Overview
WTO Finds US Violated International Trade Rules: In a report issued today, the World Trade Organization (WTO) found that a state aerospace tax break disadvantaged a European competitor, Airbus Group SE, and did not adhere to the WTO agreement on subsidies and countervailing measures. The report found that Washington state’s $8.7 billion incentive for establishing certain production and assembly lines in the state was an illegal subsidy. The WTO may authorize the EU to impose retaliatory trade measures.
The US or the EU may appeal the ruling at any time in the next 30 days.
IRS Issues Guidance for Homeowners in the Principal Reduction Modification Program: Today, the IRS issued Notice 2016-72 regarding exclusion from gross income of qualified principal residence indebtedness (QPRI) under the Principal Reduction Modification Program (PRMP). Under the Notice, QPRI may be excluded from gross income if it is discharged “subject to an arrangement that is entered into and evidenced in writing before January 1, 2017” within the meaning of § 108(a)(1)(E)(ii). According to today’s guidance, such an arrangement requires:
- The mortgage servicer to send the homeowner a notice in conjunction with a written trial period plan (TPP) or, for a homeowner in an active TPP, a separate notice in a written opt-out letter outlining the terms and conditions of the permanent mortgage loan modification following completion of the active TPP
- The homeowner to satisfy all of the trial period and PRMP conditions
- The homeowner and servicer to enter into a permanent modification of the mortgage loan on or after January 1, 2017
The PRMP offers mortgage loan modifications to certain seriously delinquent, underwater homeowners still struggling in the aftermath of the financial crisis whose loans are owned or guaranteed by Fannie Mae or Freddie Mac. This guidance also applies to a TPP under the Home Affordable Modification Program® (HAMP®).