The IRS today announced that it will return sequestered funds to businesses that were affected by a recent Office of Management and Budget (OMB) determination regarding the Balanced Budget and Emergency Deficit Control Act of 1985, as amended.
According to the IRS release—IR-2020-12 (January 16, 2020)—the IRS will restore any amounts sequestered since 2013 under section 168(k)(4).
Taxpayers will not be required to take any action to obtain a return of these funds. Additional information regarding the timing and process will be shared by IRS when available.
Today’s IRS release notes the following:
The IRS announcement is viewed by tax professionals as a welcome reversal of OMB’s prior position. However, the IRS release also provides that these funds are subject to offset, stating “Funds due a company will be used to offset current tax liabilities first.” As a result, the ultimate amount of sequestered funds actually returned to a taxpayer may not align with the total amount of funds sequestered, and funds sequestered for a year in which a taxpayer incurred a section 965 inclusion liability may be held back if a portion of such liability remains outstanding.
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