Most of the FAQs released by the IRS to implement coronavirus relief legislation won’t be turned into formal guidance, sacrificing the authority that taxpayers need to rely on for legal protection.
The IRS isn’t planning to turn every FAQ on the Coronavirus Aid, Relief, and Economic Security Act (P. L. 116-136) and the Families First Coronavirus Response Act (P. L. 116-127) into a “full-blown notice or a Treasury decision or proposed regulation,” IRS Chief Counsel Michael J. Desmond said May 6.
Speaking on a webinar hosted by Tax Notes, Desmond noted that the relief provisions in those laws largely have a short shelf life, with many of them expiring at the end of the year. “There’s a balance there in terms of how much effort to be put into that,” he said.
The IRS has relied heavily on FAQs to relay information about the coronavirus relief provisions, addressing issues such as economic impact payments, retirement plan relief, net operating loss carrybacks, and more. Because FAQs aren’t included in the Internal Revenue Bulletin, they “cannot be used to support a legal argument in a court case,” according to the agency.
“As has been well documented, FAQs don’t provide penalty protection, they’re ephemeral, and they’re not subject to consistent archiving,” Rochelle Hodes of Crowe LLP said on the webinar.
Typically, FAQs are restatements of long-existing laws and principles. But because of the need to issue guidance within a few days of a law’s enactment, even new programs — such as the employee retention credit and the paid sick and family leave credits — have had to be addressed in FAQs, said Desmond.
However, Desmond said the agency is open to input from taxpayers and practitioners on any specific issues or FAQs that they believe require some form of “reliance guidance.”
For example, the IRS recently added information from an FAQ about the due date for section 965 installment payments to a formal notice (Notice 2020-23, 2020-18 IRB 742) extending filing and payment deadlines.
“That inclusion is obviously a very consequential item for taxpayers,” Desmond said. “If they don’t get that right, there could be defaults on the installment agreements.”