IRS Releases 2017-2018 "Business Plan"

On October 20, 2017, the IRS issued its 2017-2018 Priority Guidance Plan (PGP), often referred to as the IRS “Business Plan.” The PGP outlines guidance projects the IRS and Treasury Department hope to complete during the period July 1, 2017, through June 30, 2018.

The plan is divided into four parts:

Part 1 focuses on 2016 regulations identified as “burdensome” pursuant to Executive Order 13789 and spells out the IRS’s intended actions with respect to those regulations. Among other things, the Service will look into:

• Withdrawing controversial proposed regulations under Internal Revenue Code (IRC) Sec. 2704 on liquidation of an interest for estate, gift, and generation-skipping transfer taxes.
• Removing temporary regulations under IRC Sec. 707 concerning treatment of liabilities for disguised sale purposes; and reviewing regulations under Sec. 752 concerning liabilities recognized as recourse partnership liabilities.
• Delaying and removing documentation regulations under Sec. 385 (regarding related party debt); and reviewing other regulations under Sec. 385.
• Modifying regulations under Sec. 367 (regarding treatment of certain transfers of property to foreign corporations).
• Modifying regulations under Sec. 337(d) (regarding certain transfers of property to regulated investment companies and real estate investment trusts).
• Modifying regulations under Sec. 987 (regarding income and currency gain or loss with respect to a Sec. 987 qualified business unit).

Part 2 describes regulations the IRS will consider removing or updating because they are unnecessary, create undue complexity, impose excessive burden, or fail to provide clarity and useful guidance. Examples include:

• Guidance under §871(m), including with respect to non-delta-one transactions.
• Guidance under Chapters 3 and 4, including withholding on gross proceeds and foreign pass-through payments and other withholding matters.
• Regulations under Sec. 1014(f) and Sec. 6035 regarding basis consistency between estates and persons acquiring property from a decedent.
• Guidance under Sec. 170(e)(3) regarding charitable contributions of inventory.

Part 3 describes various implementation projects related to the new statutory partnership audit regime, which takes effect January 1, 2018. The IRS issued and then withdrew proposed regulations on this subject in January 2017 and then reissued proposed regulations in June 2017. The AICPA has urged the Service to delay the new audit regime’s effective date until the end of 2018, citing the relatively short time before the new rules take effect, the fact that final regulations have not yet been issued, and certain gaps in the proposed regulations that will make implementation difficult. 

Part 4 describes specific projects by subject area on which the IRS will focus the balance of its guidance efforts for this plan year. They include a variety of regulations and other guidance related to consolidated returns, corporations and their shareholders, employee benefits, excise taxes, exempt organizations, financial institutions, general tax issues, estate and gift tax issues, insurance, international tax issues, partnerships, tax accounting and administration, and tax-exempt bonds.

To view or download the complete IRS Business Plan, click here.