Joseph R. Castellano, CPA

Issue Number: Tax Tip 2023-101

Everyone has the right to finality when working with the IRS

By law, all taxpayers have the right to finality of tax matters. For example, taxpayers have the right to know when the IRS has finished an audit. This is one of ten basic rights — known collectively as the Taxpayer Bill of Rights.

Here's what taxpayers should know about their right to finality:

Taxpayers have the right to know:
The maximum amount of time they have to challenge the IRS's position.
The maximum amount of time the IRS has to audit a particular tax year or collect a tax debt.
When the IRS has finished an audit.

The IRS generally has three years from the date taxpayers file their returns to assess any additional tax for that tax year.

There are some limited exceptions to the three-year rule, including when taxpayers fail to file returns for specific years or file false or fraudulent returns. In these cases, the IRS can assess tax for that tax year at any time.

The IRS generally has 10 years from the assessment date to collect unpaid taxes. The IRS can’t extend this 10-year period unless the taxpayer agrees to extend the period as part of an installment agreement to pay tax debt or a court judgment allows the IRS to collect unpaid tax after the 10-year period.

There are circumstances when the 10-year collection period may be suspended. This can happen when the IRS can’t collect unpaid tax due to the taxpayer's bankruptcy or there's an ongoing collection due process proceeding involving the taxpayer.

A statutory notice of deficiency is a letter proposing additional tax the taxpayer owes. This notice must include the deadline for filing a petition with the tax court to challenge the amount proposed.

Generally, a taxpayer can be subject to only one audit per tax year. The IRS may reopen an audit for a previous tax year if the agency finds it necessary. This could happen, for example, if a taxpayer files a fraudulent return.

TGIF! Check out this beautiful dolphin caught on camera at the right moment in a once in a lifetime in Lady’s Island, SC!

📸 Marjorie Bosworth.

Issue Number: IR-2023-145

Inside This Issue

IRS and Treasury issue guidance for owners of solar and wind powered energy facilities in low-income communities for increased energy credit under the Inflation Reduction Act
WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued final regulations and Revenue Procedure 2023-27 to provide guidance for owners of certain solar or wind facilities built in connection with low-income communities.
The guidance issued today provides definitions, requirements and procedures applicable to the Section 48(e) low-income communities bonus energy investment credit program established under the Inflation Reduction Act. The IRS estimates that applications from individuals, businesses and tax-exempt organizations that own certain energy credit qualifying solar or wind facilities could number in the thousands.
The Inflation Reduction Act provides for an increase in the energy investment credit for solar and wind facilities that apply for and receive an allocation of environmental justice solar and wind capacity limitation. Taxpayers that receive an allocation and properly place the facility in service may then claim the increased energy investment credit in the year that the facility is placed in service.
The final regulations provide definitions and requirements for the program. The regulations state the four project categories under which facilities apply for an allocation, and the increase of either 10% or 20% associated with a project category. Additionally, the regulations:
Define financial benefits for the two applicable project categories.
Define energy storage technology installed in connection with the solar or wind facility.
Define and describe the additional selection criteria for eligible potential applicants.
Remind potential applicants that facilities placed in service prior to an allocation are not eligible.
Provide the disqualification and credit recapture rules specific to the program.
Revenue Procedure 2023-27 provides the procedures for potential applicants to apply for an allocation of capacity limitation. Specifically, this guidance provides the information applicants will need to apply and describes the Department of Energy’s application and review process, and the IRS’s allocation award process. The guidance directs applicants to register and apply through the Department of Energy’s portal.
Today, DOE launched a Low-Income Communities Bonus Credit Program page, which will be updated in the coming weeks to provide additional information about the application opening date and application materials.
The Treasury Department and IRS released Notice 2023-17 on Feb. 13, 2023, to establish the Low-Income Communities Bonus Credit Program. Notice 2023-17 provided initial guidance for potential applicants seeking allocations of calendar year 2023 environmental justice solar and wind capacity limitation. The Treasury Department and IRS also issued proposed regulations on May 31.