LB&I produces examiner’s overview of check-the-box rules
The IRS Large Business and International division (LB&I) provided guidance to its auditors on choice-of-entity issues and related matters under the entity classification election regulations of Regs. Secs. 301.7701-1 through 301.7701-3 (the "check the box" rules). The 20-page resource, which covers both domestic and foreign entities, is available on theirs.gov website via irs.gov.
Guidelines issued for advising private foundations on grants
In Rev. Proc. 2017-53, the IRS issued guidelines that qualified tax practitioners may use for preparing written advice on which a private foundation (or a sponsoring organization of a donor-advised fund) ordinarily may rely in making a good-faith determination that a grantee is a qualifying public charity, particularly foreign grantees for which a private foundation may make an equivalency determination that the foreign grantee is a qualifying public charity described in Sec. 501(c)(3) despite its lack of a determination letter from the IRS recognizing it as tax-exempt. The guidance reflects changes to the equivalency determination final regulations published in 2015 (T.D. 9740), as well as changes to the public support tests for certain organizations made by final regulations published in 2011 (T.D. 9549).
LB&I rolls out a second batch of compliance campaigns
The IRS LB&I division augmented its audit strategy by announcing on irs.gov 11 compliance campaigns in November 2017 it would conduct (announcement available at irs.gov, in addition to 13 it identified in January 2017 (see initial rollout announcement at irs.gov. The 11 latest campaigns are:
- Verifying withholding under Chapters 3 and 4 at the source with respect to refund claims on Form 1120-F, U.S. Income Tax Return of a Foreign Corporation;
- Taxpayer noncompliance involving accounts identified in the Justice Department's Swiss Bank Program;
- Foreign earned income exclusion claims;
- Matching withholding credits claimed on Form 1040NR, Nonresident Alien Income Tax Return, with income reported on Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding;
- Qualified expenses for the (former) Sec. 45O agricultural chemicals security credit;
- Recognition of cancellation-of-debt income from reacquisition of debt instruments deferred from 2009 and 2010;
- Energy-efficient commercial building deduction (Sec. 179D);
- Corporate direct foreign tax credit (Sec. 901);
- Sec. 956 avoidance by controlled foreign corporations making loans to U.S. parents;
- Improper treatment of various economic development incentive tax credits and grants; and
- Erroneous computation of the credit limitation on Form 1116, Foreign Tax Credit (Individual, Estate, or Trust).