February 2020 / United States

February 3 2020

IRS announces next step on abusive micro-captive insurance transactions

The US Internal Revenue Service (IRS) has announced the overwhelming acceptance of a time-limited settlement offer made to certain taxpayers under audit who participated in abusive micro-captive insurance transactions. The IRS has also announced the establishment of 12 new examination teams that are expected to open audits related to thousands of taxpayers in coming months. The announcement was made in an IRS News Release (IR-2020-26) dated 31 January 2020. The IRS states that almost 80% of taxpayers who received settlement offer letters elected to accept the settlement terms, which required substantial concession of the income tax benefits claimed by the taxpayer, together with appropriate penalties. In addition, the IRS is establishing 12 new examination teams that will tackle abusive micro-captive insurance transactions and other similar abusive transactions. Potential civil outcomes can include full disallowance of claimed captive insurance deductions, inclusion of income by the captive entity, and imposition of all applicable penalties. The IRS reminds taxpayers and advisors that disclosure of participation in micro-captive insurance transactions is required with the IRS Office of Tax Shelter Analysis under IRS Notice 2016-66
February 5 2020

Tax administration updates FAQs on general FATCA issues

In a newsletter of 4 February 2020, the Liechtenstein tax administration announced that it had released updated frequently asked questions (FAQs) on the Foreign Account Tax Compliance Act (FATCA) under the heading of FACTA-AQs. The additions, among other things, address:
  • the validity of IRS forms and "Similar Agreed Forms";
  • the mandatory collection of US tax identification numbers for reporting periods from 2020; and
  • obtaining self-disclosure data on discretionary distributions.
February 17 2020

Corrections issued for final regulations on transfers of appreciated property to partnerships with related foreign partners

The US Treasury Department and the US Internal Revenue Service (IRS) have issued two documents (2020-02653 and 2020-02654) to correct the final regulations (TD 9891) that were published in the Federal Register on 23 January 2020 to provide guidance on transfers of appreciated property by US persons to partnerships with foreign partners that are related to the transferor. The correcting documents are scheduled to be published in the Federal Register on 18 February 2020. The correcting documents are effective from 18 February 2020 and applicable from 23 January 2020.