close
Share with your friends

Notice 2019-33: Future guidance on tax reserves used by public utilities

Notice 2019-33: Tax reserves used by public utilities

The IRS today released an advance version of Notice 2019-33 announcing that the IRS and Treasury Department intend to issue guidance under section 168 to clarify the normalization requirements for excess tax reserves that result from the reduction of the corporate tax rate by the 2017 tax law (Pub. L. No. 115-97, the law that is commonly referred to as the “Tax Cuts and Jobs Act” (TCJA)).

1000

Related content

Notice 2019-33 [PDF 37 KB] includes a request for comments about the ratemaking issues that have arisen (or are anticipated) because of the corporate tax rate reduction and other requirements of the 2017 tax law.

Normalization

Notice 2019-33 includes an explanation of “normalization”—the system of accounting used by regulated public utilities to reconcile the tax treatment of accelerated depreciation of public utility assets with their regulatory treatment.

Also, Notice 2019-33 explains two other factors affecting public utilities:

  • The 2017 tax law reduction of the corporate income tax rate—from 35% to 21% for tax years beginning after December 31, 2017
  • Accompanying but uncodified normalization requirements—TCJA Section 13001(d))—as well as information in the legislative history (Conference Report) that “adds more clarification about the normalization rules”

Request for comments

The IRS notice requests comments on issues to be addressed in proposed guidance that would be issued to clarify the normalization requirements for excess tax reserves resulting from the reduced corporate tax rate and the requirements of TCJA Section 13001(d).

The IRS has requested comments regarding what form of guidance “would be most useful.”

Notice 2019-33 sets out seven specific issues for which comments are being requested. All comments are due by July 29, 2019.

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Want to do business with KPMG?

 

loading image Request for proposal