Daily Tax Update - March 16, 2015: IRS Issues Final Rules On Excepted Benefits

IRS Issues Final Rules on Excepted Benefits:  Today the IRS issued TD 9714, which contains final regulations that amend the regulations regarding excepted benefits under the Employee Retirement Income Security Act of 1974, the Internal Revenue Code, and the Public Health Service Act to specify requirements for limited wraparound coverage to qualify as an excepted benefit.  

In 2014 the IRS proposed regulations under which limited benefits provided through a group health plan that wrap around either (i) eligible individual health insurance, or (ii) coverage under a Multi-State Plan (collectively referred to as “limited wraparound coverage”) could constitute excepted benefits, if certain requirements were met.  The preamble to the 2014 proposed regulations acknowledged that in states that elect to establish a Basic Health Program (BHP), certain low-income individuals who would otherwise qualify for a tax credit to obtain a qualified health plan through an exchange would instead be enrolled in coverage through the BHP.  The final rules, among other things, permit limited wraparound coverage of BHP coverage in the same manner as limited wraparound coverage of eligible individual health insurance.

The final rules are effective May 18, 2015.

JCT Issues Policy Report on U.S. Taxation of Cross-Border Income Prior to Senate Hearing:  Today the congressional Joint Committee on Taxation (JCT) released a report summarizing a number of topics related to the U.S. taxation of cross-border income.  The report has been released in advance of public hearing scheduled by the Senate Committee on Finance for March 17 titled “Building a Competitive U.S. International Tax System.”  Among the policy issues discussed in the report are the competitiveness of the U.S. tax system, the economic distortions arising from deferral, the shifting of income and business operations away from the United States, the tax incentive to locate deductions in the United States, and inversions.

FinCEN Releases Advisory on the FATF-Identified Jurisdictions With AML/CFT Deficiencies:  Today FinCEN released an advisory to financial institutions regarding the Financial Action Task Force’s (FATF) updated list of jurisdictions with strategic anti-money laundering/counter-terrorist financing (AML/CFT) deficiencies.  The FATF has recognized that Indonesia has made progress in substantially or largely addressing its FATF action plan, and has consequently removed Indonesia from the "FATF Public Statement" and included it in its “Improving Global AML/CFT Compliance: On-going Process" document. Additionally, due to their significant progress in establishing the legal and regulatory framework to addressing all or nearly all of their strategic technical AML/CFT deficiencies on a technical level, Albania, Cambodia, Kuwait, Namibia, Nicaragua, Pakistan, and Zimbabwe have been removed from the FATF listing and monitoring process.

IRS Releases Guidance on United States and Area Median Gross Income Figures: Today the IRS released Revenue Procedure 2015-23 which contains guidance with respect to the United States and area median gross figures that are to be used by issuers of qualified mortgage bonds, as defined in Section 143(a), and issuers of mortgage credit certificates, as defined in Section 25(c), in computing the income requirements described in Section 143(f).