IRS Updates Frequently Asked Question (FAQ) Process
The IRS announced updates to its processes and policies for frequently asked questions (FAQs) and has provided guidance on the rules for implementing penalties for taxpayers who rely on FAQs. FAQs often provide important interpretive guidance for taxpayers attempting to understand how new legislation will be implemented. However, the FAQs are updated frequently and without warning.
Going forward, FAQs will be announced in a news release and posted to IRS.gov in a fact sheet.
Prior versions of the fact sheet FAQs will now be dated and maintained on IRS.gov so that taxpayers can find the version they relied upon. The IRS also released a statement clarifying that if a taxpayer relies on FAQs in good faith and that reliance is reasonable, the taxpayer has a reasonable cause defense against any accuracy-related penalties and negligence penalties if it turns out that the FAQs were not a correct interpretation of the law given the facts. However, the law itself will continue to control in the taxpayer’s case (not the FAQs). In the wake of the COVID-19 pandemic, IRS FAQs were often the only interpretive materials available.