IRS Issues Priority Guidance Plan for 2008-2009 Guidance Year

• Finalization of the proposed regulations under IRC §§ 411(a)(13) and 411(b)(5) published on December 28, 2007.
• Finalization of the proposed regulations under IRC § 411(b) proposed on June 18, 2008.
• Proposed regulations regarding the market rate of return limitation under IRC § 411(b)(5). A small number of cash balance plans allow participants to select the basis on which their interest credits will be determined and include equity indexes as a choice. The regulations may limit this practice.

• Guidance on applying the IRC § 105(h) nondiscrimination rules to self-insured retiree medical plans. There are a number of questions in this area related to discrimination testing and income inclusion. It is not entirely clear which issues this guidance will address.
• Final comprehensive regulations on IRC § 125 plans. Government officials have indicated that final regulations are expected before the end of 2008 and will have a January 1, 2010, effective date.
• Guidance under IRC § 4980B regarding calculation of the applicable premium for COBRA continuation coverage. IRS and Treasury are likely embarking on this project so that they will be prepared to work on legislative proposals that would require valuing such benefits.

• Regulations on the calculation of income inclusion and additional taxes.
• Guidance on a correction program. Government officials have indicated that this project is active, but it is not yet clear whether there should be a correction program, or what form it should take.
• Guidance regarding reporting and income tax withholding under IRC § 409A. This guidance is expected to delay the reporting and withholding requirements for another year (i.e., until 2010).
• A revenue procedure on private letter rulings not involving IRC § 409A. This revenue procedure is expected to further develop the current broad prohibition against requesting private letter rulings on IRC § 409A-related issues and allow more rulings to proceed.

• Proposed regulations under IRC § 162(m) on the transition relief under Treas. Reg. § 1.162-27(f)(1), which applies to a corporation's pre-public compensation plans or agreements once the corporation becomes publicly held. It is not clear what issues this guidance will address.
• Guidance under IRC § 457(f) ineligible plans. This guidance is likely to adopt the IRC § 409A definition of "substantial risk of forfeiture" for IRC § 457(f) purposes (see Notice 2007-62), and to provide more guidance on recurring part-year compensation (see Notice 2008-62).

• Regulations regarding the deductibility of expenses for lodging not incurred in traveling away from home. This guidance may address employer-provided housing near an employee's primary work location, such as employer-provided apartments for executives.
• Guidance regarding the application of the IRC § 274(n) deduction limitations in employee leasing arrangements. Rev. Rul. 2008-23 addressed these issues but is not mentioned in the PGP. It is not clear what issues additional guidance would address.
• Guidance regarding the substantiation requirements of IRC § 274(d)(4) for cell phones and similar devices. This guidance might specifically allow certain substantiation methods, such as apportioning business and personal use on the basis of estimates or statistical sampling rather than individual telephone calls.
• Finalization of the proposed IRC § 274 regulations regarding personal use of company aircraft published on June 15, 2007.
• Guidance regarding the treatment of debt repayments by a taxpayer who previously reported cancellation of indebtedness income.
• Guidance on employer-owned life insurance contracts under IRC § 101(j) and related reporting under IRC § 6039I.

• Regulations implementing the new IRC § 3121(z) regarding FICA obligations on a foreign employer that is part of a US controlled group of entities and employs a US citizen/resident working on US government contracts.
• Finalization of the proposed regulations published on October 17, 2007 discussing sourcing of certain service compensation on an event basis.
• Guidance on the mark-to-market expatriation provisions of the Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART Act).
• Regulations regarding the tax returns required for gifts to US citizens/residents from expatriated individuals, as added by the Heart Act.

• Guidance on group trusts under Rev. Ruls. 81-100 and 2004-67, which will likely address issues that arise when retiree medical benefit obligations are transferred into a group trust holding qualified retirement plan assets.
• Follow-on guidance to Notice 2007-69, which may address the use of service-based retirement ages in public safety officer pension plans.
• Final IRC § 401(a)(9) regulations for governmental plans.
• A revenue procedure on IRC § 403(b) prototype plan documents.
• Guidance on the requirements for governmental plan status under IRC § 414(d).
• Regulations providing criteria for treating an entity as an integral part of a state, local, or tribal government.

• Guidance addressing significant issues under IRC § 152 concerning the definition of dependent.
• Guidance applying the all events test of IRC § 461 to services and other liabilities related to such services.
• Finalization of the proposed IRC § 6039 regulations, regarding reporting requirements for statutory stock options published on July 17, 2008.

• Finalization of the IRC § 6694 proposed regulations regarding return preparer penalties published on June 17, 2008.
• Finalization of the IRC § 7216 temporary regulations regarding the disclosure and use of tax return information by tax return preparers published on July 2, 2008.

EMPLOYEE BENEFITS

1. Retirement Benefits
   1. Guidance on group trusts under Rev. Ruls. 81-100 and 2004-67.
   2. Notice on cumulative list of changes in plan qualification requirements.
   3. Update of Employee Plans Compliance Resolution System (EPCRS).
      • PUBLISHED 09/02/2008 in IRB 2008-35 as REV. PROC. 2008-50 (released 08/14/2008).
   4. Follow on guidance to Not. 2007-69 for governmental plans.
   5. Final regulations under §401(a)(9) on required minimum distribution rules for governmental plans, as directed by the Pension Protection Act of 2006. Proposed regulations were published on July 10, 2008.
   6. Final regulations on diversification requirements under §401(a)(35), as added by the Pension Protection Act of 2006. Proposed regulations were published on January 3, 2008.
   7. Final regulations under §402 on the treatment of incidental health insurance benefits provided under a profit-sharing or stock bonus plan. Proposed regulations were published on August 20, 2007.
   8. Update of model notice under §402(f) relating to eligible rollover distributions.
   9. Revenue procedure on §403(b) prototype plan documents.
   10. Revenue ruling to obsolete §403(b) Internal Revenue Bulletin guidance that is no longer applicable.
   11. Guidance on pre-approved IRAs regarding recent law changes.
   12. Guidance on special issues relating to rollovers from qualified retirement plans (other than from Roth IRAs or designated Roth accounts) to Roth IRAs.
   13. Proposed regulations under §411(a)(11) to provide a description of the consequences of failing to defer, as directed by the Pension Protection Act of 2006.
   14. Final regulations on hybrid plans under §§411(a)(13) and 411(b)(5), as added by the Pension Protection Act of 2006. Proposed regulations were published on December 28, 2007.
   15. Final regulations under §411(b) on accrual rules for defined benefit plans. Proposed regulations were published on June 18, 2008.
   16. Proposed regulations regarding the market rate of return limitation under §411(b)(5).
   17. Guidance on retroactive plan amendments under §1107 of the Pension Protection Act of 2006.
   18. Guidance on requirements for governmental plan status under §414(d).
   19. Guidance on church plans.
   20. Notice on certain retirement plan provisions of the Heroes Earnings Assistance and Relief Tax Act of 2008.
   21. Notice on §903 of the Pension Protection Act of 2006 relating to eligible combined defined benefit plans and qualified cash or deferred arrangements.
   22. Final regulations on automatic enrollment under §§414(w), 401(k)(13) and 401(m)(12), as added by the Pension Protection Act of 2006. Proposed regulations were published on November 8, 2007.
   23. Final regulations on the measurement of assets and liabilities under §430, as added by the Pension Protection Act of 2006. Proposed regulations were published December 31, 2007.
   24. Final regulations on the determination of the minimum required contributions under §430, as added by the Pension Protection Act of 2006. Proposed regulations were published on April 15, 2008.
   25. Notice on mortality tables for funding purposes for years 2009-2013.
   26. Update of Rev. Proc. 2007-37 relating to plan-specific mortality tables under §430(h)(3), as added by the Pension Protection Act of 2006.
   27. Proposed regulations on funding improvement plans and rehabilitation plans for multiemployer plans under §432, as added by the Pension Protection Act of 2006. Proposed regulations were published on March 18, 2008.
   28. Final regulations on determination of endangered or critical status for multiemployer plans under §432, as added by the Pension Protection Act of 2006. Proposed regulations were published on March 18, 2008.
   29. Notice expanding the availability of transition relief in Not. 2008-21 under §436.
       • WILL BE PUBLISHED 09/22/2008 in IRB 2008-38 as Not. 2008-73 (released 09/03/2008).
   30. Final regulations on funding-based benefit limits under §436, as added by the Pension Protection Act of 2006. Proposed regulations were published on August 31, 2007.
   31. Final regulations under §4980F with respect to retroactive effective dates. Proposed regulations were published on March 21, 2008.
   32. Proposed regulations on annual reporting for qualified plans.

2. Executive Compensation, Health Care and Other Benefits, and Employment Taxes
   1. Guidance on applying §105(h) nondiscrimination rules to self-insured retiree medical plans.
   2. Final comprehensive regulations on cafeteria plans under §125. Proposed regulations were published on August 6, 2007.
   3. Guidance on §114 of the Heroes Earnings Assistance and Relief Tax Act of 2008, adding new §125(h), relating to qualified reservist distributions from a health FSA to reservists called to active duty.
   4. Notice on the effective date for compliance with the requirements of Rev. Rul. 2006-57 regarding the use of smartcards, debit or credit cards, or other electronic media to provide qualified transportation fringe benefits.
      • WILL BE PUBLISHED 09/22/2008 in IRB 2008-38 as NOT. 2008-74 (released 09/03/2008).
   5. Revenue procedure on the application of the cross-reference of §152(e) to other code sections when the custodial parent has not released the claim to the personal exemption for a dependent under §152(e)(2).
      • PUBLISHED 09/08/2008 in IRB 2008-36 as REV. PROC. 2008-48 (released 08/18/2008).
   6. Revenue ruling on the applicability of §162(l) to COBRA premiums.
   7. Proposed regulations under §162(m) on the transition relief under Treas. Reg. §1.162-27(f)(1).
   8. Guidance on additional issues on Health Savings Accounts (HSAs).
   9. Final regulations under §274(i) on qualified non-personal use vehicles. Proposed regulations were published on June 9, 2008.
   10. Regulations under §409A on the calculation of income inclusion and additional taxes.
   11. Guidance on §409A correction program.
   12. Guidance regarding reporting and income tax withholding under §409A.
   13. Revenue Procedure on private letter rulings not involving §409A.
   14. Final regulations under §423 regarding employee stock purchase plans. Proposed regulations were published on July 29, 2008.
   15. Guidance under §457(f) on ineligible plans.
   16. Revenue ruling on SECA tax on Conservation Reserve Payments that reflects the enactment of the Food, Conservation, and Energy Act of 2008.
   17. Guidance under §105 of the Heroes Earnings Assistance and Tax Relief Act of 2008 regarding the treatment of military differential pay as wages.
   18. Regulations implementing new §3121(z), as added by the Heroes Earnings Assistance and Tax Relief Act of 2008, on foreign employers.
   19. Guidance under §3504 on reporting FUTA taxes for home health care recipients.
   20. Guidance under §4980B regarding calculation of the applicable premium for COBRA continuation coverage.
   21. Final regulations on Health Opportunity Patient Empowerment Act of 2006 changes to §4980G with respect to comparable employer contributions to employees' HSAs. Proposed regulations were published on July 16, 2008.
   22. Proposed regulations under §4980G on interaction of §4980G and §125 with respect to comparable employer contributions to employees' HSAs.
   23. Final regulations under §6039 on information reporting on stock transfers. Proposed regulations were published on July 17, 2008.
   24. Guidance under §§6205, 6402, 6413, and 6414 on making employment tax adjustments and refund claims.
   25. Temporary regulations implementing Genetic Information Nondiscrimination Act of 2008.

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Copyright 2008, Deloitte.

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