The IRS and Treasury Department this week released the 2016-2017 priority guidance plan that includes several insurance-specific initiatives.
The IRS and Treasury use the guidance priority plan each year, to identify and prioritize the tax issues that are to be addressed through regulations, revenue rulings, revenue procedures, notices, and other published administrative guidance.
The 2016-2017 priority guidance plan [PDF 160 KB]—updated August 15, 2016—contains 281 guidance and regulatory projects that the IRS has identified as priorities and intends to work on during the 12-month period from July 2016 through June 2017.
The priority guidance plan for 2016-2017 provides the following insurance-specific items of interest:
1 President Obama on December 18, 2015, signed into law the Protecting Americans from Tax Hikes Act of 2015 (PATH Act), which made several significant amendments to section 831(b). Prior to these amendments, section 831(b) permitted an insurance company with up to $1.2 million in annual underwriting income to elect to exclude its underwriting income from taxable income and be subject to tax only on its investment income. Under the PATH Act, Congress: (1) increased the amount of underwriting income that may be excluded from taxable income annually from $1.2 million to $2.2 million; (2) indexed the $2.2 million ceiling for 2016 and subsequent years; and (3) added alternative anti-abuse provisions to section 831(b) - namely, a diversification requirement and an ownership test.
2 Rent-A-Center, Inc. v. Commissioner, 142 T.C. 1 (2014)
3 Securitas, Inc. v. Commissioner, T.C. Memo 2014-225
Guidance under section 833 was removed from the 2016-2017 priority guidance plan, since the IRS published final regulations effective June 22, 2016 (T.D. 9772, 81 Fed. Reg. 40518 (June 22, 2016)) that provide guidance on computing and applying the medical loss ratio (MLR) and the consequences of not meeting the MLR threshold. However, no new insurance-related items have been added to the priority guidance plan. As of note, guidance related to many of the insurance initiatives have been on the priority guidance plan for several years.
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