RECENT NEWS AND TAX GUIDANCE
FATCA: proposed regulations REG-121-647-10 under I.R.C. Chapter 4 (Foreign Account Tax
Compliance Act) (February 8, 2012)
REG-115809-11, Longevity Annuity Contracts, and REG-110980-10, Modifications to Minimum
Present Value Requirements for Partial Annuity Distribution Options Under Defined Benefit Pension
Plans, proposed regulations (February 3, 2012)
Rev. Rul. 2012-3, application of Qualified Joint and Survivor Annuity rules (February 2, 2012)
Rev. Rul. 2012-4, annuity rollover (February 2, 2012)
TD 9572 and REG-120282-10, temporary and proposed regulations for withholding tax on dividend
equivalents from U.S. sources paid to nonresident aliens and foreign corporations, including definitions
of specified notional principal contracts included within these withholding rules (January 23, 2012)
TD 9573, regulations conforming the reg. sec. 1.104-1 damages exclusion to provisions of 1996
federal legislation and eliminate references to "tort or tort type rights" (January 23, 2012)
Notice 2012-11, relief in information reporting of corporate actions affecting cost basis (January 13,
2012)
Letter Ruling 201201003, benefits and premiums under a certain unemployment insurance plan not
subject to employment taxes (January 9, 2012)
Pub 1179 for 2011 (Rev. Proc. 2011-61) IRS specifications for substitute statements to recipients of
Forms 1099, 1098, etc., including new rules for 1099-B substitute statements and composite
statements (December 27, 2011)
2012 standard business mileage rate is 55.5 cents per mile; Notice 2012-1
TD 9561 and REG-130777-11, new regulations for tax treatment of Treasury Inflation-Protected
Securities which have more than a de minimis amount of premium. (December 2, 2012)
Notice 1036 for 2012, IRS announcement of the percentage method withholding tables for 2012.
(December 2, 2012)
REG-102988-11, proposed regulations for basis reporting and transfer statements for options and
debt instruments. (November 25, 2011)
I.R.C section 3402(t) has been repealed; this was the requirement for government entities to withhold
3% from payments for services and property. (Pub. L. 112-56, November 18, 2011)
Rev Proc 2011-50, specifications for filing IRS Form 1042-S electronically (will be published later as
the 2011 Publication 1187) (October 28, 2011)
Notice 2011-88 postpones the federal backup withholding requirement on section 6050W payments
(Form 1099-K reportable payments) for one year, applying to payments made after December 31,
2012. Notice 2011-89 provides relief from penalties on incorrect Form 1099-K filing and payee
statements for 2011, provided that the filer has made a good-faith effort to accurately file the returns
and furnish the payee statements. (October 27, 2011)
Notice 2011-81, per diem amounts for lodging, meal and incidental expenses on or after October 1,
2011.
Rev. Proc. 2011-47, rules for using per diem allowances as substantiation for lodging, meal and
incidental business travel expenses (September 26, 2011)
Notice 2011-78, Section 6050W (Form 1099-K) reporting not applicable to insurance companies
administering self-insured arrangements, ASOs or ASC plans (September 22, 2011)
REG-111283-11, proposed regulations on swap exclusion for Section 1256 contracts (under Code
amendments of the Dodd-Frank Act) (September 16, 2011)
Notice 2011-72, Tax Treatment of Employer-Provided Cell Phones, new IRS guidance on the
conditions under which the value of the use of an employer-provided cell phone is excludable from an
employee's income (September 14, 2011)
Notice 2011-71, Documentation requirements under section 6050W for U.S. payers making payment
outside the U.S. to an offshore account (August 18, 2011)
Notice 2011-68, Long-term care insurance in annuity and life insurance contracts (charges against
cash value, section 1035 exchanges, and information reporting) (August 11, 2011)
Notice 2011-53 REVISED July 25 - Phased implementation of certain reporting, withholding, and
registration requirements of FATCA (Foreign Account Tax Compliance Act, Chapter 4 of the Internal
Revenue Code), notice revised by the IRS and reissued July 25 adding specific applicability to
payments made to non-financial foreign entities, as well as payments to foreign financial institutions.
IRS FILING AND RECIPIENT STATEMENTS
2011 Publication 1220, specifications and instructions for IRS electronic filing of all the Forms 1098,
1099, 5498, and W-2G, 3921, 3922 and 8935 (November 3, 2011)
T.D. 9543, Final regulations on proof of timely mailing for timely filing (August 22, 2011)
Rev. Proc. 2011-39, substitute Forms 941 (July 22, 2011)
NEW FORM W-9 - Start using this new version now for soliciting payee Name and Tax ID Number. Also
new Instructions for the Requester of Form W-9.
Rev. Proc. 2010-33, specifications and instructions for filing Form 1042-S electronically
Announcement 2009-70, Five important changes to the Pub 1220 specifications, including clarification
that "incorrect payee address" does not require filing a corrected 1099 with the IRS (October 9, 2009)
Pub 1220, Rev. Proc. 2009-30, IRS electronic filing specifications for TY 2009 filing
Rev. Proc. 2010-26, the first release of IRS electronic filing specifications and instructions for 2010
reporting (will be republished later as Pub. 1220) (July 22, 2010)
FINANCIAL INDUSTRY
Letter Ruling 201139003, tax treatment and information reporting for mortgage interest subsidies
PLR 201105016, treatment of certain consent payments in a modification of note indentures
TD 9538, Modifications of certain derivative contracts (July 22, 2011)
Rev. Proc. 2011-38, New treatment of partial exchange of annuity contract under I.R.C. sections 1035
and 72 (June 28, 2011)
Notice 2011-56, Cost basis reporting interim guidance (June 22, 2011)
Rev. Proc. 2011-35, basis determination for stock acquired in "transferred basis" transactions (June 1,
2011)
Form 1099-B for 2011: revised form and Instructions published (April 1, 2011)
Proposed REG-146097-09 for reporting of bank deposit interest paid to all nonresident alien
individuals who are residents of any foreign country (January 7, 2011)
TD 9513, final regulations relating to modification of debt instruments (January 7, 2011)
REG-131947-10, proposed regulations defining property traded on an established market, for
purposes of determining issue price of a debt instrument (January 7, 2011)
OID Tables: 2010 Final Release pdf (January 20, 2011). Or for txt version, see the IRS posting at
http://www.irs.gov/pub/irs-utl/2010p1212_sect_i-iii_2nd.pdf
T.D. 9508, Fails Charges in Treasury Securities Transactions, new regulations (December 8, 2010)
Notice 2010-84 and related IRS commentary on the new in-plan Roth rollovers (November 24, 2010)
Cost Basis Final Regulations: TD 9504, Final Regulations on reporting basis in securities sales,
including transfer statements, affecting brokers and custodians (October 12, 2010). Also, Notice
2010-67, providing interim relief on the furnishing of transfer statements (October 12, 2010).
Short sale properties: new instructions regarding IRS discharge of property subject to federal tax lien,
in a short sale situation, SBSE-05-1010-054 (October 2010)
Notice 2010-46, new rules and 1042/1042-S requirements for dividend equivalent payments, under
FATCA tax law amendment (May 21, 2010)
FOREIGN PAYEES
Treasury Inspector General report and recommendations regarding the Central Withholding
Agreement program (September 30, 2011)
Letter Ruling 201117006 and Letter Ruling 201117021, no NRA withholding required on certain
interest or gain relating to anticipated tax refunds held in trust in bankruptcy case.
Notice 2011-34, Guidance on FATCA compliance for FFIs (foreign financial institutions) (April 8, 2011)
Outer continental shelf employees and contractors: IRS Field Directive LB&I-4-0211-005 and CCA
201027046
Substantial Presence Test for tax purposes is not applicable to A-2 visa holder, AM2011-001
Foreign Account Tax Compliance Act (FATCA) included in Public Law 111-147; see Technical
Explanation beginning on page 22
Notice 2010-60, FATCA (Foreign Accounts Tax Compliance Act) preliminary guidance on some of the
withholding and reporting issues of FATCA (August 27, 2010)
CCA 201027046, services performed by nonresident aliens on the Outer Continental Shelf
RETIREMENT PLANS AND IRAS
Letter Ruling 201120011, failure to meet "substantially equal period payments" standard (February 11,
2011)
Wrap fees for certain IRA services discussed in Letter Ruling 201104061
Charitable distributions from IRAs: IRS guidance on 1099-R reporting of 2010 charitable distributions
made in January 2011 (January 12, 2011)
Final Regulations under ERISA for disclosures of investment, fee and expense information to 401(k)
plan participants and beneficiaries, RIN 1210-AB07 (October 15, 2010)
PLR 201009012, Canada treaty rate for withholding from RMD on IRA (March 5, 2010)
PURCHASING CARDS, OTHER CREDIT CARDS & THIRD-PARTY SETTLEMENT REPORTING
Form 1099-K and Instructions for Form 1099-K - for 2011 reporting by payment settlement entities
Letter Ruling 201201001, pharmacy benefit management business not a Form 1099-K filer (January 6,
2012)
FAQs furnished by IRS on Form 1099-K reporting and backup withholding, original FAQs and
supplemental FAQs October 28, 2011
Notice 2011-42, threshold for backup withholding on payments by third-party settlement organizations
(rule affecting Form 1099-K reporting, IRC section 6050W compliance) (May 19, 2011)
TD 9496, Final Regulations on information reporting for payments made in settlement of payment card
and third-party network transactions (August 16, 2010)
GENERAL NEWS AFFECTING 1099 REPORTING
Rev. Proc. 2012-13, valuation for personal use of employer-provided vehicles (January 13, 2012)
Letter Ruling 201152005, supplemental private unemployment insurance purchased with after-tax
dollars: are premiums deductible business expenses? are benefits excludable from gross income?
(January 4, 2012)
Rev. Rul. 2011-26, "North American area" list of locations for which business convention/meeting
expenses may be allowed without special justification of the location (November 4, 2011)
IRS Commissioner Shulman, speech discussing vision of an expanded role for tax information reporting
New wording for letter to payee on Second B Notice (new version of IRS Pub 1281)
Chief Counsel Memorandum 201120021, tool plan "reimbursement" that does not qualify as an
accountable plan (March 18, 2011)
Legislative proposals relating to the President's fiscal 2012 budget, as explained in the Treasury
Department Green Book (February 14, 2011)
Notice 2010-59, New rules effective January 1, 2011, for treatment of over-the-counter drug costs in
flexible spending arrangements, health reimbursement arrangements, Health Savings Accounts and
Archer Medical Savings Accounts (September 3, 2010) and Rev. Rul. 2010-23 on how these rules
affect employer contributions
Letter rulings released December 10, 2010: 201049027, backup withholding liability and period of
limitations on assessment in relation to backup withholding. 201049028, tax refunds on income
excluded under health professional discharge of indebtedness.
T.D. 9507, new regulations requiring EFT deposit of federal tax deposits, and Notice 2010-87
providing transitional relief on a new rule under which state-specific holidays will not be recognized as
extending deposit deadlines (December 3, 2010)
Increases in information return penalties - enacted as part of the Small Business Jobs Act of 2010,
Pub. L. 111-240 (September 27, 2010)
Rev. Proc. 2010-16 IRS definition of "last known address" (April 16, 2010)
COURT CASES
Feder v Commissioner, U.S. Tax Court, TC Memo 2012-10 (January 10, 2012)
Judicial Watch Inc v S,ocial Security Administration, U.S. District Court, District of Columbia, CIV.
06-2034 (August 1, 2011)
Liotti v Commissioner, U.S. Tax Court, T.C. Summary Opinion 2011-73 (June 20, 2011) - 1099-C for
credit card debt settled at reduced amount
Goosen v. Commissioner, U.S. Tax Court, 136 T.C. No. 27 (June 9, 2011) - income sourcing; royalties
versus services; eligibility for tax treaty benefit
Container Corp. v. Commissioner, 134 T.C. No. 5 (February 17, 2010) - guaranty fee for debt was
analogous to a service, so income sourced where the service was performed
TAX TREATY CHANGES
Notice 2011-64, U.S. income tax treaties that meet the requirements of section 1(h)(11)(C)(i)(II) for
"qualified foreign corporation" dividends at reduced tax rates (August 19, 2011)
China, Agreement on interpretation of Article 19 for professors and teachers (February 2011)
Nov 28 comments on REG-102988-11
District of Columbia OTR Tax Notice 2011-9
FATCA: proposed regulations REG-121-647-10 under I.R.C. Chapter 4 (Foreign Account Tax
Compliance Act) (February 8, 2012)
REG-115809-11, Longevity Annuity Contracts, and REG-110980-10, Modifications to Minimum
Present Value Requirements for Partial Annuity Distribution Options Under Defined Benefit Pension
Plans, proposed regulations (February 3, 2012)
Rev. Rul. 2012-3, application of Qualified Joint and Survivor Annuity rules (February 2, 2012)
Rev. Rul. 2012-4, annuity rollover (February 2, 2012)
TD 9572 and REG-120282-10, temporary and proposed regulations for withholding tax on dividend
equivalents from U.S. sources paid to nonresident aliens and foreign corporations, including definitions
of specified notional principal contracts included within these withholding rules (January 23, 2012)
TD 9573, regulations conforming the reg. sec. 1.104-1 damages exclusion to provisions of 1996
federal legislation and eliminate references to "tort or tort type rights" (January 23, 2012)
Notice 2012-11, relief in information reporting of corporate actions affecting cost basis (January 13,
2012)
Letter Ruling 201201003, benefits and premiums under a certain unemployment insurance plan not
subject to employment taxes (January 9, 2012)
Pub 1179 for 2011 (Rev. Proc. 2011-61) IRS specifications for substitute statements to recipients of
Forms 1099, 1098, etc., including new rules for 1099-B substitute statements and composite
statements (December 27, 2011)
2012 standard business mileage rate is 55.5 cents per mile; Notice 2012-1
TD 9561 and REG-130777-11, new regulations for tax treatment of Treasury Inflation-Protected
Securities which have more than a de minimis amount of premium. (December 2, 2012)
Notice 1036 for 2012, IRS announcement of the percentage method withholding tables for 2012.
(December 2, 2012)
REG-102988-11, proposed regulations for basis reporting and transfer statements for options and
debt instruments. (November 25, 2011)
I.R.C section 3402(t) has been repealed; this was the requirement for government entities to withhold
3% from payments for services and property. (Pub. L. 112-56, November 18, 2011)
Rev Proc 2011-50, specifications for filing IRS Form 1042-S electronically (will be published later as
the 2011 Publication 1187) (October 28, 2011)
Notice 2011-88 postpones the federal backup withholding requirement on section 6050W payments
(Form 1099-K reportable payments) for one year, applying to payments made after December 31,
2012. Notice 2011-89 provides relief from penalties on incorrect Form 1099-K filing and payee
statements for 2011, provided that the filer has made a good-faith effort to accurately file the returns
and furnish the payee statements. (October 27, 2011)
Notice 2011-81, per diem amounts for lodging, meal and incidental expenses on or after October 1,
2011.
Rev. Proc. 2011-47, rules for using per diem allowances as substantiation for lodging, meal and
incidental business travel expenses (September 26, 2011)
Notice 2011-78, Section 6050W (Form 1099-K) reporting not applicable to insurance companies
administering self-insured arrangements, ASOs or ASC plans (September 22, 2011)
REG-111283-11, proposed regulations on swap exclusion for Section 1256 contracts (under Code
amendments of the Dodd-Frank Act) (September 16, 2011)
Notice 2011-72, Tax Treatment of Employer-Provided Cell Phones, new IRS guidance on the
conditions under which the value of the use of an employer-provided cell phone is excludable from an
employee's income (September 14, 2011)
Notice 2011-71, Documentation requirements under section 6050W for U.S. payers making payment
outside the U.S. to an offshore account (August 18, 2011)
Notice 2011-68, Long-term care insurance in annuity and life insurance contracts (charges against
cash value, section 1035 exchanges, and information reporting) (August 11, 2011)
Notice 2011-53 REVISED July 25 - Phased implementation of certain reporting, withholding, and
registration requirements of FATCA (Foreign Account Tax Compliance Act, Chapter 4 of the Internal
Revenue Code), notice revised by the IRS and reissued July 25 adding specific applicability to
payments made to non-financial foreign entities, as well as payments to foreign financial institutions.
IRS FILING AND RECIPIENT STATEMENTS
2011 Publication 1220, specifications and instructions for IRS electronic filing of all the Forms 1098,
1099, 5498, and W-2G, 3921, 3922 and 8935 (November 3, 2011)
T.D. 9543, Final regulations on proof of timely mailing for timely filing (August 22, 2011)
Rev. Proc. 2011-39, substitute Forms 941 (July 22, 2011)
NEW FORM W-9 - Start using this new version now for soliciting payee Name and Tax ID Number. Also
new Instructions for the Requester of Form W-9.
Rev. Proc. 2010-33, specifications and instructions for filing Form 1042-S electronically
Announcement 2009-70, Five important changes to the Pub 1220 specifications, including clarification
that "incorrect payee address" does not require filing a corrected 1099 with the IRS (October 9, 2009)
Pub 1220, Rev. Proc. 2009-30, IRS electronic filing specifications for TY 2009 filing
Rev. Proc. 2010-26, the first release of IRS electronic filing specifications and instructions for 2010
reporting (will be republished later as Pub. 1220) (July 22, 2010)
FINANCIAL INDUSTRY
Letter Ruling 201139003, tax treatment and information reporting for mortgage interest subsidies
PLR 201105016, treatment of certain consent payments in a modification of note indentures
TD 9538, Modifications of certain derivative contracts (July 22, 2011)
Rev. Proc. 2011-38, New treatment of partial exchange of annuity contract under I.R.C. sections 1035
and 72 (June 28, 2011)
Notice 2011-56, Cost basis reporting interim guidance (June 22, 2011)
Rev. Proc. 2011-35, basis determination for stock acquired in "transferred basis" transactions (June 1,
2011)
Form 1099-B for 2011: revised form and Instructions published (April 1, 2011)
Proposed REG-146097-09 for reporting of bank deposit interest paid to all nonresident alien
individuals who are residents of any foreign country (January 7, 2011)
TD 9513, final regulations relating to modification of debt instruments (January 7, 2011)
REG-131947-10, proposed regulations defining property traded on an established market, for
purposes of determining issue price of a debt instrument (January 7, 2011)
OID Tables: 2010 Final Release pdf (January 20, 2011). Or for txt version, see the IRS posting at
http://www.irs.gov/pub/irs-utl/2010p1212_sect_i-iii_2nd.pdf
T.D. 9508, Fails Charges in Treasury Securities Transactions, new regulations (December 8, 2010)
Notice 2010-84 and related IRS commentary on the new in-plan Roth rollovers (November 24, 2010)
Cost Basis Final Regulations: TD 9504, Final Regulations on reporting basis in securities sales,
including transfer statements, affecting brokers and custodians (October 12, 2010). Also, Notice
2010-67, providing interim relief on the furnishing of transfer statements (October 12, 2010).
Short sale properties: new instructions regarding IRS discharge of property subject to federal tax lien,
in a short sale situation, SBSE-05-1010-054 (October 2010)
Notice 2010-46, new rules and 1042/1042-S requirements for dividend equivalent payments, under
FATCA tax law amendment (May 21, 2010)
FOREIGN PAYEES
Treasury Inspector General report and recommendations regarding the Central Withholding
Agreement program (September 30, 2011)
Letter Ruling 201117006 and Letter Ruling 201117021, no NRA withholding required on certain
interest or gain relating to anticipated tax refunds held in trust in bankruptcy case.
Notice 2011-34, Guidance on FATCA compliance for FFIs (foreign financial institutions) (April 8, 2011)
Outer continental shelf employees and contractors: IRS Field Directive LB&I-4-0211-005 and CCA
201027046
Substantial Presence Test for tax purposes is not applicable to A-2 visa holder, AM2011-001
Foreign Account Tax Compliance Act (FATCA) included in Public Law 111-147; see Technical
Explanation beginning on page 22
Notice 2010-60, FATCA (Foreign Accounts Tax Compliance Act) preliminary guidance on some of the
withholding and reporting issues of FATCA (August 27, 2010)
CCA 201027046, services performed by nonresident aliens on the Outer Continental Shelf
RETIREMENT PLANS AND IRAS
Letter Ruling 201120011, failure to meet "substantially equal period payments" standard (February 11,
2011)
Wrap fees for certain IRA services discussed in Letter Ruling 201104061
Charitable distributions from IRAs: IRS guidance on 1099-R reporting of 2010 charitable distributions
made in January 2011 (January 12, 2011)
Final Regulations under ERISA for disclosures of investment, fee and expense information to 401(k)
plan participants and beneficiaries, RIN 1210-AB07 (October 15, 2010)
PLR 201009012, Canada treaty rate for withholding from RMD on IRA (March 5, 2010)
PURCHASING CARDS, OTHER CREDIT CARDS & THIRD-PARTY SETTLEMENT REPORTING
Form 1099-K and Instructions for Form 1099-K - for 2011 reporting by payment settlement entities
Letter Ruling 201201001, pharmacy benefit management business not a Form 1099-K filer (January 6,
2012)
FAQs furnished by IRS on Form 1099-K reporting and backup withholding, original FAQs and
supplemental FAQs October 28, 2011
Notice 2011-42, threshold for backup withholding on payments by third-party settlement organizations
(rule affecting Form 1099-K reporting, IRC section 6050W compliance) (May 19, 2011)
TD 9496, Final Regulations on information reporting for payments made in settlement of payment card
and third-party network transactions (August 16, 2010)
GENERAL NEWS AFFECTING 1099 REPORTING
Rev. Proc. 2012-13, valuation for personal use of employer-provided vehicles (January 13, 2012)
Letter Ruling 201152005, supplemental private unemployment insurance purchased with after-tax
dollars: are premiums deductible business expenses? are benefits excludable from gross income?
(January 4, 2012)
Rev. Rul. 2011-26, "North American area" list of locations for which business convention/meeting
expenses may be allowed without special justification of the location (November 4, 2011)
IRS Commissioner Shulman, speech discussing vision of an expanded role for tax information reporting
New wording for letter to payee on Second B Notice (new version of IRS Pub 1281)
Chief Counsel Memorandum 201120021, tool plan "reimbursement" that does not qualify as an
accountable plan (March 18, 2011)
Legislative proposals relating to the President's fiscal 2012 budget, as explained in the Treasury
Department Green Book (February 14, 2011)
Notice 2010-59, New rules effective January 1, 2011, for treatment of over-the-counter drug costs in
flexible spending arrangements, health reimbursement arrangements, Health Savings Accounts and
Archer Medical Savings Accounts (September 3, 2010) and Rev. Rul. 2010-23 on how these rules
affect employer contributions
Letter rulings released December 10, 2010: 201049027, backup withholding liability and period of
limitations on assessment in relation to backup withholding. 201049028, tax refunds on income
excluded under health professional discharge of indebtedness.
T.D. 9507, new regulations requiring EFT deposit of federal tax deposits, and Notice 2010-87
providing transitional relief on a new rule under which state-specific holidays will not be recognized as
extending deposit deadlines (December 3, 2010)
Increases in information return penalties - enacted as part of the Small Business Jobs Act of 2010,
Pub. L. 111-240 (September 27, 2010)
Rev. Proc. 2010-16 IRS definition of "last known address" (April 16, 2010)
COURT CASES
Feder v Commissioner, U.S. Tax Court, TC Memo 2012-10 (January 10, 2012)
Judicial Watch Inc v S,ocial Security Administration, U.S. District Court, District of Columbia, CIV.
06-2034 (August 1, 2011)
Liotti v Commissioner, U.S. Tax Court, T.C. Summary Opinion 2011-73 (June 20, 2011) - 1099-C for
credit card debt settled at reduced amount
Goosen v. Commissioner, U.S. Tax Court, 136 T.C. No. 27 (June 9, 2011) - income sourcing; royalties
versus services; eligibility for tax treaty benefit
Container Corp. v. Commissioner, 134 T.C. No. 5 (February 17, 2010) - guaranty fee for debt was
analogous to a service, so income sourced where the service was performed
TAX TREATY CHANGES
Notice 2011-64, U.S. income tax treaties that meet the requirements of section 1(h)(11)(C)(i)(II) for
"qualified foreign corporation" dividends at reduced tax rates (August 19, 2011)
China, Agreement on interpretation of Article 19 for professors and teachers (February 2011)
Nov 28 comments on REG-102988-11
District of Columbia OTR Tax Notice 2011-9
COKALA Tax Information
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COKALA Tax Information Reporting Solutions, LLC - telephone 734.629.5155
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PO Box 2224, Ann Arbor MI 48105-2224 - fax 734.428.0702
Recent news is posted first. News from earlier
this year is grouped below, by general topic.
this year is grouped below, by general topic.