Daily Tax Update - August 9, 2016: Final Rules Make $33 PTIN Fee Permanent

Final Rules Make $33 PTIN Fee Permanent:  Today the IRS issued final regulations (T.D. 9781) regarding the imposition of a user fee to apply for or renew a preparer tax identification number (PTIN).  The final regulations supersede and adopt the text of temporary regulations that reduced the user fee to apply for or renew a PTIN from $50 to $33.

CRAT Containing Sample Provision Not Subject to ‘Probability of Exhaustion Test’:  Today the IRS released Rev. Proc. 2016-42, which contains a sample provision that may be included in the governing instrument of a charitable remainder annuity trust (CRAT) providing for annuity payments payable for one or more measuring lives followed by the distribution of trust assets to one or more charitable remaindermen.  The IRS will treat the sample provision as a qualified contingency within the meaning of section 664(f).  Consequently, the inclusion of the sample provision in the trust instrument does not cause the trust to fail to qualify as a charitable remainder trust under section 664.  Any CRAT containing the sample provision will not be subject to the “probability of exhaustion” test, which is used to determine whether a CRAT complies with the regulatory requirement applicable to all contingent charitable transfers that only a negligible chance exists that the charity will receive nothing.  

Miscellaneous Guidance:
The IRS released Notice 2016-49, which provides interim guidance on certain requirements for persons seeking certification as certified professional employer organizations (CPEOs), as defined in Treas. Reg. §301.7705-1T(b)(1).


Customer Due Diligence Guidance by FinCEN for Certain Financial Institutions:  On July 19, 2016, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued Frequently Asked Questions (FAQs) as guidance to clarify the scope of its rule, “Customer Due Diligence (CDD) Requirements for Financial Institutions.”  Steptoe’s International Compliance Blog covered the rule when FinCEN promulgated it in May; the rule became effective on July 11, 2016, but does not require implementation by covered financial institutions until May 11, 2018.  Click here to read important points from the FAQ guidance.