The IRS and U.S. Treasury Department on October 20, 2017, released the 2017-2018 priority guidance plan. The priority guidance plan (referred to by some as the “IRS business plan”) contains guidance projects that the tax authorities “hope to complete” during the 12-month period from July 1, 2017, through June 30, 2018 (the plan year).
The 2017-2018 priority guidance plan [PDF 301 KB] has eliminated from the previous IRS business plan, all but a few insurance initiatives.
The 2016-2017 priority guidance plan [PDF 160 KB], released in August 2016, included the following insurance-specific items:
The 2017-2018 priority guidance plan includes only a few insurance-specific items.
Under the subheading “Insurance Companies and Products” are the following items:
In addition, part 2 of the 2017-2018 business plan describes certain projects that have been identified as “burden reducing” and that the IRS believes can be completed in the 8½ months remaining in the plan year, with additional burden reduction projects possibly to be added. This part of the business plan includes the following insurance projects under the subheading “Near-Term Burden Reduction”:
Under the subheading “International - A. Subpart F/Deferral” is the following item:
Guidance items relating to many insurance initiatives that, for several years, had appeared on the priority guidance plan have been removed from the 2017-2018 pan, thereby leaving a narrower listing. This reduced list may be the result of a focus on upcoming tax reform initiatives and planning for anticipated resource needs.
Principle-based reserving (PBR) remains on the 2017-2018 priority guidance plan and is also included on the IRS issues-based compliance campaign. Life insurance companies will continue to evaluate their insurance tax reserves calculations to allow for an orderly transition and accurate assessment of related tax issues as PBR becomes mandatory on January 1, 2020.
It is also not surprising that guidance under section 954(i) is anticipated. Several private letter rulings have been released in the past year that approved the utilization of foreign statement reserves as the basis for determining foreign personal holding company income. See, for example, PLR 201637005 (June 8, 2016); PLR 201718020 (Feb. 9, 2017); PLR 201739009 (June 30, 2017).
For more information, contact a tax professional with KPMG’s Washington National Tax practice:
Sheryl Flum | +1 (202) 533-3394 | firstname.lastname@example.org
Fred Campbell-Mohn | +1 (212) 954-8316 | email@example.com
Liz Petrie | +1 (202) 533-3125 | firstname.lastname@example.org
Rob Nelson | +1 (312) 665-6457 | email@example.com
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