Daily Tax Update - July 1, 2016: IRS Releases Proposed Changes to QI Agreement

IRS Releases Proposed Changes to QI Agreement:  Today the IRS issued Notice 2016-42 (Notice 2016-42), which sets forth the proposed qualified intermediary (QI) withholding agreement (QI agreement) entered into under Treas. Reg. § 1.1441-1(e)(5).  The QI agreement published in Rev. Proc. 2014-39 expires on December 31.  The revised QI agreement updates the current agreement by providing more detailed procedures regarding how qualified intermediaries satisfy their compliance review obligations and sets out terms and requirements for qualified intermediaries that want to act as qualified derivatives dealers with respect to transactions subject to section 871(m).  The proposed QI agreement, when finalized, would be effective beginning January 1, 2017.  

IRS Releases Corrections to Proposed Regulations Under Section 305(c):  Today the IRS released corrections to proposed regulations published in the Federal Register on April 13.  The proposed regulations would resolve ambiguities concerning the amount and timing of deemed distributions that are or result from adjustments to right to acquire stock.  

IRS Corrects Final and Temporary Regulations Regarding Employment Tax Treatment of Partners in a Partnership That Owns a Disregarded Entity:  The IRS released a correction to final and temporary regulations published in the Federal Register on May 4.  The final and temporary regulations clarify the employment tax treatment of partners in a partnership that owns a disregarded entity.