Weekly Report from Washington, D.C.

A bipartisan group of House lawmakers asked Treasury Secretary Jack Lew to personally review the IRS’s performance during the 2015 filing season. The IRS announced changes to extensions for information returns and issued guidance on charitable remainder trusts and in other areas.

Congress

Filing Season. House lawmakers wrote to Treasury Secretary Jack Lew expressing concerns about the IRS’s levels of customer service this past filing season (TAXDAY, 2015/08/12, C.1). The group asked Lew to explain the problems with customer service and options for improvements for the 2016 filing season.

Asset Forfeitures. House lawmakers also called on the Treasury Department to return money seized from taxpayers for allegedly structuring transactions to circumvent reporting rules (TAXDAY, 2015/08/13, C.1). The IRS has acknowledged that many small businesses make deposits under $10,000 without any intent to avoid the reporting requirements (TAXDAY, 2015/02/15, C.2).

Treasury

FATCA. The U.S. and Portugal have signed an intergovernmental agreement (IGA) to implement the Foreign Account Tax Compliance Act (FATCA) (P.L. 111-147) (TAXDAY, 2015/08/11, T.1). The agreement with Portugal is a Model 1 IGA. The U.S. and the Slovak Republic have also signed a Model 1 IGA to implement FATCA (TAXDAY, 2015/08/14, T.1).

IRS Employees. The Treasury Inspector General for Tax Administration (TIGTA) has found that the IRS identified and reported 10 instances of confirmed purchase card misuse by employees (Ref. No. 2015-10-070; TAXDAY, 2015/08/12, T.1). In addition, TIGTA identified an instance of purchase card misuse. Five other cases were pending investigation, of which two were under TIGTA’s review.

IRS

Information Returns. The IRS has announced it will remove the automatic extension of time to file information returns in the W-2 series (T.D. 9730, NPRM REG-132075-14; TAXDAY, 2015/08/13, I.1). The new approach allows only a single, 30-day, nonautomatic extension of time to file these information returns. Proposed regulations would make similar changes to other information returns. The Service reported that the changes are being implemented to accelerate the filing of Forms W-2 so they are available earlier in the filing season for use in identity theft and refund fraud detection processes.

Charitable Remainder Trusts. The IRS has released final regulations to provide rules for determining the basis in certain charitable remainder trusts (CRT) term interests that are transferred as part of a transaction in which all of the CRT interests are transferred (T.D. 9729; TAXDAY, 2015/08/12, I.1). The regulations adopt without change proposed regulations from 2014 (NPRM REG-154890-03, I.R.B. 2014-6, 504).

Advance Pricing Agreements. The Treasury Department and the IRS have issued new procedures for requesting and obtaining advance pricing agreements (APAs) from the Advance Pricing and Mutual Agreement Program (APMA) (Rev. Proc. 2015-41; TAXDAY, 2015/08/13, I.4). The procedures apply to all APA requests, except that an APA request filed after August 31, 2015, may be filed under Rev. Proc. 2006-9, 2006-1 CB 278, if a substantially complete APA request is filed under that procedure no later than December 29, 2015.

The Treasury Department and IRS also issued new procedures for requesting assistance under U.S. tax treaties from the U.S. Competent Authority, acting through the Advance Pricing and Mutual Agreement Program (APMA) and the Treaty Assistance and Interpretation Team (TAIT) of the deputy commissioner (International), Large Business and International Division (Rev. Proc. 2015-40; TAXDAY, 2015/08/13, I.3).

Identity Theft. The IRS has announced that it will not assert that an individual, whose personal information may have been compromised in a data breach, must include in gross income the value of identity protection services provided by the entity that experienced the data breach (Announcement 2015-22; TAXDAY, 2015/08/14, I.1). In addition, the Service will not assert that an employer, whose employees’ data may have been compromised in a data breach of the employer, must include the value of identity protection services in the employees’ gross income.

By George L. Yaksick, Jr., CCH News Staff

 

AUTHOR

Wolters Kluwer TAA

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