The House and Senate are preparing to go to conference after the House approved a six-year highway bill by a vote of 363 to 64. Rep. Kevin Brady, R-Tex., has replaced Rep. Paul Ryan, R-Wis., as chairman of the House Ways and Means Committee. Following a successful pilot program, the Treasury has launched the new myRA retirement savings account, while the IRS released guidance extending through 2017 the safe harbor method or computing a homeowner’s deduction for payments made on a home mortgage under program related to the Treasury’s Housing Finance Agency Innovation Fund for the Hardest-hit Housing Markets.
New House Ways and Means Committee Chairman Brady was selected by the House Republican Steering Committee over Ways and Means member Pat Tiberi, R-Ohio, to replace Ryan, R-Wis., who stepped down to become House speaker (TAXDAY, 2015/11/05, C.2).
House lawmakers on November 5 approved, by a margin of 363 to 64, a six-year highway bill, the Surface Transportation Reauthorization and Reform Bill (HR 22) (TAXDAY, 2015/11/06, C.1). The measure now moves to conference to reconcile differences between the House and Senate’s separate bills. The House bill contains two revenue offsets that also appear in the Senate’s long-term transportation bill, the Developing a Reliable and Innovative Vision for the Economy (DRIVE) Bill (HR 22). Both bills include a provision calling for the revocation or denial of a passport in the case of certain unpaid taxes. The measure would authorize the government to deny the application for a passport if an individual owes more than $50,000 in unpaid federal taxes. The provision is expected to bring in $398 million over 10 years. The second provision calls for the IRS to use private debt collectors to collect unpaid taxes; the measure is estimated to raise $2.4 billion.
Congress can use the tax law to discourage U.S. businesses from paying taxes to Iran as a means to help counter potential terrorism, witnesses told House lawmakers on November 4 (TAXDAY, 2015/11/05, C.1). Their testimony was presented during a hearing of the House Ways and Means Oversight Subcommittee on presidential authority to waive anti-terror provisions in the tax code with respect to Iran. Subcommittee Chairman Peter Roskam, R-Ill., noted that U.S. companies get two benefits on their worldwide business—foreign tax credits and deferral. He said one of the relief measures the president may provide to Iran while implementing his nuclear agreement is to waive these provisions, which work to discourage U.S. companies from doing business there. Roskam added that he has asked the administration if it plans to waive these rules in light of the nuclear agreement, but the president has not responded. The law currently gives the president the authority to waive these tax provisions and allow beneficial tax treatment for business conducted in Iran.
myRAs The Treasury Department announced the nationwide launch of the new myRA retirement savings account following the successful conclusion of its pilot program (TDNR JL-10250; TAXDAY, 2015/11/05, T.1). The program has added a new payment feature enabling individuals to set up recurring or one-time contributions from a checking or savings account. In addition, taxpayers may contribute a portion or all of their federal tax refund to a myRA account.
FATCA. The U.S. has reached an intergovernmental agreement (IGA) with San Marino to implement the provisions of the Foreign Account Tax Compliance Act (FATCA) (P.L. 111-147) (TAXDAY, 2015/11/04, T.1). The agreement with San Marino is a Model 2 IGA.
NOLs. The Treasury Inspector General for Tax Administration (TIGTA) made several recommendations for how the IRS could improve its administration of the tax laws for corporate net operating losses (NOL) and NOL carryovers (Ref. No. 2016-IE-R002; TAXDAY, 2015/11/03, T.1).
IRS Funding. IRS Commissioner John Koskinen told tax and accounting professionals in Washington, D.C. that the IRS would need $300 million to restore its telephone response service to the 70-percent level from its current level of 40 percent (TAXDAY, 2015/11/04, I.5). Customer service will continue to decline, and will not improve if the agency’s budget is the same, Koskinen said.
Listed Transactions. The IRS has amended sections 2.01 and 2.05 of Notice 2015-73 and Notice 2015-74 to replace the phrase “effective date of this notice” with January 1, 2011 (Notice 2015-43; Notice 2015-74; TAXDAY, 2015/11/03, I.1).
Employment Taxes. The IRS has reminded business owners of the importance of understanding the various types of employment-related taxes they may be required to deposit and report (FS-2015-25; TAXDAY, 2015/11/05, I.2). The IRS has answered common employment tax questions posed by business owners on topics such as worker classification, voluntary classification settlement program, fringe benefits, officer compensation and backup withholding, and information return penalties.
Modernized eFile. Modernized e-File (MeF) programs have posted updated schemas and business rules versions for the following 2015 tax year Forms: 1040; 2350; 4868, 1041, 1065/1065B; 1120/1120S/1120F; 1120-POL; 990x; 990N; and 8868 (TAXDAY, 2015/11/05, I.3). Software developers, return transmitters and states should refer to the version’s release memo for a description of the updates and to determine when the schemas and business rules will be operational in the MeF ATS and/or Production environments.
Code Sec. 2801. The IRS is addressing new questions, such as the taxation of the recipient of a gift or bequest (rather than the donor or decedent), as it works on final regulations under Code Sec. 2801, an agency official told practitioners on November 4 (TAXDAY, 2015/11/05, I.4). The official said that the IRS is continuing to consider guidance, which could be a revenue procedure, on whether and how a recipient might obtain information on the status of the donor/decedent for purposes of Code Sec. 2801.
Delegation Orders. The commissioner has delegated to the chief, Excise Tax Program, the authority to grant extensions of time to file returns and pay taxes related to communication services under Code Sec. 4251, and transportation of persons and property under Code Secs. 4261 and 4271, and to make monthly deposits in payment of such taxes (CDO No. 4-4 (Rev. 1); TAXDAY, 2015/11/04, I.3). The commissioner also delegated authority to accept, reject, return, terminate or acknowledge withdrawals, of offers in compromise to various IRS officials based on the amount of the offer, whether the offer is based on doubt as to collectibility or doubt as to liability and the type of tax involved (CDO No. 5-1 (Rev. 4); TAXDAY, 2015/11/04, I.4).
2016 Pension Plan COLAs. Cost-of-living adjustments (COLAs) that affect pension plan dollar limitations and other retirement-related provisions have been released by the IRS, effective January 1, 2016 (Notice 2015-75; TAXDAY, 2015/11/02, I.3).
EITC Due Diligence. The IRS has sent Earned Income Tax Credit (EITC) Due Diligence letters to tax preparers who submitted incorrect or highly questionable EITC tax returns this past year (TAXDAY, 2015/11/02, I.4). Although the letters are for information purposes only, the IRS will continue to monitor the EITC returns prepared in the upcoming filing season to see if the quality of the preparers’ returns improves.
Homeowner Payments. The IRS has extended through 2017 the safe harbor method or computing a homeowner’s deduction for payments made on a home mortgage under program related to the Treasury’s Housing Finance Agency Innovation Fund for the Hardest-hit Housing Markets (Notice 2015-77; TAXDAY, 2015/11/09, I.2). The notice also extends relief from information reporting penalties for mortgage servicers and state housing finance agencies.
By Jeff Carlson, Jennifer Cordaro and Brant Goldwyn, Wolters Kluwer News Staff