Lawmakers approved a temporary extension of highway funding prior to the October 29 deadline. Rep. Paul Ryan, R-Wis., was elected to replace John Boehner, R-Ohio, as House speaker. The IRS, meanwhile, released the first quarter updated on the 2015-206 Priority Guidance Plan, as well as temporary and proposed regulations that reduce the user fee that must be paid for an individual to apply for, or renew, a preparer tax identification number (PTIN).
Congress
President Obama on October 29 signed the Surface Transportation Extension Bill of 2015 (P.L. 114-73), which would extend current funding through November 20. House lawmakers approved the measure by voice vote on October 27 (TAXDAY, 2015/10/28, C.2) and the Senate unanimously approved it on October 28 (TAXDAY, 2015/10/30, C.1). Current funding was set to expire on October 29 and lawmakers realized they would not have enough time to conference the House and Senate long-term highway bills before the deadline. The additional three weeks are funded by revenue raisers currently in place in a three-month transportation bill, which Congress approved in July (Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (P.L. 114-41)).
House. House lawmakers on October 29 elected House Ways and Means Committee Chairman Ryan, as speaker, with Rep. Sam Johnson, R-Tex. acting as temporary chairman until a replacement is selected TAXDAY, 2015/10/30, C.2. The two main contenders for chairmanship are Reps. Kevin Brady, R-Tex., and Patrick Tiberi, R-Ohio. Rep. Devin Nunes, R-Calif., is also considering a run for the position.
House Oversight and Government Reform Committee Chairman Chaffetz, R-Utah, introduced a resolution seeking the impeachment of IRS Commissioner John Koskinen for allegedly failing to cooperate with Congress in its investigation into IRS targeting of conservative groups seeking tax-exempt status TAXDAY, 2015/10/29, C.2. Although the resolution is co-sponsored by 18 other Republicans, it is unlikely that it will make its way through Congress, nor lead to the commissioner’s impeachment.
Treasury
Priority Guidance Plan/First Quarter Update. The Treasury Department and IRS have released their first quarter update to the 2015-2016 Priority Guidance Plan (TAXDAY, 2015/10/26, T.1). The 2015-2016 Priority Guidance Plan contains 277 projects for the period from July 1, 2015, through June 30, 2016, that will provide guidance on a variety of issues important to individuals and businesses, including international taxation, health care and implementation of legislative changes.
Health Insurer Compliance. The health insurers that were approved to participate in the advance Code Sec. 36B premium tax credit and/or cost-sharing reduction programs and received subsidy payments on behalf of taxpayers were generally tax compliant, the Treasury Inspector General for Tax Administration (TIGTA) has found (TAXDAY, 2015/10/26, T.2). TIGTA reviewed 365 health insurers and found that none of them had been convicted of a felony, and none were currently listed in the Excluded Parties List System as ineligible to receive any federal payments or benefits. TIGTA made no recommendations to the IRS.
MyRA Expansion. After a successful pilot run of myRAs, the Treasury Department is ready for a wider launch of these retirement savings arrangements, Melissa Koide, deputy assistant secretary, Office of Consumer Policy, Treasury, said on October 23 (TAXDAY, 2015/10/26, T.3). Koide spoke at the Fall 2015 Meeting of the Council for Electronic Revenue Communication Advancement (CERCA) in Arlington, Va.
IRS
PTIN Fee. The IRS has released temporary and proposed regulations that reduce the user fee that must be paid for an individual to apply for, or renew, a preparer tax identification number (PTIN) (T.D. 9742 ; NPRM REG-121496-15 ; IR-2015-123 ; TAXDAY, 2015/10/30, I.1). The fee currently required for a PTIN is $50, but will be reduced by the new regulations to $33 per application or renewal plus a separate vendor fee. The IRS also reminded unenrolled preparers of changes in practice rights before the agency after 2015.
Publicly Traded Partnerships. Witnesses at an October 27 IRS hearing heavily criticized proposed regulations (NPRM REG-132634-14, I.R.B. 2015-21, 997) that define certain activities of publicly traded partnerships (PTPs) that produce qualifying income so that the PTP may be taxed as a partnership, rather than as a corporation (TAXDAY, 2015/10/28, I.2). The proposed regulations describe qualifying activities under Code Sec. 7704(d)(1)(E) involving the exploration, development, mining or production, processing, refining, transportation and marketing of minerals and natural resources.
Audit Coverage Rate. IRS Commissioner John Koskinen predicted another drop in audit coverage rates due to funding reductions at the Fall 2016 Meeting of the Council for Electronic Revenue Communication (CERCA) in Arlington, Va., on October 23 (TAXDAY, 2015/10/26, I.2). The IRS is also going on the offense on tax-related identity theft and refund fraud, Koskinen said.
RMD Reminder. Taxpayers born before July 1, 1945, generally are required to receive required minimum distributions (RMDs) from their individual retirement arrangements (IRAs) and workplace retirement plans by December 31, 2015, the IRS reminded (IR-2015-122 ; TAXDAY, 2015/10/30, I.2). The requirement generally applies to owners of traditional, Simplified Employee Pension (SEP) and Savings Incentive Match Plans for Employees (SIMPLE) IRAs (but not Roth IRAs) while the original owner is alive. The requirement also applies to participants in various workplace retirement plans, including 401(k), 403(b) and 457(b) plans.
2015 Discount Factor Tables. The IRS has provided insurance companies with tables setting forth the loss payment patterns and discount factors for the 2015 accident year (Rev. Proc. 2015-52 ; TAXDAY, 2015/10/30, I.3).
2015 Salvage Discount Factors. The IRS has provided insurance companies with tables setting forth the salvage discount factors for the 2015 accident year (Rev. Proc. 2015-54 ; TAXDAY, 2015/10/30, I.4).
Frequent Flyer Miles. The IRS and the Treasury Department have announced that they are considering exercising their authority under Code Sec. 4261(e)(3)(C) to prescribe rules that would exclude from the excise tax imposed by Code Sec. 4261(a) amounts attributable to mileage awards, sometimes referred to as “frequent flyer miles,” that are not redeemed for air fares, but for other items such as redemptions for international air transportation, restaurant gift cards, magazine and newspaper subscriptions, free hotel nights, and items from the airline’s shopping catalog (Notice 2015-76 ; TAXDAY, 2015/10/30, I.5). The IRS has requested comments from the public on issues that should be addressed in future guidance on this issue.
2015 IRPAC Annual Report. The Information Reporting Program Advisory Committee (IRPAC) has released its 2015 annual report, which includes numerous recommendations to the IRS. IRPAC was created to provide a forum for discussion of information reporting issues (IR-2015-121 ; TAXDAY, 2015/10/29, I.1). Among other things, IRPAC’s 2015 report recommended penalty relief for name-taxpayer identification number (TIN) mismatches in cases where filers under current rules are not permitted to access the IRS TIN Matching Program.
Code Sec. 45R Credit. The IRS has announced on its website the fiscal year (FY) 2016 sequestration rate on the Code Sec. 45R Small Business Health Care Tax Credit and on certain qualified bonds (TAXDAY, 2015/10/29, I.4). The Budget Control Act of 2011 (P.L. 112-25) amended the Budget and Emergency Deficit Reduction Act of 1985 (P.L. 99-177) to provide for budget sequestration (across-the-board spending cuts).
Private Activity Bond Restrictions. The IRS has released final regulations, and partially withdrawn certain proposed regulations, on allocation and accounting, and certain remedial actions, for purposes of the private activity bond restrictions under Code Sec. 141 that apply to tax-exempt bonds issued by state and local governments (T.D. 9741 ; NPRM REG-140379-02, NPRM REG-142599-02 ; TAXDAY, 2015/10/27, I.2). The final regulations provide guidance to state and local governmental issuers of tax-exempt bonds on the application of these restrictions.
Revised Publication 4557. The IRS has announced that Publication 4557, Safeguarding Taxpayer Data, A Guide for Your Business, has been revised and is available for download in PDF form on the IRS website (TAXDAY, 2015/10/29, I.6). The revised version replaces the previous edition dated October 2008.
By Jeff Carlson and Jennifer Cordaro, Wolters Kluwer News Staff