Comments on IRS's 1993 Business Plan.On December 1, 1992, Tax Executives Institute filed the following comments with the Internal Reven Treasury Department on projects that should be included in the IRS's 1993 Business Plan. The Institu on guidance in the domestic tax, international tax, administrative, and employee benefits areas, and Commissioner Shirley D. Peterson and Assistant Treasury Secretary Fred T Goldberg, Jr. The Institute submitted under the aegis of its IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. Administrative Affairs Committee, whose chair is W Remi Taylor its International Tax Committee, whose chair is Lisa Norton of the Ingersoll-Rand Co.; its Federal T is David F. Nitschke of Amerada Hess Corporation The Hess Corporation (NYSE: HES) is an integrated oil company based in New York City. The company changed its name from Amerada Hess as of May 8, 2006. The company explores, produces, transports, and refines oil. ; and its Employee Benefits Subcommittee, whose chai of Westinghouse Electric Corp. Transmittal Letter Transmittal letter A letter describing the contents and purpose of a transaction delivered with a security that is changing ownership. On October 29, 1992, the Department of the Treasury and the Internal Revenue Service requested comments on projects that should be included in the IRS's 1993 Business Plan. On behalf of Tax Executives Institute, I am pleased to submit the enclosed list of projects that the Institute believes should be given priority in 1993. TEI 1. (communications) TEI - Terminal Endpoint Identifier. 2. (text, project) TEI - Text Encoding Initiative. commends Treasury and the IRS for undertaking to outline the IRS's agenda for the upcoming year. Mapping out a plan for 1993 constitutes the exercise of good business sense and will provide taxpayers with needed guidance on the IRS's priorities. I believe it would be helpful to describe the process TEI used to develop the enclosed list of projects for inclusion in the 1993 Business Plan. The Institute circulated the IRS's announcement and a copy of the 1992 Business Plan for comment to its committees that have substantive responsibility for guidance that emanates from the IRS and the Treasury Department. Our committees were asked not only to identify issues on which guidance was needed but to assign a priority to the projects, taking into account the overall reach of the guidance (i.e., the number of taxpayers affected by the guidance) and the importance of the guidance to individual companies (i.e., the number of transactions affected by the guidance). The list of projects, broken down into "A," "B," and "C" groupings, was then reviewed and approved by the Institute's Executive Committee. Obviously, what one company or industry segment considers to be important may have little or no effect on another company or industry. There are some projects, however, that cut across a broad range of companies. In particular, the Institute would assign the highest priority to the issuance of the "Accelerated Issue Resolution" revenue procedure, the application of the Indopco decision to repairs and maintenance charges (and to other expenses), the guidance on record retention agreements (in the form of a revision to Rev. Proc. 91-59), the guidance on the application of the alternative minimum tax to consolidated groups, the section 6662(e) penalty regulations, and the section 367(a) and (b) regulations. Tax Executives Institute appreciates this opportunity to present our views on the IRS's 1993 Business Plan. If you have any questions, please do not hesitate to call me at (408) 765-1202. Note: The following items are grouped as "A," "B," and "C" according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the priority assigned by TEI's members, with the "A" group having the highest priority. Within each group, the items are listed in random order. An "*" denotes an item as listed in the IRS's 1992 Business Plan. Administrative "A" GROUP Coordinated Examination Program * Revenue procedure on "Accelerated Issue Resolution." Taxpayer Identification Number * *Proposed regulations and revenue procedure to establish a taxpayer identification number (TIN) matching program to allow a payor to pre-check whether a name/TIN combination provided by a payee The person who is to receive the stated amount of money on a check, bill, or note. payee n. the one named on a check or promissory note to receive payment. PAYEE. The person in whose favor a bill of exchange is made payable. matches a name/TIN combination in the IRS's records. Rev. Proc. 91-59 * Guidance on record retention agreements. * Guidance on electronic data interchange See EDI. (application, communications) electronic data interchange - (EDI) The exchange of standardised document forms between computer systems for business use. EDI is part of electronic commerce. . Penalties * Revision of Rev. Proc. 85-26 on disclosure for Coordinated Examination Program taxpayers to permit the IRS and taxpayers to agree on the time frame for submitting adjustments to income. * Adoption of a reasonable cause rule to eliminate penalties when taxpayers make a good faith effort to comply with the TIN rules. Miscellaneous * *Proposed regulations under section 6611(b)(1) on the erroneous allowance of interest on overpayments credited against certain underpayments. Revision of Form 5471. * Computerization com·put·er·ize tr.v. com·put·er·ized, com·put·er·iz·ing, com·put·er·iz·es 1. To furnish with a computer or computer system. 2. To enter, process, or store (information) in a computer or system of computers. of the interest calculation on deficiencies/overassessments and provision of a copy to taxpayers. International "A"GROUP Reorganization of Foreign Corporations * Final regulations under section 367(a) and (b). Transfer Pricing Transfer pricing refers to the pricing of goods and services within a multi-divisional organization, particularly in regard to cross-border transactions. For example, goods from the production division may be sold to the marketing division, or goods from a parent company may be Issues * Guidance on the "reasonable cause exception" under section 6662(e). * *Final regulations. Foreign Currency Issues * Revenue procedure on section 988 advance rulings. * *Final section 985 regulations involving DASTM DASTM Dollar Approximate Separate Transactions Method (US IRS) . Characterization of Entities * Clarification of Rev. Rul. 77-214 concerning the partnership status of limited liability companies where owners are commonly controlled. Foreign Tax Credit * *Final regulations under section 905(c) providing procedures for adjusting the foreign tax credit and penalties for failure to do so. * Regulations under section 902 to take into account the changes made by the Tax Reform Act of 1986. Earnings and Profits * *Final regulations under section 964 relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the transition rules for earnings and profits of foreign corporations. * Final regulations under section 964 on the GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). E&P method. Withholding Taxes The amount legally deducted from an employee's wages or salary by the employer, who uses it to prepay the charges imposed by the government on the employee's yearly earnings. * *Final regulations under section 1441 to clarify the withholding tax rules. Transition Rule under Section 1503(d) * Guidance on the application of the transition rules under the final dual consolidated loss rules concerning the availability of the election to use a loss against U.S. consolidated income for years beginning prior to the effective date where the conditions under the temporary regulations were not satisfied (i.e., the loss was not unusable as a matter of foreign law, but the loss was in fact not used in the foreign country). "B" GROUP Foreign tax credit * *Proposed regulations under section 904(i) limiting the use of deconsolidations of corporations to avoid foreign tax credit limitations. Subpart F/Deferral * *Proposed regulations under section 898 determining the required taxable year Taxable year The 12-month period an individual uses to report income for income tax purposes. For most individuals, their tax year is the calendar year. of certain foreign corporations. * *Final regulations under section 954 containing subpart F definitions. Inbound Transactions * *Proposed regulations under section 163(j) involving the guaranty As a verb, to agree to be responsible for the payment of another's debt or the performance of another's duty, liability, or obligation if that person does not perform as he or she is legally obligated to do; to assume the responsibility of a guarantor; to warrant. rules for earnings stripping. * *Final regulations under sections 163(c) and 267(a)(3) relating to deduction of interest and certain other amounts owed to related foreign parties. Outbound Transactions * *Final regulations under section 367(e) involving certain corporate distributions to foreign corporations. * *Proposed regulations under section 936 relating to qualified possessions source investment income. Foreign Currency Issues * *Final regulations under section 985 involving changes in functional currency and weighted average exchange rate. Sourcing Issues * *Proposed interest regulations under section 864(e) on hedging and interest equivalents, integrated financial transactions, and nonrecourse debt A nonrecourse debt or non-recourse debt or nonrecourse loan is a secured loan (debt) that is secured by a pledge of collateral, typically real property, but for which the borrower is not personally liable. . * *Final regulations under section 864(e). Miscellaneous * Amendment of section 1502 regulations to permit aggregation of members of a consolidated group for purposes of section 902. "C" GROUP Foreign Sales Corporations Foreign Sales Corporation (FSC) A special type of corporation created by the Tax Reform Act of 1984 that is designed to provide a tax incentive for exporting U.S.-produced goods. * Safe harbor rule safe harbor rule Antitrust law A federal guideline as to what constitutes antitrust activity, established by the FTC and Justice Dept, after specific legislation–which might be open to misinterpretation–is enacted. Cf Self-referral. for underpayment of estimated taxes Federal and state tax laws require a quarterly payment of estimated taxes due from corporations, trusts, estates, non-wage employees, and wage employees with income not subject to withholding. by a FSC FSC See: Foreign Sales Corporation where estimated taxes are based on 1.83 percent of foreign trading gross receipts the total of the receipts, before they are diminished by any deduction, as for expenses; - distinguished from net profits. - Bouvier. See under Gross, a. os> See also: Gross Receipt . * Final regulations under sections 923-927. Inbound Transactions * *Proposed regulations relating to the definition of a bank for purposes of the portfolio interest exemption. Miscellaneous * Guidance on revocation The recall of some power or authority that has been granted. Revocation by the act of a party is intentional and voluntary, such as when a person cancels a Power of Attorney that he has given or a will that he has written. of an existing election under section 1504(d) to treat contiguous country corporations as domestic corporations. * *Proposed regulations under section 6503(k) concerning designated summons. Domestic "A"GROUP Section 162: Indopco * Application to environmental clean-up expenditures, repairs and maintenance costs, and other recurring expenditures. * Clarification of the interaction between sections 263 and 263A with the ordinary and necessary repair provisions of section 162, especially in the area of the unit of property" level at which the rules are to be applied, taking into account existing regulations under section 168. Tax Accounting * Development of an elective, simplified method based on historic results of each taxpayer under the uniform capitalization rules. * *Final regulations under section 263A(f) on the requirement to capitalize interest to certain property produced by taxpayer. * Guidance on when charge-offs of bad debts by entities other than banks will be respected. * Final regulations under section 448(d)(5) concerning the components of the nonaccrual formula and the definition of uncollectible amount. * *Revenue ruling under section 461(h) on state taxes paid "shortly after" the filing of a federal return. Inventory * Inventory Shrinkage: guidance on the timing of a deduction where physical count is not taken on yearend date. * Inventory Methods: resolution of conflicts in how to apply the components-of-cost method. * Proper treatment of "shelving shelv·ing n. 1. Shelves considered as a group. 2. Material for shelves. 3. An incline; a slope. shelving Noun 1. material for shelves 2. allowances." Alternative Minimum Tax * *Proposed regulations on application of AMT See vPro. to consolidated groups. * *Final regulations under Treas. Reg. [sections] 1.56(g)-1 simplifying inventory computations for purposes of adjusted current earnings and alternative minimum taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. . Consolidated Returns * *Final regulations under sections 382 and 1502 relating primarily to limitations on net operating losses Net operating losses Losses that a firm can take advantage of to reduce taxes. of consolidated and controlled groups. * *Proposed regulations revising the rules for intercompany transactions and distributions in consolidated groups. * *Final regulations on the option rules of section 1504(a)(5). Financial Products * Guidance the proper tax accounting treatment for certain hedging and integrated financial transactions. * Characterization of gain or loss on hedging transactions involving notional principal contracts The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. . * Clarification of the application of Arkansas Best. Research Activities * *Guidance under section 174 on the definition of research and experimental expenditures. * Guidance under section 41 on the credit for increasing research activities. Miscellaneous * Section 460 regulations. * Final section 338 regulations. "B" GROUP Loss Corporations * Revenue ruling under section 382(l)(5) on when shareholders own stock "as a result of" being shareholders or creditors of the old loss corporation. Insurance Companies and Products * *Final regulations under section 848 on deferred acquisition costs. Demolition of Structures * Definition of the term "structure' under section 280A. * Clarification that the term "demolition' does not apply to the removal of tanks, walls, etc. in the ordinary course of renovating manufacturing and processing facilities. Miscellaneous * Regulations on the conditions and steps necessary to make an election pursuant to section 336(e). "C" GROUP Alternative Minimum Tax * Duplication of noninventory installment sales Installment sale The sale of an asset in exchange for a specified series of payments (the installments). installment sale A sale in which the buyer is scheduled to make a series of payments over a period of time. in both ACE and BURP. Loss Corporations * *Proposed regulations under section 382(b)(3) on allocating income to pre- and post-change periods based on a closing of the books. * *Proposed regulations under section 382(l)(6) on applying section 382 in certain insolvency transactions. * *Final regulations on what indebtedness qualifies under section 382(l)(5)(E) when stock is transferred to creditors. Insurance Companies and Products * *Final regulations under section 846 on discounted unpaid losses. Tax Accounting * *Final regulations on the application of section 263A to producers and resellers. * Guidance under section 461(h) that utilities receiving refunds from upstream suppliers that they are obligated ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. to pass through to downstream customers may accrue the obligation to match the income, even though economic performance may not have occurred. Stock Purchases * Guidance on how much depreciation is allowable in the year of acquisition for assets acquired pursuant to section 338 in ACRS ACRS See: Accelerated cost recovery system ACRS See Accelerated Cost Recovery System (ACRS). years -- full year or part year. Consolidated Returns * Regulations on normalization In relational database management, a process that breaks down data into record groups for efficient processing. There are six stages. By the third stage (third normal form), data are identified only by the key field in their record. of utility consolidated tax adjustment. Health Maintenance Organizations * Clarification of the treatment of advance premiums. * Application of section 461(h) and Subchapter L to HMOSs. Employee Benefits "A"GROUP Definition of Wages * Regulations under section 3121 concerning the application of FICA FICA abbr. Federal Insurance Contributions Act Noun 1. FICA - a tax on employees and employers that is used to fund the Social Security system income tax - a personal tax levied on annual income to deferred benefits. Cafeteria/Dependent Care Plans * Final regulations under section 125 and 129, especially with respect to the hardship rules and the definition of insurance. Qualified Plans * Re-issue section 401(a)(4) non-discrimination regulations incorporating changes made by administrative pronouncements during 1992. * Re-issue section 414(r) separate line of business regulations. * *Revenue procedure to simplify data collection for purposes of demonstrating compliance under various nondiscrimination non·dis·crim·i·na·tion n. 1. Absence of discrimination. 2. The practice or policy of refraining from discrimination. non regulations. * Revenue procedure expanding determination letter program to include plans utilizing separate lines of business. "B" GROUP Qualified Plans * Revenue ruling to clarify the exception for collectively bargained VEBAs under the deduction limitations of section 419A with respect to funding post-retirement health benefits. Miscellaneous * Guidance concerning leased employees. "C" GROUP Qualified Plans * Guidance on deductibility under section 404(k) of dividends paid with respect to employer stock that are used to repay ESOP ESOP See: Employee Stock Ownership Plan ESOP See Employee Stock Ownership Plan (ESOP). notes. * Guidance on "age-weighted" defined contribution plans. Foreign Pension Assets * Proposed regulations under section 404A relating to deduction for certain foreign deferred compensation plans. Miscellaneous "A" GROUP Gasoline Excise Tax Excise Tax 1. An indirect tax charged on the sale of a particular good. 2. A penalty tax applied to ineligible transactions in retirement accounts. This penalty is assessed by and paid to the IRS. Notes: 1. * Final regulations under section 4081, et seq et seq. (et seek) n. abbreviation for the Latin phrase et sequentes meaning "and the following." It is commonly used by lawyers to include numbered lists, pages or sections after the first number is stated, as in "the rules of the road are found in Vehicle Code . * *Proposed regulations on the registration and information reporting requirements. "B" GROUP Miscellaneous * *Final regulations on general procedural issues relating to excise taxes excise taxes, governmental levies on specific goods produced and consumed inside a country. They differ from tariffs, which usually apply only to foreign-made goods, and from sales taxes, which typically apply to all commodities other than those specifically exempted. . * *Proposed regulations under section 4682(d)(3) on exports of ozone-depleting chemicals. * *Final regulations under section 149(e) on information reporting for tax-exempt bonds. |
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