The Internal Revenue Service (IRS) introduced new procedures for announcing and posting Frequently Asked Questions (FAQs) on newly enacted tax legislation. Additionally, the IRS also clarified how a taxpayer who relies on FAQs when making tax determinations may be protected from penalties. The changes are an attempt by the IRS to ease concerns among tax professionals about transparency and reliability issues.
FAQ Updates
The new procedures include the following:
- Newly released FAQs will be announced by the IRS via news releases, as well as posted to IRS.gov in separate, dated fact sheets
- New fact sheets will be issued when FAQs are updated or revised
- All versions of the fact sheets will be available to taxpayers on IRS.gov
- The IRS may apply these procedures to other FAQs, such as when FAQs address emerging issues
Reliance Consideration
The IRS also announced that a taxpayer who reasonably relies in good faith on FAQs when making tax decisions may not be subject to negligence penalties and other accuracy-related penalties if those FAQs are later deemed to be inaccurate as applied to the taxpayer’s facts.
Addressing Transparency Concerns
The IRS introduced these new procedures in an effort to address complaints from taxpayers that noncompliance is often due to reliance on IRS information that is later changed without notice. The new processes are designed to:
- Better alert taxpayers about changes to FAQs
- Provide taxpayers more time to adjust to these changes
- Grant penalty relief to taxpayers who reasonably relied on a FAQ that was later revised or deemed inaccurate
