Insights & News

Tax Insights, November 16, 2016
Tracking Tax News You Need to Know

November 16, 2016

IRS Releases Final Regulations On Debt Discharge Reporting Event
The IRS has issued final regulations (TD 9793) that eliminate a rule under which, subject to exceptions, a creditor had to furnish Form 1099-C, Cancellation of Debt, if there was a 36-month period during which the creditor had not received any payment on its indebtedness. This provision has been criticized for confusing taxpayers as to whether and when an actual debt discharge has occurred. The fact that a creditor reported under the 36-month rule did not necessarily reflect a discharge of indebtedness. However, a debtor might conclude that the debtor had taxable income even though the creditor had not discharged the debt and continued to pursue collection.  The final regulations are applicable to information returns required to be filed, and payee statements required to be furnished, after Dec. 31.

IRS Announces End To Litigation Guideline Memorandum Program
The IRS announced, in Chief Counsel Notice 2017-001, that it is discontinuing its Litigation Guideline Memorandum (LGM) program and making obsolete all of the existing LGMs. LGMs were a form of legal advice prepared by attorneys in the National Office of the Office of Chief Counsel (IRS OCC) through 1999. Their purpose and scope was to provide information and instruction relating to litigating procedures and methods, and standards and criteria on issues and matters of significant interest to litigating attorneys in the Office of Chief Counsel. It was not envisioned that LGMs would be distributed outside of the Chief Counsel’s Office and were considered exempt from production under the Freedom of Information Act or discovery as privileged law enforcement material or attorney work product. However, in 1998, Congress enacted Section 6110(i) (section references are to the Internal Revenue Code of 1986, as amended), which established a comprehensive scheme for the public disclosure of “Chief Counsel advice,” which included LGMs. The IRS OCC now issues legal advice and litigation guidance through Chief Counsel Notices, formal and informal Chief Counsel advice memorandums, generic legal advice memorandums, program manager technical advice, and updates to the Chief Counsel Directives Manual. To the extent that existing LGMs have not been formally obsoleted or withdrawn, they should now be considered obsolete.

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

IRS Releases Practice Unit on Portfolio Interest Exemption
The IRS made available an international practice unit on U.S.-source interest income that qualifies for the portfolio debt exemption under Sections 871(h) and 881(c), outlining the requirements for qualification and addressing some types of interest that will not qualify for the exemption and some foreign recipients that are not eligible for it.

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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