js-1913: Joint Statement of Eric Solomon, Deputy Assistant Secretary (Regulatory Affairs), Department of the Treasury, and Nicholas J. DeNovio, Deputy Chief Counsel (Technical), Office of Chief Counsel, Internal Revenue Service

Joint Statement of Eric Solomon, Deputy Assistant Secretary (Regulatory Affairs), Department of the Treasury, and Nicholas J. DeNovio, Deputy Chief Counsel (Technical), Office of Chief Counsel, Internal Revenue Service

Our principal goal for the 2003-2004 plan year was to continue a strong published guidance program that timely addresses the major issues facing taxpayers and the Internal Revenue Service. By discussing our priorities and our positions with the public, we instill confidence in the fairness of our tax system and help ensure that the Service is administering the rules fairly and impartially. Issuing published guidance that addresses issues before taxpayers enter into transactions encourages greater compliance and decreases the likelihood that the Service will act inconsistently from taxpayer to taxpayer. It also provides greater certainty to taxpayers in factoring tax consequences into the economics of their transactions. We continue to rely on increased published guidance in our efforts to combat tax shelters. We also continue to look for ways to replace private letter rulings with safe harbor revenue procedures or other published guidance that can be relied upon by all taxpayers.

We kept up the pace of published guidance in 2003-2004 with another strong year. For the 12-month business plan year that just ended June 30, 2004, we published 314 total projects. We issued 77 revenue rulings. We published 66 final and temporary regulations and 38 proposed regulations. The expedited guidance program resulted in 31 items of published guidance. We also devoted significant resources to some high profile projects that we expect to publish soon, such as regulations on cost sharing, dual consolidated losses and cross-border mergers.

Our results for the 2003-2004 business plan year include projects that were approved by the Chief Counsel, the Commissioner, and Office of Tax Policy on or before July 22, 2004. The closing of the 2003-2004 business plan year was intended to roughly coincide with the release of the 2004-2005 Priority Guidance Plan on July 26, 2004. Because of publication demands at both the Internal Revenue Bulletin and the Federal Register, some projects were not published until August or September. In those cases we have indicated the earlier date of release to the public, if applicable. In addition, a handful of items are still awaiting publication but should be published very soon.

The guidance included many significant projects addressing not only the most difficult questions, but also matters of high importance to taxpayers and tax administration.

We continued to focus on issuing published guidance on tax shelters. In the 2003-2004 business plan year we listed seven transactions as abusive tax avoidance transactions, relating to contested liability trusts [NOCLJLV1] , S corporation ESOPs, offsetting foreign currency option contracts [NOCLJLV2] , undervalued contributions of property to Roth IRAs [NOCLJLV3] , certain structured foreign tax credit transactions [NOCLJLV4] , S corporation income shifting arrangements [NOCLJLV5] , and partnership intercompany financing arrangements [NOCLJLV6] . We have further refined the tax shelter disclosure regulations and we will continue to evaluate their success and listen to comments regarding their operation. We modified the reporting of book-tax differences by large corporations, through the development of new forms and simplified procedures [NOCLJLV7] . We issued proposed revisions to Circular 230 that would set appropriate standards for tax advisors and firms that provide opinions supporting tax-motivated transactions [NOCLJLV8] . We proposed a major settlement initiative for participants in Son-of-Boss transactions. We issued other important guidance relating to tax avoidance schemes involving U.S. possessions and reporting by U.S. persons of interests in foreign disregarded entities [NOCLJLV9] . Furthermore, we publicized frivolous return positions [NOCLJLV10] .

[NOCLJLV1]Notice 2003-77
[NOCLJLV2]Notice 2003-81
[NOCLJLV3]Notice 2004-8
[NOCLJLV4]Notice 2004-20
[NOCLJLV5]Notice 2004-30
[NOCLJLV6]Notice 2004-31
[NOCLJLV7] Schedule M-3 proposal
[NOCLJLV8]Circ. 230, 12/19/03
[NOCLJLV9]Announcement 2004-4
[NOCLJLV10]Rev. Ruls. 2004-31, -34, -32, -30, -28, -27, -29, -33, and Notices 2004-22, -28,



	FROM THE OFFICE OF PUBLIC AFFAIRS To view or print the PDF content on this page, download the free Adobe® Acrobat® Reader®. September 13, 2004 js-1913 Joint Statement of Eric Solomon, Deputy Assistant Secretary (Regulatory Affairs), Department of the Treasury, and Nicholas J. DeNovio, Deputy Chief Counsel (Technical), Office of Chief Counsel, Internal Revenue Service Our principal goal for the 2003-2004 plan year was to continue a strong published guidance program that timely addresses the major issues facing taxpayers and the Internal Revenue Service. By discussing our priorities and our positions with the public, we instill confidence in the fairness of our tax system and help ensure that the Service is administering the rules fairly and impartially. Issuing published guidance that addresses issues before taxpayers enter into transactions encourages greater compliance and decreases the likelihood that the Service will act inconsistently from taxpayer to taxpayer. It also provides greater certainty to taxpayers in factoring tax consequences into the economics of their transactions. We continue to rely on increased published guidance in our efforts to combat tax shelters. We also continue to look for ways to replace private letter rulings with safe harbor revenue procedures or other published guidance that can be relied upon by all taxpayers. We kept up the pace of published guidance in 2003-2004 with another strong year. For the 12-month business plan year that just ended June 30, 2004, we published 314 total projects. We issued 77 revenue rulings. We published 66 final and temporary regulations and 38 proposed regulations. The expedited guidance program resulted in 31 items of published guidance. We also devoted significant resources to some high profile projects that we expect to publish soon, such as regulations on cost sharing, dual consolidated losses and cross-border mergers. Our results for the 2003-2004 business plan year include projects that were approved by the Chief Counsel, the Commissioner, and Office of Tax Policy on or before July 22, 2004. The closing of the 2003-2004 business plan year was intended to roughly coincide with the release of the 2004-2005 Priority Guidance Plan on July 26, 2004. Because of publication demands at both the Internal Revenue Bulletin and the Federal Register, some projects were not published until August or September. In those cases we have indicated the earlier date of release to the public, if applicable. In addition, a handful of items are still awaiting publication but should be published very soon. The guidance included many significant projects addressing not only the most difficult questions, but also matters of high importance to taxpayers and tax administration. In the individual income tax area, we issued guidance on health savings accounts, the exclusion of gain on the sale of a principal residence, payments to claimants of the September 11th Victims Compensation Fund and interest on education loans. In the estate, gift, and trust area, we issued guidance on the definition of trust income, qualified interests, and qualified severances of trusts. In the partnership area, we issued guidance on section 704(c), long-term contracts of partnerships, partnerships holding small business stock, and issues involving disregarded entities. In the employee benefits area, we issued guidance on section 401(k) plans, reductions in benefit accruals under section 411(d)(6), notices to participants in qualified plans, incentive stock options and golden parachutes. In the corporate income tax area, we issued guidance on the application of section 108 in consolidated groups, the effect of stock and asset transfers after reorganizations, the requirements of a reorganization under section 368(a)(1)(F), and the effect of changes in the value of acquiror stock on the satisfaction of the continuity of interest requirement. In the financial institutions and products area, we issued guidance concerning contingent payments on notional principal contracts, the application of section 265(a)(2) in affiliated and consolidated return groups, and the treatment of fees received by credit card issuers. We also issued several pieces of important guidance concerning RICs, REITs, and REMICs. In the insurance area, we provided guidance on split dollar life insurance, annuities, and the calculation of the company's share and policyholder's share under section 812. In the international area, we issued guidance on subpart F allocations, stapled stock and several income source issues. In the income tax accounting area, we issued guidance on the deduction and capitalization of costs to create intangible assets, the nonaccrual experience method, advance payments, transfers to satisfy contested liabilities, and environmental remediation expenses. In the general business area, we issued final regulations regarding the research credit. We also issued guidance on using statistical sampling in deducting expenses for meals and entertainment, reverse like-kind exchanges of property and like-kind exchanges of depreciable tangible personal property. In the depreciation area, we issued guidance on change in use, the special depreciation allowance, asset and activity classes, and vans and light trucks. In the tax administration area, we issued guidance on electronic payee statements, collection issues relating to property held as tenancy by the entirety, and information reporting regarding purchasing cards and payments in lieu of dividends for individuals. We continued to focus on issuing published guidance on tax shelters. In the 2003-2004 business plan year we listed seven transactions as abusive tax avoidance transactions, relating to contested liability trusts [NOCLJLV1] , S corporation ESOPs, offsetting foreign currency option contracts [NOCLJLV2] , undervalued contributions of property to Roth IRAs [NOCLJLV3] , certain structured foreign tax credit transactions [NOCLJLV4] , S corporation income shifting arrangements [NOCLJLV5] , and partnership intercompany financing arrangements [NOCLJLV6] . We have further refined the tax shelter disclosure regulations and we will continue to evaluate their success and listen to comments regarding their operation. We modified the reporting of book-tax differences by large corporations, through the development of new forms and simplified procedures [NOCLJLV7] . We issued proposed revisions to Circular 230 that would set appropriate standards for tax advisors and firms that provide opinions supporting tax-motivated transactions [NOCLJLV8] . We proposed a major settlement initiative for participants in Son-of-Boss transactions. We issued other important guidance relating to tax avoidance schemes involving U.S. possessions and reporting by U.S. persons of interests in foreign disregarded entities [NOCLJLV9] . Furthermore, we publicized frivolous return positions [NOCLJLV10] . [NOCLJLV1]Notice 2003-77 [NOCLJLV2]Notice 2003-81 [NOCLJLV3]Notice 2004-8 [NOCLJLV4]Notice 2004-20 [NOCLJLV5]Notice 2004-30 [NOCLJLV6]Notice 2004-31 [NOCLJLV7] Schedule M-3 proposal [NOCLJLV8]Circ. 230, 12/19/03 [NOCLJLV9]Announcement 2004-4 [NOCLJLV10]Rev. Ruls. 2004-31, -34, -32, -30, -28, -27, -29, -33, and Notices 2004-22, -28, REPORTS Attachment: 2003-2004 Published Guidance Results