On July 31, the IRS released its updated priority guidance plan for 2015–2016. The priority guidance plan describes projects the IRS intends to work on actively during 2015 and 2016 but does not place any deadline on the completion of listed projects. The updated plan includes several new projects, updated projects, and carryover projects relevant to tax exempt organizations.
The plan added an item relating to guidance under section 170(e)(3) regarding charitable contributions of inventory. The amount of the deduction for a charitable contribution of inventory (and certain depreciable property) generally is limited to the lesser of the fair market value or the donor’s basis in the property. However, section 170(e)(3) provides an enhanced deduction for contributions of such property if the donated property is used by the donee “solely for the care of the ill, the needy, or infants” and certain other requirements are met. The regulations under section 170(e)(3) have not been updated since 1984, and several statutory changes have been made in the interim.
The plan added an item relating to guidance on qualified contingencies of charitable remainder annuity trusts under section 664. A charitable remainder annuity trust is a tax-exempt trust that provides for payment of a fixed amount at least annually to income beneficiaries with the remaining corpus passing to a charitable organization upon the trust’s termination. A charitable remainder annuity trust generally must terminate after a fixed term (not more than 20 years), upon the death of an income beneficiary, or upon the occurrence of a “qualified contingency.” Rules currently in effect generally have provided trustees with flexibility in terminating charitable remainder annuity trusts early without jeopardizing the trust’s tax-exempt status.
The plan added an item relating to final regulations under section 529A on qualified Achieving a Better Life Experience (ABLE) programs. The ABLE Act of 2014 created tax-advantaged savings programs under section 529A for disability-related expenses of parents with disabled children, generally similar to tax-advantaged college savings plans under section 529. Proposed regulations under section 529A were published on June 22, 2015.
The plan updated an item relating to guidance under section 509(a)(3) supporting organizations to include the issuance of final regulations under section 509(a)(3). In 2009, the IRS issued proposed and temporary regulations relating to supporting organizations. A portion of the 2009 proposed regulations was adopted as final in 2012 without substantive change, but the remainder was reissued as proposed and temporary regulations because the IRS determined that further elaboration was necessary in light of comments received.
The plan also included carryover projects that had been included in the prior year’s plan relating to:
- Revenue procedures updating grantor and contributor reliance criteria under sections 170 and 509
- Revenue procedure to update Revenue Procedure 2011-33 for Exempt Organizations Select Check
- Proposed regulations under section 501(c) relating to political campaign intervention
- Guidance under section 512 regarding methods of allocating expenses relating to dual use facilities
- Guidance under section 4941 regarding a private foundation's investment in a partnership in which disqualified persons are also partners
- Final regulations under sections 4942 and 4945 on reliance standards for making good faith determinations (proposed regulations were published on September 24, 2012)
- Final regulations under section 4944 on program-related investments and other related guidance (proposed regulations were published on April 19, 2012)
- Guidance regarding the excise taxes on donor advised funds and fund management
- Guidance under section 6033 relating to the reporting of contributions
- Final regulations under section 6104(c) (proposed regulations were published on March 15, 2011)
- Final regulations under section 7611 relating to church tax inquiries and examinations (proposed regulations were published on August 5, 2009)
- Final regulations under section 170 regarding charitable contributions (proposed regulations were published on August 7, 2008)
- Regulations under section 170(f)(8) regarding donee substantiation of charitable contributions
- Final regulations under section 1014 regarding uniform basis of charitable remainder trusts (proposed regulations were published on January 17, 2014)
- Regulations under section 457(f) on ineligible plans
- Final regulations under section 512 explaining how to compute unrelated business taxable income of voluntary employees' beneficiary associations described in section 501(c)(9) (proposed regulations published on February 6, 2014)
- Regulations concerning the fractions rule under section 514(c)(9)
- Guidance on the definition of political subdivision under section 103 for purposes of the tax-exempt, tax credit, and direct pay bond provisions
- Revenue procedure that will update Revenue Procedure 97-13 relating to the conditions under which a management contract does not result in private business use under section 141
- Final regulations under section 45D that revise and clarify certain rules relating to recapture of the new markets tax credit as well as other issues (proposed regulations were published August 11, 2008)
- Guidance under section 7701 providing criteria for treating an entity as an integral part of a state, local, or tribal government