What to Expect from the IRS

The Treasury Department sets its tax project agenda for the next year and publishes a list of 264 action items.
Marie LeoneAugust 29, 2006

Wondering whether the Internal Revenue Service will change withholding rules governing poker tournaments? Or perhaps you are more concerned about when new guidance on vendor allowances will be issued? In either case, you won’t have to wait long for an answer, says the IRS.

On August 15, the Department of the Treasury released its 2006-2007 Priority Guidance Plan, a list of 264 tax projects slated to be completed during the next 12 months. While the list usually grows to keep pace with new IRS or taxpayer concerns, the number of projects scheduled to receive attention this year is “nothing out of the ordinary” in terms of volume, says Treasury spokesman Sean Kevelighan.

Projects of interest to corporate tax departments span a wide range of topics. For instance, the list includes: temporary regulations to facilitate electronic filing; guidelines for estimating stock basis in tax-free reorganizations; guidance on mergers involving foreign corporations; guidance on the exemption of certain investment income of foreign governments; and proposed regulations regarding unrealized receivables and inventory items of a partnership.

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Employee benefit projects — there are 37 of them — also run the gamut, from guidance on split-dollar life insurance and health savings accounts, to final regulations on synthetic equity and other issues relating to ESOPs (employee share ownership program).

Last year the list was updated and republished to provide additional guidance related to hurricane relief and the global tax shelter settlement. This year, it is likely to be updated to include the effect that the new pension law will have on taxes related to employee benefits, although no projects addressing the Pension Protection Act of 2006 has been scheduled yet.

The 2006-2007 Plan contains 15 broad sections covering such topics as corporations and their shareholders; tax administration; employee benefits; tax accounting; and S corporations. The tax administration section is loaded up with the most projects, boasting 45, followed by employee benefits and international issues which each list 37 projects.

Four final regulations are listed within the tax administration section — the section that also includes a project on the revenue procedure regarding withholding rules applicable to poker tournaments. The quartet of final regs relate to collection due process, extending the statute of limitations on collection, estimated tax payments made by corporations, and tax shelter standards for covered opinions and other written advice.

In all, 55 projects on the full list are identified as final regulations. The other projects focus on guidance, revisions, and proposed regulations. The IRS agenda also includes an appendix with 87 more routine guidance projects published on a regular basis, such as the monthly Bureau of Labor Statistics price indexes that department stores may use in valuing inventory.

The litany of projects also include industry specific subjects, such as guidance on when to treat costs of qualified film and television productions as an expense; revised rules for nuclear decommissioning costs; income averaging for fisherman; the replacement period for livestock sold because of drought, flood, or other weather related conditions, guidance on political activities for non-profit organizations; and capital costs deductions incurred by a refiner when complying with environmental regulations.