Daily Tax Update - August 8, 2014: IRS Issues Additional Guidance on Beginning of Construction

IRS Issues Additional Guidance on Beginning of Construction:  The American Taxpayer Relief Act of 2012 modified the definition of certain qualified facilities under Section 45(d), allowing taxpayers to receive the renewable electricity production tax credit (PTC) under Section 45, or the energy investment tax credit (ITC) under Section 48 in lieu of the PTC, with respect to such a facility if construction of such facility began before January 1, 2014.  The IRS released Notice 2014-46 today, further clarifying Notices 2013-29 and 2013-60 regarding (i) how to satisfy the “physical work” method for determining whether construction has begun and (ii) the effect of various types of transfers with respect to a facility after construction has begun.  The notice also modifies the application of a five percent safe harbor for determining the beginning of construction on an applicable qualified facility.

IRS Issues Guidance on Foreign Withholding Partnership and Trust Agreements Under FATCA:  The IRS issued Rev. Proc. 2014-47 today, providing revised texts for a withholding foreign partnership (WP) agreement or a withholding foreign trust (WT) agreement with the IRS under FATCA.  It also provides guidance on the procedures for entering into or renewing WP and WT agreements.  The revenue procedure provides that a WP or WT that desires to apply for a new, or renew an existing, WP or WT agreement must apply through the IRS FATCA registration website, and have its application approved by the IRS, on or before August 31, 2014, in order for the agreement to be effective June 30, 2014.  WPs that are retirement funds or non-financial foreign entities that are not sponsored entities must follow separate procedures to renew a WP agreement.

FATCA FAQs Updated:  The IRS updated its frequently asked questions (FAQs) regarding FATCA to address the application of “preexisting obligation” rules when the recipient of a payment made under the obligation is a flow-through entity or intermediary.

The new FATCA FAQs can be accessed by viewing Q7 here.