Insights & News

Tax Insights, April 27, 2016
Tracking Tax News You Need to Know

April 27, 2016

District Court Describes "Foreign-Based Documentation"
In Cheri LaRue et vir v. United States; No. 3:15-cv-00705, the U.S. District Court for the District of Oregon held that "foreign-based documentation" for purposes of Section 982(c) (section references are to the Internal Revenue Code of 1986, as amended) means documents held outside the United States and copies of those documents which may be held in the United States. Section 982(c) authorizes the IRS to issue a formal document request to any taxpayer. The court rejected the taxpayer's arguments that "foreign-based documentation" means documents that are physically located in a foreign country.

Treasury Releases Joint Statement on U.S.-India Partnership
Treasury Secretary Jacob Lew and Indian Finance Minister Arun Jaitley have issued a joint statement describing the efforts that have been undertaken by both sides to deepen mutual understanding and improve cooperation across a wide range of bilateral and multilateral issues, including accepting bilateral Advance Pricing Agreements and sharing financial information under FATCA.

Treasury Issues Background Paper on the NIIT/SECA Fiscal Year 2017 Budget Proposal
The Department of the Treasury released a report outlining how President Obama’s fiscal year 2017 budget proposes to eliminate the gap between employment taxes and net investment income tax. The report explains how most high-income taxpayers are able to avoid paying the 3.8 percent tax on income above a threshold ($200,000 if filing single, $250,000 if filing joint) either through employment taxes (FICA or SECA) or through the net investment income tax.

IRS Issued Final Regulations on Program-Related Investments
The IRS has issued final regulations (T.D. 9762) that provide guidance to private foundations on program-related investments by providing a series of examples illustrating investments that qualify as such. The final regulations include several modifications to the proposed regulations issued in 2012. Additionally, while the IRS refused to include the "statement of principles" included in the preamble to the proposed regulations in the text of the final regulations, the IRS intends to post the principles on its website. Further, the IRS is considering whether to address program-related investments in the form of investments in partnership interests through the issuance of a revenue ruling.

Several Groups Submit Comments on Partnership Audit Regime
Several groups have responded to a request for comments on the implementation of the new partnership audit regime, including the National Association of Real Estate Investment Trusts (asking for guidance allowing the use of the current deficiency dividend procedures for any resulting adjustment to REIT taxable income arising in cases related to Section 6225 or 6226) and the Master Limited Partnership Association (requesting that taxpayers and practitioners be given more time to review and comment on the multitude of issues raised by Notice 2016-23).

Updated Form W-8BEN-E and Instructions Released
The IRS has released an updated version of Form W-8BEN-E, "Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities)," and final instructions thereto.

Competent Authority Arrangement to Philippines-U.S. IGA Available
The Philippine and U.S. competent authorities have signed an arrangement under the two countries' 2015 intergovernmental agreement to implement the Foreign Account Tax Compliance Act. 

Competent Authority Arrangement to France-U.S. IGA Available  
The French and U.S. competent authorities have signed an arrangement under the two countries' 2013 intergovernmental agreement to implement the Foreign Account Tax Compliance Act.

2016 U.S.-Vietnam FATCA Agreement Available
The text is available of the agreement signed by the United States and Vietnam to improve international tax compliance and implement the information reporting and withholding tax provisions of the U.S. Foreign Account Tax Compliance Act.

California May Not Require Disclosure of Nonprofits’ Donor Information
In Americans for Prosperity Foundation (APF) v. Kamala Harris; No. 2:14-cv-09448, the U.S. District Court for the Central District of California permanently enjoined the California attorney general from requiring charitable organizations, such as APF, to report to the state the organization's Schedule B to the IRS Form 990, which discloses the names and contributions of significant donors, and found the disclosure requirements unconstitutional as applied to APF.

Pennsylvania Establishes ABLE Accounts for Disabled Individuals
Pennsylvania SB 879, signed into law as the Pennsylvania Achieving a Better Life Experience (ABLE) Act, establishes private, tax-free savings accounts for qualified disability expenses for disabled beneficiaries under Section 529(A).

Alabama DOR Announces New Website for Tax Amnesty Program
The Alabama Department of Revenue has launched a new website for the 2016 tax amnesty program, which provides information about the program and answers to frequently asked questions; the program will run from June 30 through Aug. 30. See our prior coverage here.

Illinois' DOR Proposes Amended Corporate Income Tax Regulations
The Illinois Department of Revenue has released proposed amendments to rules on corporate income tax, specifically reportable transactions, composite returns and withholding requirements for partnerships, S corporations and trusts.

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 © 2016 Stradley Ronon Stevens & Young, LLP. All rights reserved.

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