Daily Tax Update - November 17, 2016: Sens. Hatch, Wyden Introduce Retirement Savings Bills

Sens. Hatch, Wyden Introduce Retirement Savings Bills:  Today, Senate Finance Committee Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) introduced the Retirement Enhancement and Savings Act of 2016 (S. 3471) and the Miners Protection Act of 2016 (S. 3470).  According to Chairman Hatch, the Retirement Enhancement and Savings Act of 2016 would “allow open multiple employer plans for employees working for companies of all sizes, increasing access for a number [of] Americans hoping to save for their future.”  The Miners Protection Act of 2016 would expand the group of coal miners covered by the 1993 United Mine Workers of America Health Benefit Plan.  

Ohio Supreme Court Holds Ohio Can Impose Commercial-Activity Tax on Out-of-State Sellers:  Today, the Supreme Court of Ohio held in Crutchfield Corp. v. Testa that Ohio can impose its commercial-activity tax (CAT) on out-of-state companies that sell products and services to Ohioans, but lack a “physical presence” in Ohio (i.e., property in the state or agents or employees acting in the state in connection with its sales).  In affirming a decision of the Board of Tax Appeals, the Ohio Supreme Court concluded in a 5-2 decision that “the physical-presence requirement recognized and preserved by the United States Supreme Court for purposes of use-tax collection does not extend to business privilege taxes such as the CAT” and “the statutory threshold of $500,000 of Ohio sales constitutes a sufficient guarantee of the substantiality of an Ohio nexus for purposes of the dormant commerce clause.”  

IRS Extends Relief From Penalties for Tuition Statement Filers:  Today, the IRS issued Announcement 2016-42, which provides notice that the IRS is extending relief from penalties under sections 6721 and 6722 with respect to tuition statements (Forms 1098-T).  The announcement provides that eligible educational institutions will continue to have the option of reporting either the amount of payments of qualified tuition and related expenses received in Box 1 of Form 1098-T or the amount of qualified tuition and related expenses billed in Box 2 of Form 1098-T for the 2017 calendar year without being subject to penalties.  (In 2015, the PATH Act eliminated the option for eligible educational institutions to report aggregate qualified tuition and related expenses billed for the calendar year.)  Such penalty relief is limited to 2017 Forms 1098-T required to be filed by educational institutions by February 28, 2018 (or April 2, 2018, if filed electronically), and furnished to recipients by January 31, 2018.

Indian Ministry of Finance Announces Resolution of 108 Tax Cases with US, Agreement on Bilateral APA:  Today, the Indian Ministry of Finance announced that India and the United States resolved 108 tax cases during the last week of October.  Of these cases—which involved 50 billion rupees (approximately $735 million)—66 related to transfer pricing issues and 43 related to treaty interpretation issues.  In addition to the resolution of these cases, the Indian Finance Ministry announced that India and the United States had reached an agreement on the terms and conditions of their first ever bilateral advance pricing agreement (APA).  In a press release, the Indian Ministry of Finance commented that the “speedy resolution” of these cases and agreement on the terms and conditions of the bilateral APA would serve as “positive factor[s] in creating a conducive atmosphere for investments and businesses by US companies in India.”

TIGTA Releases Report Describing Instances Where IRS Employees Sent Unencrypted Emails:  Today, the Treasury Inspector General for Tax Administration (TIGTA) released a report that found that IRS “employees sometimes did not adhere to e-mail policies which increased the risk of improper disclosure of taxpayer information.”  As a result, TIGTA has recommended, among other things, that the IRS “consider the feasibility of a systemic solution to ensure that [personally identifiable information]/tax return information is encrypted. . . .” 

Miscellaneous Guidance:
Revenue Ruling 2016-27 provides various prescribed rates for December 2016 for federal income tax purposes, including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, and the adjusted federal long-term tax-exempt rate.