Weekly Report from Washington, D.C.

Weekly Report from Washington, D.C.

first_imgHouse Republicans released their blueprint for health care and tax reform during the week of June 20. The Treasury Inspector General for Tax Administration (TIGTA) reported that the IRS could improve the process through which it addresses the noncompliance of taxpayers who are denied access to or withdraw from its Offshore Voluntary disclosure Program (OVDP). The Service, meanwhile, issued proposed regulations address both deferred compensation plans and nonqualified deferred compensation plans. The IRS also scheduled a public hearing covering proposed related-party indebtedness regulations.CongressCongress will soon begin its summer recess. The House adjourned early because of a sit-in by Democrats over gun control; it will be in recess through the July 4 holiday. The Senate is scheduled to recess from July 1 through July 5. Both chambers are scheduled to return for two weeks before recessing again from July 16 through September 5.House. The House GOP released a tax reform blueprint on June 24 (TAXDAY, 2016/06/24, C.1). The 35-page document, “A Better Way—Our Vision for a Confident America,” details Republican ideas for implementing a simplified tax code designed for economic growth. The blueprint would overhaul individual and business taxation.House Ways and Means Committee Chairman Kevin Brady, R-Tex., and House Speaker Paul Ryan, R-Wis., on June 22 unveiled a health care plan that would repeal the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) (TAXDAY, 2016/06/23, C.3). The lawmakers described the proposal as a health care “backpack” that provides “every American access to financial support for an insurance plan chosen by the individual and that can be taken with them job-to-job, home to start a small business or raise a family, and even into retirement years.”Before recessing, the House passed the bipartisan Small Business Health Care Relief Bill (HR 5447) on June 21 by voice vote (TAXDAY, 2016/06/22, C.1). The House Ways and Means Committee had approved the bill on June 15 (TAXDAY, 2016/06/16, C.1). The measure, sponsored by Reps. Charles Boustany, R-La., and Mike Thompson, D-Calif., now heads to the Senate.The House Judiciary Committee on June 22 held its second hearing examining the allegations of misconduct against IRS Commissioner John Koskinen (TAXDAY, 2016/06/23, C.2). The commissioner did not attend the hearing.The House Small Business Tax and Capital Access Subcommittee held a hearing June 22 (TAXDAY, 2016/06/23, C.1). Modernizing the IRS taxpayer service platform is an urgent priority for the Service, Lee Davenport, member, IRS Electronic Tax Administration Advisory Committee (ETAAC) told lawmakers.Senate. The Senate on June 16 approved the Recovering Missing Children Act (HR 3209), which would allow the IRS to disclose tax return information to local law enforcement officials investigating missing or exploited children (TAXDAY, 2016/06/17, C.1). The bill passed the House on May 10 (TAXDAY, 2016/05/11, C.1). The legislation is now headed to President Obama’s desk for his expected signature.TreasuryOffshore Voluntary Disclosure Program. TIGTA reported that the IRS’s processes and controls to address the noncompliance of taxpayers who are denied access to or withdraw from its Offshore Voluntary disclosure Program (OVDP) need improvement (Ref. No. 2016-30-030; TAXDAY, 2016/06/22, T.1). According to TIGTA, the IRS did not assess approximately $21.6 million in delinquent FBAR penalties based on a sample test conducted for taxpayers’ OVDP requests.IRSEmpowerment Zone Designations. The IRS has issued another extension for all empowerment zone designations through December 31, 2016, as no state or municipality contacted the IRS to decline the extension (IR-2016-91; TAXDAY, 2016/06/22, I.5). This extension primarily affects businesses that would benefit from claiming the tax incentives for empowerment zones on their 2015 and 2016 returns.Texas Disaster Victims. Victims of severe storms and flooding that took place on May 26, 2016 in parts of Texas may qualify for tax relief from the IRS (HOU-2016-08; TAXDAY, 2016/06/22, I.4). Individuals who reside or have a business in one of the listed counties may qualify for the relief.Code Sec. 457 Plans. The IRS has issued proposed regulations under Code Sec. 457 pertaining to deferred compensation plans for state and local governments and tax-exempt entities (NPRM-REG-147196-07; TAXDAY, 2016/06/22, I.3). The proposed regulations amend final regulations to reflect the new rules governing the ineligibility of certain plans under Code Sec. 457(f), as well other statutory changes that have occurred since 2003.Nonqualified Deferred Compensation Plans. The IRS has issued proposed regulations under Code Sec. 409A that apply to nonqualified deferred compensation plans (NPRM-REG-123854-12; TAXDAY, 2016/06/23, I.2). The proposed regulations specify that a nonqualified deferred compensation plan under Code Sec. 457A may be a nonqualified deferred compensation plan under Code Sec. 409A, and that the rules of Code Sec. 409A apply to such a plan separately and in addition to requirements applicable to the plan under Code Sec. 457A.Corporate Inversions. The IRS has issued corrected final and temporary regulations that address corporate inversion transactions (T.D. 9761; TAXDAY, 2016/06/22, I.2). The regulations correspond to Code Secs. 367 and 7874.ETAAC Annual Report. The Electronic Tax Administration Advisory Committee (ETAAC) has presented its 2016 annual report to Congress (IR-2016-92; TAXDAY, 2016/06/23, I.1). The report makes several recommendations on a range of issues and concerns, to include the IRS Future State Initiative, changes necessary to combat tax fraud and lack of compliance, and the IRS’s capacity to offer electronic help to taxpayers before, during, and after filing.Convention Expense Limitation. The IRS has listed areas that are considered to be within the “North America area” for purposes of the limitation under Code Sec. 274(h) on deductions for convention expenses (Rev. Rul. 2016-16; TAXDAY, 2016/06/24, I.1). The limitation applies to expenses incurred in connection with a convention, seminar, or similar meeting held in the North American area.Substitute Forms. The IRS has issued general requirements and conditions for the development, printing and approval of all substitute tax forms to be acceptable for filing in lieu of official IRS-produced and distributed forms (Rev. Proc. 2016-34; TAXDAY, 2016/06/24, I.2). The IRS accepts quality substitute tax forms that are consistent with the official forms and that do not have an adverse impact on processing.Related-Party Indebtedness. The IRS has scheduled a public hearing on proposed regulations that would authorize the IRS commissioner to treat certain related-party interests in a corporation as indebtedness in part and stock in part for federal income tax purposes (NPRM-REG-108060-15; TAXDAY, 2016/06/21, I.1). The hearing is scheduled to take place on Thursday, July 14, 2016, at 10:00 a.m. at the IRS Building in Washington, D.C.By Jessica Jeane and Jalisa Mathis, Wolters Kluwer News Stafflast_img

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