While Congress continued its August recess, the IRS issued guidance in a number of areas, including rules on foreign currency debt transactions and proposed rules on controlled foreign corporations and multi-employer pension plans as well as the calculation of “minimum value” as defined by the Patient Protection and Affordable Care Act (PPACA). TIGTA issued a report on premium tax credits claimed for the 2015 filing season.
Interest Rates. The IRS has issued the over- and underpayment interest rates for the fourth quarter of 2015 beginning October 1, 2015 (IR-2015-106, Rev. Rul. 2015-17; TAXDAY 2015/09/08, I.6). The rates will remain the same: three percent for overpayments; two percent in the case of a corporation; and five percent for large corporate underpayments.
Premium Tax Credits. This week the Treasury Inspector General for Tax Administration (TIGTA) issued a report on the IRS’s processing of tax returns that reported or claimed Premium Tax Credits (PTC) during the 2015 filing season (Ref. No. 2015-43-057; TAXDAY 2015/09/02, T.1). Among other things, the report found that the IRS had made almost $11 billion in advance payments of the PTC to insurers in fiscal year (FY) 2014.
TIGTA Report. TIGTA found in a new audit report that while the IRS established the Property Appraisal and Liquidation Specialist (PALS) unit to ensure the protection of taxpayers’ rights when property is seized for unpaid taxes, seizure sale procedures were not always followed (Ref. No. 2015-30-036; TAXDAY 2015/09/01, T.2). While TIGTA found that for sampled cases, seized assets were properly inventoried, safeguarded, and handled professionally, the written sale plans developed by the PALS provided varying amounts of detail for the actions to be performed on the day of the sale.
Final Regulations/Foreign Currency Debt Transactions. The Treasury and IRS have issued final regulations with respect to integrated transactions that involve foreign currency denominated debt instruments and multiple associated hedges (T.D. 9736; TAXDAY 2015/09/04, I.1). The final regulations are effective September 3, 3015. The temporary regulations (T.D. 9598) were adopted without substantive change.
Tax-Exempt Bonds VCAP Updates. The IRS Tax Exempt Bonds (TEB) function has announced several changes to its tax-exempt bonds Voluntary Closing Agreement Program (TEB VCAP) that will become effective in fiscal year (FY) 2016 during a September 3, 2015, webinar (TAXDAY 2015/09/04, I.2). The changes will be reflected in revised IRM sections 7.2.3 and 4.81.6, both of which will be published soon, according to the IRS.
Partnership Control System Submissions. The IRS announced it would soon issue interim guidance resolving conflicting requirements for the submission of Partnership Control System (PCS) linkage packages needed for establishing the TEFRA Audit (SBSE-04-0815-0054; TAXDAY 2015/09/03, I.4). The IRS stated in a memorandum that changes in the guidance will reflect that in general requests for PCS linkage must be submitted no sooner than 45 days and no later than 120 days after the Notice of Beginning of Administrative Proceedings (NBAP) has been issued at the Partnership level. An exception would apply if potential adjustments are identified earlier than the specified 45 days.
Proposed Regulations/Controlled Foreign Corporations. The Treasury and IRS have issued temporary and proposed regulations under Code Sec. 956 with respect to the inclusions of the U.S. shareholder of a controlled foreign corporation (CFC) that are based on U.S. property held, directly or indirectly, by the CFC at the close of each quarter of its tax year (T.D. 9733; NPRM REG-155164-09; TAXDAY 2015/09/02, I.1). The regulations address the anti-avoidance rule under Code Sec. 956 and partnership transactions. The regulations also address the active rents and royalties exception from foreign personal holding company income (FPHCI), a component of foreign base company income under Code Sec. 954.
Proposed Regulations/Minimum Value. The IRS has issued proposed regulations providing that an eligible employer sponsored group health plan does not provide minimum value, as defined under Code Sec. 36B(c)(2)(C)(ii), if it excludes substantial coverage to employees for in-patient hospitalization services or physician services (or both) (NPRM REG-143800-14; TAXDAY 2015/09/01, I.1). The proposed regulations are a response to news that certain group health plan benefit designs that do not provide coverage for in-patient hospitalization services are being promoted to employers as plans that satisfy minimum value (or “MV”) requirements as determined through use of the on-line MV calculator.
Proposed Regulations/Multiemployer Plans. The IRS has issued temporary and identical proposed regulations providing election administration rules for multiemployer plans in critical and declining status that are seeking approval of a benefits suspension from participants and beneficiaries (T.D. 9735; NPRM REG-123640-15; TAXDAY 2015/09/01, I.2). The temporary regulations apply on or after June 17, 2015, and expire on June 15, 2016.
Audit Techniques Guide/Low-Income Housing Credit. The IRS has issued an audit techniques guide (ATG) on the Code Sec. 42 low-income housing credit (TAXDAY 2015/09/01, I.3). The ATG provides an overview of the program, including a discussion of pre-contact analysis procedures for IRS employees.
Penalty Waiver/Form 1098-T. Penalties for colleges, universities and other educational institutions that filed Form 1098-T, Tuition Statement, with incorrect or missing taxpayer identification numbers (TIN) will be waived for tax years 2012, 2013 and 2014, the IRS announced in e-News for Tax Professionals (issue 2015-34) and on its website (TAXDAY 2015/09/01, I.4). The Service explained that the waiver for select past years is being granted to reflect prospective waivers under the Trade Preferences Act (P.L. 114-27) (TAXDAY, 2015/06/26,C.1).
Jennifer R Cordaro, Wolters Kluwer News Staff