Insights & News

Tax Insights, December 23, 2015
Tracking Tax News You Need to Know

December 23, 2015

PATH Act and 2016 Consolidated Appropriations Act Signed into Law
On Dec. 18, President Obama signed into law the Protecting Americans from Tax Hikes Act of 2015 (PATH Act) and the Consolidated Appropriations Act, 2016 (CAA Act). Both Acts contain several tax-related provisions. Generally, for regulated investment companies (RIC), the PATH Act includes the following, among other provisions discussed in our prior coverage:

  • Section 125 of the Act retroactively and permanently extends the rules exempting from gross-basis tax and withholding tax the interest-related dividends and short-term capital gain dividends received from a RIC. The provision applies to dividends paid with respect to any taxable year of a RIC beginning after Dec. 31, 2014.
  • Section 133 of the Act makes permanent the inclusion of a RIC within the definition of a “qualified investment entity” under Section 897 (section references are to the Internal Revenue Code of 1986, as amended, unless otherwise noted) for those situations in which that inclusion would otherwise have expired after Dec. 31, 2014.
Additionally, the Joint Committee on Taxation released a technical explanation of the PATH Act, providing detailed descriptions of the bill’s revenue-related provisions, and released the estimated revenue budget effects of the PATH Act.

    Division P of the CAA Act contains several tax-related provisions, including:

  • Section 101 of Division P postpones the effective date of the “Cadillac” excise tax on high-cost employer-sponsored health plans under Section 4980I. The tax will now go into effect for tax years beginning after Dec. 31, 2019. Section 102 of Division P also removes the Cadillac excise tax from the list of nondeductible taxes in Section 275.
  • Section 201 of Division P suspends for one year, during 2017, the annual fee charged to covered entities engaged in the business of providing health insurance with respect to U.S. health risks.
  • Sections 301 through 304 of Division P include several changes to the energy credits under Sections 45 and 48 related to certain energy property.
IRS Rules on Cash and Stock Distribution of Future REIT
In Private Letter Ruling 201550017, the IRS ruled that a distribution consisting of stock and cash made by a publicly traded corporation electing to be treated as a REIT will be treated as a distribution of property with respect to stock under Section 301 and that the amount of stock distributed to a shareholder will equal the amount of cash that the shareholder could have received instead.

All Partners Allowed to Receive Documents in Partnership Audit
In e-mailed advice, the IRS said all partners have a right to participate in an administrative audit at the partnership level and, therefore, may receive documents not ultimately impacting the partner, provided disclosure of the information does not seriously impair federal tax administration.

IRS Issues 2015 List of Changes in Plan Qualification Requirements
The IRS has issued Notice 2015-84; 2015-52 IRB 1, which contains the 2015 Cumulative List of changes in plan qualification requirements outlined in guidance (Rev. Proc. 2007-44) on issuing opinion, advisory and determination letters, and describes the five-year remedial amendment cycle for individually designed plans and the six-year remedial amendment cycle for pre-approved plans. The list is published annually to identify statutory, regulatory and guidance changes that must be taken into account by plan sponsors in submissions to the IRS requesting opinion, advisory, and determination letters whose submission period begins on Feb. 1 following issuance of the Cumulative List.

IRS Provides New Q&As on Employer-Provided Health Coverage under ACA 
Notice 2015-87; 2015-52 IRB 1 provides further guidance on the application of various provisions of the Affordable Care Act (ACA) to employer-provided health coverage, including health reimbursement arrangements (HRAs), COBRA continuation coverage, and penalty relief, in a question-and-answer format. The notice applies to provisions within the jurisdiction of the Treasury Department, the IRS and the Departments of Health and Human Services and Labor. The notice also provides certain guidance that Treasury and the IRS intend to incorporate into proposed regulations.

Draft 2015 FATCA Form 8966 Instructions Released
The IRS has published a draft version of the instructions to the 2015 Form 8966 (FATCA Report), describing the new lines and check boxes. Form 8966 is used by certain foreign financial institutions and others to report information with respect to U.S. accounts under FATCA.

U.S. TIEA Protocols with Isle of Man, Jersey in Force
Protocols to the U.S. tax information exchange agreements with the Isle of Man and Jersey have entered into force.

IRS Releases Inflation-Adjusted Items for 2015 for Certain Civil Penalties 
Rev. Proc. 2016-11; 2016-2 IRB 1 sets forth inflation-adjusted items for 2015 for certain civil penalties under Sections 6651, 6652(c), 6695, 6698, 6699, 6721 and 6722 for returns and statements required to be filed after Dec. 31. In addition, it corrects section 3.48(3), Failure to File Correct Information Returns, of Rev. Proc. 2015-53.

IRS Releases Tax Guide for U.S. Citizens, Resident Aliens Abroad
The IRS has released Publication 54 (rev. 2015), Tax Guide for U.S. Citizens and Resident Aliens Abroad, for use in preparing 2015 returns, which discusses special tax rules for U.S. citizens and resident aliens who work abroad or who have income earned in foreign countries.

Information contained in this publication should not be construed as legal advice or opinion or as a substitute for the advice of counsel. The articles by these authors may have first appeared in other publications. The content provided is for educational and informational purposes for the use of clients and others who may be interested in the subject matter. We recommend that readers seek specific advice from counsel about particular matters of interest.

Copyright © 2015 Stradley Ronon Stevens & Young, LLP. All rights reserved.

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