With lawmakers on their holiday recess during the final weeks of 2015, the IRS issued guidance on the Health Care Tax Credit (HCTC), Type III supporting organizations and certain information reporting under the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148). The Treasury Inspector General for Tax Administration (TIGTA) released reports on the erroneous refunds and more.
Passage of the Consolidated Appropriations Act, 2016 (P.L. 114-113), which contained the fiscal year (FY) 2016 omnibus spending bill and the Protecting Americans from Tax Hikes (PATH) Act of 2015 (TAXDAY, 2015/12/21, W.1), has lawmakers predicting growing momentum for tax reform in 2016 (TAXDAY, 2015/12/22, C.1). The chairmen of the House and Senate tax-writing committees both highlighted tax reform in statements after passage of the PATH Act .
Erroneous Refunds. TIGTA has reported that an IRS programming error generated millions of dollars in refunds were erroneously issued (Ref. No. 2016-40-016; TAXDAY, 2015/12/22, T.1). The error impacted more than 13,000 returns from tax year (TY) 2013, according to TIGTA.
Security. TIGTA has reported that the IRS has not established a Service-wide approach to effectively manage the online authentication of taxpayer accounts (Ref. No. 2016-40-007; TAXDAY, 2015/12/23, T.1). According to TIGTA, the IRS’s authentication methods used for current online services did not comply with Government Information Security Standards.
PPACA. The IRS has extended the filing deadlines for certain information reporting requirements applicable to insurers, self-insuring employers and certain other providers of minimum essential coverage under Code Sec. 6055 and to applicable large employers under Code Sec. 6056 (Notice 2016-4; TAXDAY, 2015/12/29, I.3). The IRS also provided guidance to individual taxpayers who may be affected by the extended deadlines.
HCTC. The IRS has issued guidance about the Health Coverage Tax Credit (HCTC) (Notice 2016-2; TAXDAY, 2015/12/23, I.7). The guidance provides information on who may claim the HCTC, the amount of the HCTC and how to claim it.
CbC Reporting. Proposed regulations would require annual country-by-country (CbC) reporting by U.S. persons that are the ultimate parent of a multinational enterprise (MNE) group (NPRM REG-109822-15; TAXDAY, 2015/12/22, I.3). The proposed regulations are the first issued in response to the final recommendations of the Organisation for Economic Co-operation and Development (OECD) on their Base Erosion and Profit Shifting (BEPS) project.
Supporting Organizations. The IRS has issued final regulations regarding the requirements to qualify as a Type III supporting organization (T.D. 9746; TAXDAY, 2015/12/22, I.1).
Identity Theft. The IRS has extended the guidance in Announcement 2015-22, I.R.B. 2015-35, 288 (TAXDAY, 2015/08/14, I.1) to include identity protection services provided to employees or other individuals before a data breach occurs (Announcement 2016-2; TAXDAY, 2015/12/31, I.2).
Interest Rates. Interest rates for the calendar quarter beginning January 1, 2016, will remain at 3 percent for overpayments (2 percent in the case of a corporation), 3 percent for underpayments and 5 percent for large corporate underpayments (IR-2015-138, Rev. Rul. 2015-23; TAXDAY, 2015/12/22, I.1). The interest rate for the portion of a corporate overpayment exceeding $10,000 remains at 0.5 percent.
Filing Season. The IRS has announced that it will begin accepting and processing electronic returns on Tuesday, January 19, 2016 (IR-2015-139; TAXDAY, 2015/12/22, I.2).
Chief Counsel. Chief Counsel attorneys have been instructed not to argue that the Tax Court does not have jurisdiction in employment status cases unless the IRS has issued a Notice of Determination of Worker Classification (NDWC) if certain requirements are met (CC-2016-002; TAXDAY, 2015/12/23, I.1).
EITC. The IRS has announced that it is sending letters to some taxpayers who may not be entitled to some or all of the Earned Income Tax Credit (EITC) claimed on their 2014 tax return (TAXDAY, 2015/12/30, I.2).
Transcripts. The IRS has reminded taxpayers that the fastest way to obtain a return transcript is to order it using the Get Transcript application on its website (FS-2015-28; TAXDAY, 2015/12/28, I.1).
Return Preparers. The IRS Return Preparer Office is mailing educational letters to certain return preparers (TAXDAY, 2015/12/28, I.1). The letters remind recipients of their responsibilities when preparing returns that include the Child Tax Credit and Additional Child Tax Credit.
Phishing Scams. Tax professionals to be on the lookout for new phishing scams seeking to obtain e-services information, the IRS has cautioned (TAXDAY, 2015/12/23, I.2).
IRS Executives. The IRS has announced over 30 new executive assignments in the Large Business and International Division, effective February 7, 2016, as part of the Division’s new organizational structure (TAXDAY, 2015/12/30, I.1). In a statement, the Service emphasized that the new structure is focused on improving tax compliance.
Identity protection. The IRS has determined that Announcement 2015-22 should be extended to include identity protection services that are provided to employees or other individuals before a data breach actually occurs (Announcement 2016-2; TAXDAY, 2015/12/31, I.2). Additionally, the IRS will not assert that an employer providing identity protection services to its employees must include the value of the identity protection services in the employees’ gross income and wages.
New Revenue Procedures. The IRS has released annual guidance on the 2016 procedures for taxpayers to obtain rulings, information letters, determination letters and technical advice (Rev. Proc. 2016-1 through Rev. Proc. 2016-8; TAXDAY, 2016/01/04, I.1 through I.8). The revenue procedures also address user fees and areas on which the IRS will not rule.
By Brant Goldwyn and George L. Yaksick, Jr., Wolters Kluwer News Staff