postpone certain deadlines by reason of Federally declared disaster, significant fire, or terroristic or military actions under § 7508A.

A few other areas flagged in the list highlight some issues that have long needed administrative attention, including a revision of the woefully out of date Circular 230 rules addressing practice before the IRS, regulations under § 6501 to define the return that starts the limitations period on assessment (especially important in a world of e-filing, a backlog of unprocessed returns, and returns that may sweep in multiple schedules and taxes) and new guidance under § 6662 to address the accuracy related penalty.

Two procedural items relating to business taxpayers piqued my interest, as the list identifies a reg project looking at last known address for business taxpayers and guidance on the application of the qualified amended return penalty exception rules for corporate taxpayers. I was happy to see last known address rules on this list, though the whole last known address regime needs a careful review and could use additional guidance rather than a focus just on business taxpayers.

As our blog often flags, there are many procedural issues not on the list that we believe could use administrative attention or even a possible legislative correction. For example, the what looks like unintended consequence of the Taxpayer First Act’s potentially limiting the Tax Court from considering evidence in a case involving relief from joint and several liability is an area that needs careful reconsideration (see, e.g., Keith’s post discussing that issue), and Caleb’s thoughtful series on Section 7122(f) and offers in compromise (all linked in Samantha Galvin’s July digest)

As the list related to the period that started this past July, the Guidance List flags some projects that have been released, including the controversial proposed regs addressing the TFA’s legislative changes concerning access to and exclusions from Appeals consideration.

As the list notes, “published guidance plays an important role in increasing voluntary compliance by helping to clarify ambiguous areas of the tax law.”  It is helpful to see what Treasury and IRS are prioritizing, but the list does not identify expected release dates and sometimes items that appear on these lists never result in outward facing projects.

Avatar photo About Leslie Book

Professor Book is a Professor of Law at the Villanova University Charles Widger School of Law.

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