Accounting Change Procedures for Qualified Foreign Plan Election Modified (Rev. Proc. 2017-59)

The IRS has modified its procedures for obtaining consent to an accounting method change after a qualified foreign plan election. The new procedure specifies that the section 481 adjustment period with respect to a qualified foreign plan election is 15 tax  years for both positive and negative adjustments.

Qualified Foreign Plan Election

Employers may elect a special set of rules for deducting contributions to deferred compensation plans maintained for nonresident aliens and for adjustments to earnings and profits. If the employer elects the special deduction rules, the plan is not required to use the general rules regarding the timing and allowance of contribution deductions that apply to qualified plans. This election is available to what is called “a qualified foreign plan.”

Under section 404A(g)(5), a qualified foreign plan election is treated as a change of accounting method. When applying section 481 to this election, the period for taking into account any increase or decrease in accumulated profits, earnings and profits, or taxable income resulting from the application of section 481(a)(2) is the year for which the election is made and the fourteen succeeding years.

Effective date

The new revenue procedure is effective for Forms 3115 filed on or after November 13, 2017. Rev. Proc. 2015-13, I.R.B. 2015-5, 419, is modified.

Rev. Proc. 2017-59

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