Proposed Bill Would Streamline Employer Reporting Under ACA

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October 16, 2017

On October 3, bipartisan legislation was introduced in the House and the Senate to streamline the employer health-coverage reporting requirements under the Affordable Care Act (ACA).  In contrast to the ACA repeal-and-replace bills proposed in the past several months, which do not directly affect ACA information reporting provisions (see prior coverage), the Commonsense Reporting Act would direct the Treasury Department to implement a more streamlined, prospective reporting system less burdensome than the current requirements.  Specifically, the legislation would create a voluntary prospective reporting system for employer-provided health coverage and permit employers who use this system to provide employee statements under section 6056 only to employees who have purchased coverage through an exchange, rather than to the entire workforce.  … Read More

Five New CAAs on Exchange of CbC Reports Pushes Total to 27

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October 9, 2017

The IRS has concluded competent authority arrangements (“CAAs”) for the exchange of country-by-country (“CbC”) reports with the Czech Republic, Finland, Greece, Italy, and Sweden.  The new arrangements bring the number of CAAs for the exchange of CbC reports to 27.  The CAAs for the exchange of CbC reports generally require the competent authorities of the foreign country and the United States to exchange annually, on an automatic basis, CbC reports received from each reporting entity that is a tax resident in its jurisdiction, provided that one or more constituent entities of the reporting entity’s group is a tax resident in the other jurisdiction, or is subject to tax with respect to the business carried out through a permanent establishment in the other jurisdiction.… Read More

First Friday FATCA Update

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October 6, 2017

Since our last monthly FATCA update, the IRS has issued Notice 2017-46, providing welcomed reprieve for U.S. financial institutions with respect to the collection of foreign taxpayer identification numbers (FTINs) required of them by FATCA to avoid Chapter 3 withholding.  The notice delays the date on which U.S. financial institutions must begin collecting FTINs to January 1, 2018, provides a phase-in period for obtaining FTINs from account holders documented before January 1, 2018, that will end on December 31, 2019, and limits the circumstances in which FTINs are required (see prior coverage).  This week, an IRS official reiterated that a change in an accountholder’s address to another jurisdiction is a change in circumstances that will invalidate the Form W-8 for payments made after the change provided an FTIN is otherwise required, necessitating the collection of an FTIN if an FTIN is otherwise required with respect to the payment(s).… Read More

IRS Updates List of Countries Subject to Bank Interest Reporting Requirements

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October 2, 2017

Last week, the IRS issued Revenue Procedure 2017-46 to supplement the list of countries subject to the reporting requirements of Code section 6049, which generally relate to reporting on bank interest paid to nonresident alien individuals.  The expansion is not unexpected, as this list of countries, originally set forth in Revenue Procedure 2014-64 and modified a handful of times since, will likely continue to expand as more countries enter into tax information exchange agreements with the U.S. in order to implement the Foreign Account Tax Compliance Act (FATCA).  Specifically, the Revenue Procedure adds the Faroe Islands and Greenland to the list of countries with which the U.S.… Read More

IRS Approves Final Regulations on Gambling Withholding

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September 28, 2017

The IRS has finalized regulations under section 3402(q) simplifying the withholding regime applicable to certain gambling winnings, which were issued in proposed form in December 2016 (prior coverage here).  The IRS issued the regulations in response to complaints about the withholding system previously applicable to horse races, dog races, and jai alai.  Commenters explained that newer methods of gambling on such events often caused the amount withheld to exceed the actual tax liability.  The key change made by the regulations relates to the method of calculating the amount of the wager in the case of parimutuel wagers, a type of bet that differs from the typical straight wager. … Read More

IRS Makes Good on Promise to Issue Guidance Loosening Certain FATCA Reporting Requirements

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September 26, 2017

Yesterday, the IRS issued Notice 2017-46, representing a welcome reprieve for U.S. financial institutions with respect to the collection of foreign taxpayer identification numbers (FTINs) required of them by the Foreign Account Tax Compliance Act (FATCA) to avoid Chapter 3 withholding.  As we discussed in a prior post, an official with the IRS Office of Chief Counsel previewed this forthcoming guidance earlier this month and communicated that it was intended as a response to comments received by the IRS from withholding agents.  The new guidance delays the date on which U.S. financial institutions must begin collecting FTINs to January 1, 2018, provides a phase-in period for obtaining FTINs from account holders documented before January 1, 2018 that will end on December 31, 2019, and limits the circumstances in which FTINs are required. … Read More

Graham-Cassidy Bill Eliminates Premium Tax Credit But Retains ACA Information Reporting Requirements

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September 21, 2017

With the September 30 budget reconciliation deadline looming, Senate Republican leaders recently released the Graham-Cassidy proposal, which would repeal and replace the Affordable Care Act, but retain most of its information reporting requirements.  A departure from previous GOP proposals (see discussions here and here), the Graham-Cassidy proposal would completely eliminate federal premium tax credits by January 2020, and not provide any other health insurance tax credits.  The legislation would instead put in place a system of block grants to the states which states could use to increase health coverage, but would not be required to use for that purpose. … Read More

Proposed Regulations Would Allow Truncated SSN on Forms W-2 Furnished to Employees

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September 20, 2017

The IRS recently issued proposed regulations that would allow employers to truncate employees’ social security numbers (SSNs) on copies of Forms W-2 furnished to employees, to help protect employees from identity theft.  The truncated SSNs must appear in the form of IRS truncated taxpayer identification numbers (TTINs): the first five digits of the nine-digit SSN are replaced with Xs or asterisks.  For example, a TTIN replacing an SSN appears in the form XXX‑XX‑1234 or ***‑**‑1234.  Employers may also use TTINs on Forms W-2 furnished to employees for payment of wages in the form of group-term life insurance.  But as with information returns filed with the IRS, employers cannot use TTINs on copies of the Forms W-2 filed with the Social Security Administration.   … Read More

Tax Relief for Leave-Based Donation Programs and Qualified Plan Distribution Extended to Hurricane Irma Victims

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September 18, 2017

The IRS recently announced favorable tax relief for “leave-based donation programs” designed to aid victims of Hurricane Irma, as well as easier access to funds in qualified retirement plans for these victims.  These forms of relief were provided to victims of Hurricane Harvey last month (see prior coverage), and as expected, were promptly extended to victims of Hurricane Irma.

Specifically, under Notice 2017-52, employees may forgo paid vacation, sick, or personal leave in exchange for cash donation the employer makes, before January 1, 2019, to charitable organization providing relief for the Hurricane Irma victims.  The IRS will not treat the donated leave as income or wages to the employee, and will permit employers to deduct the donations as business expenses. … Read More

Hurricane Harvey Prompts IRS to Provide Tax Relief for Leave-Based Donation Programs

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September 7, 2017

The IRS recently released Notice 2017-48, providing favorable tax relief for “leave-based donation programs” designed to aid victims of Hurricane Harvey.  Under these programs, employees may elect to forgo vacation, sick, or personal leave in exchange for payments that the employer makes to charitable organizations described under section 170(c).  Under this notice, payments employees elect to forgo do not constitute income or wages of the employees for federal income and employment tax purposes if the employer makes the payments, before January 1, 2019, to charitable organizations for the relief of victims of Hurricane Harvey.  The IRS will not assert that an opportunity to make this election results in employees’ constructive receipt of the payments. … Read More

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