Comments on IRS's 1993 Business Plan.
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 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 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.
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 matches
a name/TIN combination in the IRS's records.
Rev. Proc. 91-59
* Guidance on record retention agreements.
* Guidance on electronic data interchange.
* 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.
* *Proposed regulations under section 6611(b)(1) on
the erroneous allowance of interest on overpayments
credited against certain underpayments.
Revision of Form 5471.
* Computerization of the interest calculation on deficiencies/overassessments
and provision of a copy to
Reorganization of Foreign Corporations
* Final regulations under section 367(a) and (b).
Transfer Pricing Issues
* Guidance on the "reasonable cause exception" under
* *Final regulations.
Foreign Currency Issues
* Revenue procedure on section 988 advance rulings.
* *Final section 985 regulations involving DASTM.
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 the
transition rules for earnings and profits of foreign
* Final regulations under section 964 on the GAAP
* *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).
Foreign tax credit
* *Proposed regulations under section 904(i) limiting
the use of deconsolidations of corporations to avoid
foreign tax credit limitations.
* *Proposed regulations under section 898 determining
the required taxable year of certain foreign corporations.
* *Final regulations under section 954 containing subpart
* *Proposed regulations under section 163(j) involving
the guaranty 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.
* *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
* *Proposed interest regulations under section 864(e)
on hedging and interest equivalents, integrated financial
transactions, and nonrecourse debt.
* *Final regulations under section 864(e).
* Amendment of section 1502 regulations to permit
aggregation of members of a consolidated group for
purposes of section 902.
Foreign Sales Corporations
* Safe harbor rule for underpayment of estimated taxes
by a FSC where estimated taxes are based on 1.83
percent of foreign trading gross receipts.
* Final regulations under sections 923-927.
* *Proposed regulations relating to the definition of a
bank for purposes of the portfolio interest exemption.
* Guidance on revocation of an existing election under
section 1504(d) to treat contiguous country corporations
as domestic corporations.
* *Proposed regulations under section 6503(k) concerning
Section 162: Indopco
* Application to environmental clean-up expenditures,
repairs and maintenance costs, and other recurring
* 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
* Development of an elective, simplified method based
on historic results of each taxpayer under the uniform
* *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 Shrinkage: guidance on the timing of a
deduction where physical count is not taken on yearend
* Inventory Methods: resolution of conflicts in how to
apply the components-of-cost method.
* Proper treatment of "shelving allowances."
Alternative Minimum Tax
* *Proposed regulations on application of AMT to consolidated
* *Final regulations under Treas. Reg. [sections] 1.56(g)-1 simplifying
inventory computations for purposes of adjusted
current earnings and alternative minimum
* *Final regulations under sections 382 and 1502 relating
primarily to limitations on net operating losses of
consolidated and controlled groups.
* *Proposed regulations revising the rules for intercompany
transactions and distributions in consolidated
* *Final regulations on the option rules of section
* 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.
* Clarification of the application of Arkansas Best.
* *Guidance under section 174 on the definition of research
and experimental expenditures.
* Guidance under section 41 on the credit for increasing
* Section 460 regulations.
* Final section 338 regulations.
* 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
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
* Regulations on the conditions and steps necessary to
make an election pursuant to section 336(e).
Alternative Minimum Tax
* Duplication of noninventory installment sales in both
ACE and BURP.
* *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
Insurance Companies and Products
* *Final regulations under section 846 on discounted
* *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 to pass through to downstream customers
may accrue the obligation to match the income, even
though economic performance may not have occurred.
* Guidance on how much depreciation is allowable in
the year of acquisition for assets acquired pursuant
to section 338 in ACRS years -- full year or part year.
* Regulations on normalization of utility consolidated
Health Maintenance Organizations
* Clarification of the treatment of advance premiums.
* Application of section 461(h) and Subchapter L to
Definition of Wages
* Regulations under section 3121 concerning the application
of FICA 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.
* 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
* Revenue procedure expanding determination letter
program to include plans utilizing separate lines of
* Revenue ruling to clarify the exception for collectively
bargained VEBAs under the deduction limitations
of section 419A with respect to funding post-retirement
* Guidance concerning leased employees.
* Guidance on deductibility under section 404(k) of
dividends paid with respect to employer stock that
are used to repay ESOP notes.
* Guidance on "age-weighted" defined contribution
Foreign Pension Assets
* Proposed regulations under section 404A relating to
deduction for certain foreign deferred compensation
Gasoline Excise Tax
* Final regulations under section 4081, et seq.
* *Proposed regulations on the registration and information
* *Final regulations on general procedural issues relating
to excise taxes.
* *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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|Date:||Jan 1, 1993|
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