The ambitious Priority Guidance Plan, issued by the US Treasury Department's Office of Tax Policy and the Internal Revenue Service (IRS) on November 24, includes 315 items on which the IRS will issue final regulations, proposed regulations, or guidance between July 2009 and June 2010.
The plan is published annually to concentrate government resources in the coming fiscal year on important activities for taxpayers and to clarify ambiguities in tax law. The IRS solicited feedback from industry groups, taxpayers, and tax professionals to determine which tax items warranted further attention and legal guidance. The plan provides clarification in areas affecting individuals, corporations, and charities, on topics including tax accounting, general corporate tax issues, international transactions, and employee benefit plans.
The tax authorities list eight projects under the heading of "International Issues". International taxpayers and practitioners can expect to receive guidance on issues such as subpart F and deferral including tiered investments and passive foreign investment companies; inbound transactions including section 1441 on qualified intermediaries and other withholding issues; outbound transactions including repatriation transactions; foreign tax credits including the treatment of foreign and domestic losses; treaties; and sourcing and expense allocation.
The plan will also treat matters affecting the insurance industry, such as the tax treatment of a partial exchange of an annuity contract and the determination of a company's share of the net investment income of a life insurance company under section 812 of the Internal Revenue Code. The IRS has also indicated that it will issue the final regulations on exchange of property for an annuity contract.
The document also spells out a number of projects relevant to financial institutions and products. The IRS will issue guidance on issues including distressed debt, prepaid forward contracts, and bank investment subsidiaries. Taxpayers can also anticipate guidance on issues that have arisen in this economic environment, including final regulations under section 860G addressing modifications of commercial mortgages and clarification on whether a deterioration in the financial condition of the issuer is taken into account to determine whether a modified debt instrument is debt or equity under section 1.1001-3.
Treasury and the IRS will update the plan during the year to highlight additional projects that may arise.
