Weekly Report from Washington, D.C.

During the week of June 13, Congress sent legislation to the president’s desk that would allow the IRS to disclose tax return information to local law enforcement officials investigating missing or exploited children. Additionally, the Senate Appropriations Committee on June 16 approved, along party lines, the Financial Services and General Government Appropriations Bill for fiscal year (FY) 2017, which contains the FY 2017 budget for the IRS. The Treasury Inspector General for Tax Administration (TIGTA) has reported that the IRS could stand to improve the process through which it approaches claims for refund and abatement of taxes that result from amended returns. The IRS has scheduled a hearing covering the proposed consistent basis reporting regulations. In addition, the Service has issued guidance how to exclude awards made to wrongfully incarcerated individuals from income.

Congress

House. In a letter dated June 10, IRS Commissioner John Koskinen informed House Ways and Means Oversight Subcommittee Chairman Peter Roskam, R-Ill., and ranking member John Lewis, D-Ga., of specific actions the IRS is taking to remedy potential wrongs created by former civil asset forfeiture procedures (TAXDAY, 2016/06/15, C.2). Koskinen announced the IRS will mail over 700 letters by June 17 providing notice to individuals and entities that they may be entitled to a return of their property through the remission or mitigation process.

The House passed the Preventing IRS Abuse and Protecting Free Speech Bill (HR 5053) on June 14 by a 240-to-182 vote (TAXDAY, 2016/06/15, C.3). The measure, sponsored by Rep. Peter Roskam, R-Ill., was approved by the Ways and Means Committee on April 28 (TAXDAY, 2016/04/29, C.1).

The House Ways and Means Committee held a markup of eight bills on June 15 (TAXDAY, 2016/06/16, C.1). The committee approved the bipartisan Small Business Health Care Relief Bill (HR 5447), by voice vote. If enacted, the bill would create a safe-harbor for innovative employer payment arrangements, a Health Reimbursement Arrangement. It would also “allow small employers the freedom to reimburse their employees for health care coverage,” Ways and Means Chairman Kevin Brady, R-Tex., said.

The House on June 9 approved resolutions signaling opposition to any carbon tax and oil fee/tax (HConRes 89 and HConRes 112) (TAXDAY, 2016/06/13, C.1). House GOP leaders said that they would oppose President Obama’s proposals to impose a carbon tax or a tax on oil. “This type of tax is not just a tax on carbon. It’s a tax on working families. It’s a tax on the American economy…. It’s the wrong thing to do,” Rep. Charles Boustany, R-La., said on the House floor.

The House Judiciary Committee will hold its second hearing on June 22 at 10:00 a.m. to examine the allegations of misconduct against Koskinen, a committee spokesperson told Wolters Kluwer on June 14 (TAXDAY, 2016/06/15, C.4). The first hearing, held May 24, introduced allegations against Koskinen and details of the investigations conducted by the House Committee on Oversight and Government Reform and TIGTA. Outside experts are expected to testify on June 22 regarding the findings presented at the first hearing and comment as to whether further congressional action is warranted, the committee spokesperson told Wolters Kluwer.

The House Oversight and Government Reform Committee approved HRes 737, authored by Rep. Jason Chaffetz, R-Utah, by a 23-to-15 vote on June 15 (TAXDAY, 2016/06/17, C.2). The resolution, which now goes to the House floor, censures Koskinen and urges his resignation or removal.

Senate. The Senate Appropriations Committee on June 16 approved, along party lines, the Financial Services and General Government Appropriations Bill for FY 2017 (TAXDAY, 2016/06/17, C.1), which includes IRS funding. The Financial Services and General Government Subcommittee had approved the bill on June 15.

The Senate on June 16 approved, by unanimous consent, the Recovering Missing Children Bill (HR 3209), which would allow the IRS to disclose tax return information to local law enforcement officials investigating missing or exploited children. The measure was introduced by House Ways and Means Committee member Erik Paulsen, R-Minn., and passed the House on May 10.

The Senate Finance Committee held a hearing June 14 examining energy tax policy in 2016 (TAXDAY, 2016/06/15, C.1). “By reducing our dependence on foreign oil, creating many high-paying jobs, and bringing down the cost of living for U.S. households, increased domestic energy production can protect our national security and provide greater economic stability,” Chairman Orrin G. Hatch, R-Utah, said during opening statements. An expert at the hearing testified that, “[f]rom the social standpoint, it [carbon tax] would be all cost and no benefit.”

Treasury

Scam Alert. TIGTA issued an alert warning taxpayers of a scam in which individuals are calling taxpayers and posing as IRS or Treasury employees (TAXDAY, 2016/06/15, T.2). The scammers are demanding payment of taxes on gift cards and prepaid credit and debit cards.

Amended Returns. TIGTA reported that the IRS’s process for refund and abatement of taxes claims stemming from amended returns needs improvement (Ref. No. 2016-30-032; TAXDAY, 2016/06/15, T.1). TIGTA found that the IRS’s controls over the examination of amended individual tax returns with refund claims did not always ensure that the claims were properly evaluated and were not always effective in preventing the potentially inappropriate issuance of tax refunds and allowance of tax abatements.

IRS

Consistent Basis Reporting. The IRS has scheduled a hearing on June 27 at 10:00 a.m. covering proposed regulations under Code Sec. 1014 and 6035 (NPRM REG-127923-15, I.R.B. 2016-12, 473; TAXDAY, 2016/06/14, I.1). The proposed regulations pertain to the requirement that a beneficiary’s basis in certain property acquired from a decedent be consistent with the value of the property as determined for federal estate tax purposes.

Charity Scams. The IRS has cautioned taxpayers to be aware of possible charity scams that has emerged in the wake of the mass shooting that occurred in Orlando, Fla. on June 12 (IR-2016-89; TAXDAY, 2016/06/20, I.2). The IRS notes that it is common for scam artists to attempt to take advantage of the outpouring of generosity in times of grief.

Work Opportunity Tax Credit. The IRS has issued guidance expanding and extending transition relief for employers claiming the Work Opportunity Tax Credit (Notice 2016-40; TAXDAY, 2016/06/20, I.3). The notice extends transition relief for meeting the 28-day deadline specified in Code Sec. 51(d) by three months.

Applicable Federal Rates. The IRS has released the applicable federal rates schedule for July 2016 (Rev. Rul. 2016-17; TAXDAY, 2016/06/20, I.1). The rates relate to the determination of issue price for certain debt instruments issued for property.

Form 990. The IRS has made information from Forms 990, Return of Organization Exempt from Income Tax, publicly available online in machine-readable format (IR-2016-87; TAXDAY, 2016/06/17, I.1). The data has been made available in other formats.

Foreign Accounts Reporting. The IRS has reminded taxpayers who have one or more bank or financial accounts located outside the United States, or signature authority over foreign accounts that they must file Form 114, Report of Foreign Bank and Financial Accounts (FBAR) by June 30 (IR-2016-90; TAXDAY, 2016/06/20, I.4). In general, the filing requirement applies to anyone who had an interest in, or signature or other authority over foreign financial accounts whose aggregate value exceeded $10,000 at any time in 2015.

Interest Rates. The IRS has released the 30-year Treasury bond weighted average interest rate, the unadjusted segment rates, the adjusted rates, and the minimum present value segment rates for pension plan years beginning in June 2016 (Notice 2016-38; TAXDAY, 2016/06/14, I.2). The rates are with respect to Code Sec. 431.

Wrongful-Incarceration Exclusion. The IRS released guidelines on how wrongfully incarcerated individuals can claim a retroactive exclusion from income for any civil damages, restitution or other monetary awards received in connection with their incarceration (IR-2016-88; TAXDAY, 2016/06/17, I.2). The deadline for mailing a claim is December 19, 2016.

By Jessica Jeane and Jalisa Mathis, Wolters Kluwer News Staff

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CCHTaxGroup

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