Insights & News

Tax Insights, May 4, 2016
Tracking Tax News You Need to Know

May 04, 2016
Publications

Final Regulations Issued on Method to Adjust AFRs
The IRS issued final regulations providing the method to be used to adjust the applicable federal rates (AFRs) to determine the corresponding rates under Section 1288 for tax-exempt obligations (adjusted AFRs) and the method to be used to determine the long-term tax-exempt rate and the adjusted federal long-term rate under Section 382 (section references are to the Internal Revenue Code of 1986, as amended). For tax-exempt obligations, the regulations affect the determination of original issue discount under Section 1273 and of total unstated interest under Section 483. The regulations also affect the determination of the limitations under Sections 382 and 383 on the use of certain operating loss carry forwards, tax credits and other attributes of corporations following ownership changes.

IRS Announces Penalty Relief for Educational Institutions for Tuition Reporting Change
The IRS issued Announcement 2016-17, stating that it will not impose penalties under Sections 6721 or 6722 on eligible educational institutions required to file Forms 1098-T, Tuition Statement, for 2016 if the institution reports the aggregate amount billed for qualified tuition and related expenses on Form 1098-T instead of the aggregate amount of payments received. Penalty relief was granted because of a law change made last year by the Protecting Americans from Tax Hikes (PATH) Act of 2015, which eliminated the option of reporting the billed amount for expenses paid after Dec. 31, 2015. The relief is limited to 2016 Forms 1098-T required to be filed by eligible educational institutions by Feb. 28, 2017 (or March 31, 2017, if filed electronically).

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

Slovakia-U.S. FATCA Competent Authority Arrangement Available
The Slovak and U.S. competent authorities have signed an arrangement under the two nations’ 2015 intergovernmental agreement to implement the information reporting and withholding tax provisions of the Foreign Account Tax Compliance Act.

IRS Releases Annual Report on Competent Authority Statistics
The IRS released its annual report on competent authority statistics, which shows a decline in the number of transfer-pricing-related mutual agreement procedure (MAP) requests received and an increase in the number of cases closed.

Alabama Announces Anticipated ABLE Program Launch
The Alabama state treasurer’s office announced that Alabama anticipates launching its Achieving a Better Life Experience (ABLE) program in the fall of 2016. In 2015, the Alabama Legislature passed the Alabama ABLE Act that established the state program. The program permits the creation of tax-free savings accounts for individuals with disabilities for use toward qualified disability expenses.

Florida Adopts Simplified Process for Nonprofits to Obtain Exemption Certificates
Florida has issued a new Form DR-5 (Application for a Consumer’s Certificate of Exemption). The new application streamlines the process for establishing that a nonprofit organization or governmental entity meets the statutory criteria for each exemption category. Holders of exemption certificates no longer need to reapply for a new certificate every five years. The Florida Department of Revenue will review each exemption certificate 60 days before the current certificate expires. For those nonprofit organizations and governmental entities located in Florida, the department will use public information to determine whether the organization continues to qualify for a sales tax exemption certificate. If an organization continues to meet the statutory exemption criteria, a new exemption certificate will be issued. If additional information is needed, a letter requesting documentation will be mailed to the organization. For those nonprofit organizations and governmental entities located outside Florida, the department will mail a letter requesting whether the organization wishes to have its certificate renewed. The letter will also provide a list of documentation needed for the department to renew the exemption certificate. (See Florida Tax Information Publication No. 16A01-03.)

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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