IRS Releases New Safe Harbors for Its Employee Plans Compliance Resolution System
The IRS released Revenue Procedure 2015-28, 2015-16 IRB, April 2, 2015, which can be found here, relating to the Employee Plans Compliance Resolution System (EPCRS). EPCRS sets forth a comprehensive system of correction programs for sponsors of retirement plans that are intended to satisfy the requirements of Sections 401(a), 403(a), 403(b), 408(k) or 408(p), but have failed to meet those requirements for a period of time. The Revenue Procedure modifies the EPCRS by providing for: (a) new safe harbor EPCRS correction methods relating to automatic contribution features (including automatic enrollment and automatic escalation of elective deferrals) in plans described in Section 401(k) and Section 403(b), and (b) special safe harbor correction methods for plans (including those with automatic contribution features) that have failures that are of limited duration and involve elective deferrals.
Final Regulations Issued on Stock-Based Compensation for Purposes of $1 Million Limit on Executive Pay
The IRS issued final regulations, which can be found here, relating to the deduction limitation for certain employee compensation in excess of $1 million under the Code. The regulations: (a) liberalize a rule in proposed regulations relating to an exception to the $1 million limit for qualified performance-based compensation attributable to stock options and stock appreciation rights and (b) liberalize the effective date of a change to another qualified performance-based, stock-based compensation rule that applies to non-publicly held corporations that become publicly held.
IRS Releases Final Regulations and a Revenue Procedure on Consolidated Group Agent
The IRS issued final regulations, which can be found here, providing guidance on which entity acts as the agent for an affiliated group of corporations that files a consolidated return. The IRS issued Revenue Procedure 2015-26, 2015-15 IRB, which can be found here, contemporaneously with the issuance of the final regulations. The Revenue Procedure provides guidance on identifying an agent under the final regulations.
U.S. Tax Court Prohibits IRS from Using Federal Law for Purposes of Transferee Liability Rules
In William Scott Stuart, Jr., Transferee, et al., (2015) 144 TC No. 12, which can be found here, the U.S. Tax Court found that the IRS could not use federal law (the federal substance over form doctrine) to recharacterize a transaction for purposes of applying transferee liability rules under Section 6901 (section references are to the Internal Revenue Code (the Code)). Under Section 6901, transferee liability applies if there is a basis under state law for finding the transferee liable for another taxpayer's tax. Despite the rejection of the IRS's approach under federal tax law, the Tax Court held that transferee liability was established under Nebraska law.
IRS Releases Audit Technique Guide (ATG) on Foreclosure
The IRS released an ATG on foreclosure, which can be found here. The ATG covers many nuances of foreclosure including the tax consequences of foreclosure of properties with nonrecourse or recourse mortgages (e.g., the amount, nature and timing of income or gain or loss).