DEPARTMENT OF THE TREASURY
Statement of Regulatory Priorities
The primary missions of the Department of the Treasury are:
Consistent with these missions, most regulations of the Department and its constituent bureaus are promulgated to interpret and implement the laws as enacted by the Congress and signed by the President. It is the policy of the Department to comply with applicable requirements to issue a notice of proposed rulemaking and carefully consider public comments before adopting a final rule. Also, the Department invites interested parties to submit views on rulemaking projects while a proposed rule is being developed.
To the extent permitted by law, it is the policy of the Department to adhere to the regulatory philosophy and principles set forth in Executive Orders 12866, 13563, and 13609 and to develop regulations that maximize aggregate net benefits to society while minimizing the economic and paperwork burdens imposed on persons and businesses subject to those regulations.
Alcohol and Tobacco Tax and Trade Bureau
The Alcohol and Tobacco Tax and Trade Bureau (TTB) issues regulations to implement and enforce the Federal laws relating to alcohol, tobacco, firearms, and ammunition excise taxes and certain non-tax laws relating to alcohol. TTB's mission and regulations are designed to:
1) collect the taxes on alcohol, tobacco, firearms, and ammunition;
2) protect the consumer by ensuring the integrity of alcohol products; and
3) prevent unfair and unlawful market activity for alcohol and tobacco products.
In the last several years, TTB has identified changes in the industries it regulates, as well as new technologies available in compliance enforcement. In response, TTB has focused on revising its regulations to ensure that it accomplishes its mission in a way that facilitates industry growth and reduces burdens where possible, while at the same time collecting the revenue and protecting consumers from deceptive labeling and advertising of alcohol beverages. This modernization effort resulted in the publishing of two key rulemakings that took effect in FY 2014-15 that reduced burden on TTB-regulated industry members.
On March 27, 2014, TTB published a final rule (79 FR 17029) amending its regulations in 27 CFR part 73 regarding the electronic submission of forms and other documents. Among other things, this rule provided for the electronic submission to TTB of forms requiring third-party signatures, such as bond forms and powers of attorney. It also provided that any requirement in the TTB regulations to submit a document to another agency may be met by the electronic submission of the document to the other agency, as long as the other agency provides for, and authorizes, the electronic submission of such document.
On September 30, 2014, TTB published a final rule (79 FR 58674) that reduced the compliance burden for the beer industry. This rule reduced the penal sum of the bond required for certain small brewers to a flat $1,000, which applies to brewers whose excise tax liability is reasonably expected to be not more than $50,000 in a given calendar year and who were liable for not more than $50,000 in such taxes in the preceding calendar year. Additionally, TTB adopted as a final rule its prior proposal to provide that those brewers must file Federal excise tax returns, pay tax, and submit reports of operations less frequently, that is every quarter rather than twice monthly.
As part of this rulemaking, TTB also made a number of changes to the forms brewers use to report on their operations. The two versions of the Brewer's Report of Operations forms (TTB F 5130.9 and TTB F 5130.26) were streamlined based on feedback from the industry. These changes included removing two separate parts, adding clarifying instructions, and revising TTB F 5130.26 (previously for brewpub reporting only) to be an "EZ" reporting option for small brewers to facilitate the new quarterly reporting mandate. TTB released the new versions of the reports in the second quarter of FY 2015. This combination of regulatory amendments and form changes have reduced regulatory burdens and administrative costs for small brewers and created administrative efficiencies for TTB.
In FY 2016, TTB will continue its multi-year Regulations Modernization effort by prioritizing projects that will update its Import and Export regulations, Labeling Requirements regulations, Specially Denatured and Completely Denatured Alcohol regulations, Nonbeverage Products regulations, Distilled Spirits Plant Reporting requirements, and Civil Monetary Penalty for Violations of the Alcohol Beverage Labeling Act regulation.
This fiscal year TTB plans to give priority to the following regulatory matters:
Revisions to Export and Import Regulations Related to the International Trade Data System. TTB is currently preparing for the implementation of the International Trade Data System (ITDS) and, specifically, the transition to an all-electronic import and export environment. The ITDS, as described in section 405 of the Security and Accountability for Every Port Act of 2006 (the "SAFE Port Act") (Public Law 109-347), is an electronic information exchange capability, or "single window," through which businesses will transmit data required by participating Federal agencies for the importation or exportation of cargo. To enhance Federal coordination associated with the development of the ITDS and put in place specific deadlines for implementation, President Obama, on February 19, 2014, signed an Executive Order on Streamlining the Export/Import Process for America's Businesses. In line with section 3(e) of the Executive Order, TTB was required to develop a timeline for ITDS implementation. Updating the regulations for transition to the all-electronic environment is part of the implementation process.
TTB has completed its review of the relevant regulatory requirements and identified those that it intends to update to address an all-electronic environment. As noted above, TTB regulations in 27 CFR part 73 have already been amended to remove regulatory barriers to the electronic submission of TTB-required documents to another agency. In FY 2016, TTB intends to publish a notice of proposed rulemaking to propose changes to TTB regulatory sections that address the submission of information or documentation at importation, and to update and streamline TTB regulatory processes for importations and make clear the circumstances in which the submission of certain data elements replaces the submission of paper documents. Specifically, TTB will propose that data from certain forms (e.g., the TTB F 5100.31 (Application for and Certification/Exemption of Label/Bottle Approval)) may be submitted electronically at importation through the "single window" in lieu of the submission of the paper documents to U.S. Customs and Border Protection personnel. TTB also reviewed existing requirements and processes to determine how the all-electronic environment can be used to reduce burden. For example, many regulatory provisions in TTB's import and export regulations require forms to be submitted in triplicate or quadruplicate, and the availability of the relevant data electronically makes such multiple submissions unnecessary. The amendments to the regulations that TTB will propose to implement ITDS for imports will facilitate legitimate trade and allow enforcement resources to be focused on identifying noncompliance.
On August 7, 2015, TTB published a notice (80 FR 47558) announcing a pilot program for importers who want to gain experience with the ITDS "single window" functionality for providing data on the TTB-regulated commodities. This pilot program will help familiarize both TTB and the public with the new environment and assist TTB and the public to refine the implementation of ITDS. TTB is planning to publish rulemaking on its import and export regulations in FY 2016, and the pilot program will provide valuable information for this undertaking.
In addition, in recent years, TTB has identified selected sections of its export regulations (27 CFR parts 28 and 44) that it intends to amend to clarify and update the requirements. Under the Internal Revenue Code of 1986 (IRC), the products taxed by TTB may be removed for exportation without payment of tax or with drawback of any excise tax previously paid, subject to the submission of proof of export. However, the current export regulations require industry members to obtain documents and follow procedures that do not reflect current technology or take into account current industry business practices. The notice of proposed rulemaking that TTB will publish to implement ITDS for exports will include proposals to amend the regulations to provide industry members with clear and updated procedures for removal of alcohol and tobacco products for exportation, thus facilitating exportation of those products. Increasing U.S. exports benefits the U.S. economy and is consistent with Treasury and Administration priorities.
Revisions to the Labeling Requirements (Parts 4 (Wine), 5 (Distilled Spirits), and 7 (Malt Beverages)). The Federal Alcohol Administration Act requires that alcohol beverages introduced in interstate commerce have a label issued and approved under regulations prescribed by the Secretary of the Treasury. In accordance with the mandate of Executive Order 13563 of January 18, 2011, regarding improving regulation and regulatory review, TTB conducted an analysis of its labeling regulations to identify any that might be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with that analysis. These regulations were also reviewed to assess their applicability to the modern alcohol beverage marketplace. As a result of this review, TTB plans to propose in FY 2016 revisions to modernize the regulations concerning the labeling requirements for wine, distilled spirits, and malt beverages. TTB anticipates that these regulatory changes will assist industry in voluntarily complying with these requirements for the over 160,000 label applications that are projected to be submitted in FY 2016, which will decrease industry burden associated with the label approval requirement and result in the regulated industries being able to bring products to market without undue delay.
Revisions to Specially Denatured and Completely Denatured Alcohol Regulations. TTB proposed changes to regulations for specially denatured alcohol (SDA) and completely denatured alcohol (CDA) that will provide a reduction in regulatory burden while posing no risk to the revenue.
Under the authority of the IRC, TTB regulates denatured alcohol that is unfit for beverage use, which may be removed from a regulated distilled spirits plant free of tax. SDA and CDA are widely used in the American fuel, medical, and manufacturing sectors. The industrial alcohol industry far exceeds the beverage alcohol industry in size and scope, and it is a rapidly growing industry in the United States. Some concerns have been raised that the current regulations may create significant roadblocks for industry members in getting products to the marketplace quickly and efficiently. To help alleviate these concerns, TTB published a notice of proposed rulemaking (78 FR 38628) and, in FY 2016, plans to issue a final rule that will reclassify certain SDA formulas as CDA and issue new general-use formulas for articles made with SDA.
TTB estimates that these changes will result in an 80 percent reduction in the formula approval submissions currently required from industry members. The reduction in formula submissions will enable TTB to redirect its resources to address backlogs that exist in other areas of TTB's mission activities, such as analyses of compliance samples for industrial/fuel alcohol to protect the revenue and working with industry to test and approve new and more environmentally friendly denaturants. Additionally, the reclassification of certain SDA formulas as CDA formulas will not jeopardize the revenue because it is more difficult to separate potable alcohol from CDA than it is from SDA, and CDA is less likely to be used for beverage purposes due to its taste. Similarly, authorizing new general-use formulas will not jeopardize the revenue because it will be difficult to remove potable alcohol from articles made with the specific SDA formulations. Other changes made by this final rule will remove unnecessary regulatory burdens and update the regulations to align them with current industry practice.
Revision of the Part 17 Regulations, Drawback on Taxpaid Distilled Spirits Used in Manufacturing Nonbeverage Products, to Allow Self-Certification of Nonbeverage Product Formulas. TTB is considering revisions to the regulations in 27 CFR part 17 governing nonbeverage products made with taxpaid distilled spirits. These nonbeverage products include foods, medicines, and flavors. This proposal, which TTB intends to publish in FY 2016, offers a new method of formula certification by incorporating quantitative standards into the regulations and establishing new voluntary procedures that would further streamline the formula review process for products that meet the standards. This proposal provides adequate protection to the revenue because TTB will continue to receive submissions of certified formulas; however, TTB will not take action on certified formula submissions unless TTB discovers that the formulas require correction. By allowing for self-certification of certain nonbeverage product formulas, this proposal would nearly eliminate the need for TTB to formally approve all such formulas. These changes would result in significant cost savings for the nonbeverage alcohol industry, which currently must obtain formula approval from TTB, and some savings for TTB, which must review and take action to approve or disapprove each formula.
Revisions to Distilled Spirits Plant Reporting Requirements. In FY 2012, TTB published a notice of proposed rulemaking (NPRM) proposing to revise regulations in 27 CFR part 19 to replace the current four report forms used by distilled spirits plants to report their operations on a monthly basis with two new report forms that would be submitted on a monthly basis. (Plants that file taxes on a quarterly basis would submit the new reports on a quarterly basis.) This project will address numerous concerns and desires for improved reporting by the distilled spirits industry and result in cost savings to industry and TTB by significantly reducing the number of monthly plant operations reports that must be completed and filed by industry members and processed by TTB. TTB preliminarily estimates that this project will result in a reduction of paperwork burden hours for industry members, as well as savings in processing hours and contractor time for TTB. In addition, TTB estimates that this project will result in additional savings in staff time based on the more efficient and effective processing of reports and the use of report data to reconcile industry member tax accounts. In FY 2016, TTB intends to publish a Supplemental NPRM that will include new proposals to address comments received in response to the initial NPRM.
Inflation Adjustment to the Civil Monetary Penalty for Violations of the Alcohol Beverage Labeling Act. The Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Debt Collection Improvement Act of 1996, requires Federal agencies to adjust certain civil monetary penalties for inflation according to a formula set out in the statute. In FY 2016, TTB plans to publish a final rule increasing the maximum penalty for violations of the Alcohol Beverage Labeling Act from $11,000 (the level at which it was set following the first inflation adjustment in 1996) to $16,000. The increased maximum penalty will help maintain the deterrent effect of the penalty.
Community Development Financial Institutions Fund
The Community Development Financial Institutions Fund (CDFI Fund) was established by the Community Development Banking and Financial Institutions Act of 1994 (12 U.S.C. 4701 et seq.). The mission of the CDFI Fund is to increase economic opportunity and promote community development investments for underserved populations and in distressed communities in the United States. The CDFI Fund currently administers the following programs: The Community Development Financial Institutions (CDFI) Program, the Bank Enterprise Award (BEA) Program, the Native American CDFI Assistance (NACA) Program, the New Markets Tax Credit (NMTC) Program, the Financial Education and Counseling Pilot Program (FEC), the Capital Magnet Fund (CMF), and the CDFI Bond Guarantee Program (BGP).
In FY 2016, the CDFI Fund will publish updated regulations for its Capital Magnet Fund (CMF) to incorporate the requirements of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR part 200) and make other policy updates.
Customs Revenue Functions
The Homeland Security Act of 2002 (the Act) provides that, although many functions of the former United States Customs Service were transferred to the Department of Homeland Security, the Secretary of the Treasury retains sole legal authority over customs revenue functions. The Act also authorizes the Secretary of the Treasury to delegate any of the retained authority over customs revenue functions to the Secretary of Homeland Security. By Treasury Department Order No. 100-16, the Secretary of the Treasury delegated to the Secretary of Homeland Security authority to promulgate regulations pertaining to the customs revenue functions subject to certain exceptions. This Order further provided that the Secretary of the Treasury retained the sole authority to approve such regulations.
During the past fiscal year, among the customs-revenue function regulations issued were the United States-Australia Free Trade Agreement interim final rule, the Documentation Related to Goods Imported from U.S. Insular Possessions final rule, Technical Corrections to the North American Free Trade Agreement Uniform Regulations final rule, and Liberalization of Certain Documentary Evidence Required As Proof of Exportation on Drawback Claims final rule. On February 10, 2015, U.S. Customs and Border Protection published the United States-Australia Free Trade Agreement interim final rule (80 FR 7303) to the CBP regulations, which implemented the preferential tariff treatment and other customs-related provisions of the United States-Australia Free Trade Agreement Implementation Act. In addition, on May 11, 2015, CBP and Treasury issued a final rule (80 FR 26828) titled "Technical Corrections to the North American Free Trade Agreement Uniform Regulations" which amended CBP regulations implementing conforming changes of the preferential tariff treatment and other customs-related provisions of the North American Free Trade Agreement (NAFTA) entered into by the United States, Canada, and Mexico. On August 7, 2015, CBP issued a final rule (80 FR 47405) titled "Liberalization of Certain Documentary Evidence Required As Proof of Exportation on Drawback Claims" which amended CBP regulations by removing some of the requirements for documentation used to establish proof of exportation for drawback claims.
This past fiscal year, consistent with the goals of Executive Orders 12866 and 13563, Treasury and CBP issued a final rule titled "Documentation Related to Goods Imported From U.S. Insular Possessions" on February 11, 2015 (80 FR 7537), that amended CBP regulations to eliminate the requirement that a customs officer at the port of export verify and sign CBP Form 3229, Certificate of Origin for U.S. Insular Possessions, and to require instead that the importer present this form, upon CBP's request, rather than submit it with each entry as the current regulations require. The amendments streamline the entry process by making it more efficient as it would reduce the overall administrative burden on both the trade and CBP. If the importer does not maintain CBP Form 3229 in its possession, the importer may be subject to a recordkeeping penalty.
Treasury and CBP are currently working towards the implementation of the International Trade Data System (ITDS). The ITDS, as described in section 405 of the Security and Accountability for Every Port Act of 2006 (the "SAFE Port Act") (Public Law 109-347), is an electronic information exchange capability, or "Single Window," through which businesses will transmit data required by participating agencies for the importation or exportation of cargo. To enhance Federal coordination associated with the development of the ITDS, Treasury and CBP plan to issue an interim regulation which will to reflect that on November 1, 2015, the Automated Commercial Environment (ACE) is a CBP-authorized Electronic Data Interchange (EDI) System. This regulatory document informs the public that the Automated Commercial System (ACS) is being phased out as a CBP-authorized EDI System for the processing electronic entry and entry summary filings (also known as entry filings). In the future when there is full functionality, ACE will replace the Automated Commercial System (ACS) as the CBP-authorized EDI system for processing commercial trade data.
During fiscal year 2016, CBP and Treasury also plan to give priority to the following regulatory matters involving the customs revenue functions:
Disclosure of Information for Certain Intellectual Property Rights Enforced at the Border. Treasury and CBP plan to finalize interim amendments to the CBP regulations which provides a pre-seizure notice procedure for disclosing information appearing on the imported merchandise and/or its retail packing suspected of bearing a counterfeit mark to an intellectual property right holder for the limited purpose of obtaining the right holder's assistance in determining whether the mark is counterfeit or not.
Free Trade Agreements. Treasury and CBP also plan to issue final regulations this fiscal year to implement the preferential trade benefit provisions of the United States-Singapore Free Trade Agreement Implementation Act. Treasury and CBP also expect to issue final regulations implementing the preferential trade benefit provisions of the United States-Australia Free Trade Agreement Implementation Act.
In-Bond Process. Consistent with the practice of continuing to move forward with Customs Modernization provisions of the North American Free Trade Implementation Act to improve its regulatory procedures, Treasury and CBP plan to finalize this fiscal year the proposal to change the in-bond process by issuing final regulations to amend the in-bond regulations that were proposed on February 22, 2012 (77 FR 10622). The proposed changes, including the automation of the in-bond process, would modernize, simplify, and facilitate the in-bond process while enhancing CBP's ability to regulate and track in-bond merchandise to ensure that in-bond merchandise is properly entered or exported.
Inter-Partes Proceedings Concerning Exclusion Orders Based on Unfair Practices in Import Trade. Treasury and CBP plans to publish a proposal to amend its regulations with respect to administrative rulings related to the importation of articles in light of exclusion orders issued by the United States International Trade Commission ("Commission") under section 337 of the Tariff Act of 1930, as amended. The proposed amendments seek to promote the speed, accuracy, and transparency of such rulings through the creation of an inter partes proceeding to replace the current ex parte process.
Customs and Border Protection's Bond Program. Treasury and CBP plan to publish a final rule amending the regulations to reflect the centralization of the continuous bond program at CBP's Revenue Division. The changes proposed would support CBP's bond program by ensuring an efficient and uniform approach to the approval, maintenance, and periodic review of continuous bonds, as well as accommodating the use of information technology and modern business practices.
Office of the Comptroller of the Currency
The primary mission of the Office of the Comptroller of the Currency (OCC) is to charter, regulate, and supervise all national banks and Federal Savings Associations (FSAs). The agency also supervises the Federal branches and agencies of foreign banks. The OCC's goal in supervising the financial institutions subject to its jurisdiction is to ensure that they operate in a safe and sound manner and in compliance with laws requiring fair treatment of their customers and fair access to credit and financial products.
Significant rules issued during fiscal year 2015 include:
Integration of National Bank and Federal Savings Association Regulations: Licensing Rules (12 CFR Parts 4, 5, 7, 14, 32, 34, 100, 116, 143, 144, 145, 146, 150, 152, 159,160, 161, 162, 163, 174, 192, and 193). The OCC issued a final rule that integrates its rules relating to policies and procedures for corporate activities and transactions involving national banks and FSAs. The final rule also revises some of these rules in order to eliminate unnecessary requirements, consistent with safety and soundness; promote fairness in supervision; and to make other technical and conforming changes. The final rule also includes amendments to update OCC rules for agency organization and function. The final rule was issued on May 18, 2015, 80 FR 28345.
Flood Insurance (12 CFR parts 22 and 172). The banking agencies, Farm Credit Administration (FCA), and the National Credit Union Administration (NCUA) revised their regulations regarding loans in areas having special flood hazards to implement provisions of the Homeowner Flood Insurance
Affordability Act of 2014 (HFIAA), which amends some of the changes to the Flood Disaster Protection Act of1973 mandated by the Biggert-Waters Flood Insurance Reform Act of 2012 (Biggert-Waters). The
rule requires the escrow of flood insurance payments on residential improved real estate securing a loan,
consistent with the changes set forth in HFIAA. The final rule also incorporates an exemption in HFIAA for certain detached structures from the mandatory flood insurance purchase requirement. The rule also implements the provisions of Biggert-Waters related to the force placement of flood insurance. Finally, the rule integrates the OCC's flood insurance regulations for national banks and Federal savings associations. The final rule was issued on July 21, 2015, 80 FR 43216.
Appraisal Management Companies (12 CFR part 34). The banking agencies, the Federal Housing Finance Agency (FHFA), NCUA and the Consumer Financial Protection Bureau (CFPB) issued a rule that sets minimum standards for state registration and supervision of appraisal management companies (AMCs). The rule implements the minimum requirements in section 1473 of the Dodd-Frank Act to be applied by states in the registration and supervision of AMCs. It also implements the requirement in section 1473 of the Dodd-Frank Act for states to report to the Appraisal Subcommittee (ASC) of the Federal Financial Institutions Examination Council the information needed by the ASC to administer the national registry of AMCs. The final rule was issued on June 6, 2015, 80 FR 32658.
Margin and Capital Requirements for Covered Swap Entities (12 CFR part 45). The banking agencies, FCA, and FHFA issued a proposed rule to establish minimum margin and capital requirements for registered swap dealers, major swap participants, security-based swap dealers, and major security-based swap participants for which one of the agencies is the prudential regulator. The proposed rule will implement sections 731 and 764 of the Dodd-Frank Act, which require the agencies to adopt rules jointly to establish capital requirements and initial and variation margin requirements for such entities on all non-cleared swaps and non-cleared security-based swaps in order to offset the greater risk to such entities and the financial system arising from the use of swaps and security-based swaps that are not cleared. A second proposal was issued on September 24, 2014, 79 FR 57348.
Credit Risk Retention (12 CFR part 43). The banking agencies, Securities and Exchange Commission (SEC), FHFA, and the Department of Housing and Urban Development (HUD) issued rules to implement the credit risk retention requirements of section 15G of the Securities Exchange Act of 1934 (15 U.S.C. section 78o-11), as added by section 941 of the Dodd-Frank Act. Section 15G generally requires the securitizer of asset-backed securities to retain not less than 5 percent of the credit risk of the assets collateralizing the asset-backed securities. Section 15G includes a variety of exemptions from these requirements, including an exemption for asset-backed securities that are collateralized exclusively by residential mortgages that qualify as "qualified residential mortgages," as such term is defined by the agencies by rule. The final rule was issued on December 24, 2014, 78 FR 77602.
Regulatory priorities for fiscal year 2016 include finalizing any proposals listed above as well as the following rulemakings:
Automated Valuation Models (parts 34, 164). The banking agencies, NCUA, FHFA and CFPB, in consultation with the ASC and the Appraisal Standards Board of the Appraisal Foundation, are required to promulgate regulations to implement quality-control standards required under the statute. Section 1473(q) of the Dodd-Frank Act requires that automated valuation models used to estimate collateral value in connection with mortgage origination and securitization activity, comply with quality-control standards designed to ensure a high level of confidence in the estimates produced by automated valuation models; protect against manipulation of data; seek to avoid conflicts of interest; require random sample testing and reviews; and account for other factors the agencies deem appropriate. The agencies plan to issue a proposed rule to implement the requirement to adopt quality-control standards.
Incentive-Based Compensation Arrangements (12 CFR part 42). Section 956 of the Dodd-Frank Act requires the banking agencies, NCUA, SEC, and FHFA, to jointly prescribe regulations or guidance prohibiting any type of incentive-based payment arrangement, or any feature of any such arrangement, that the regulators determine encourages inappropriate risks by covered financial institutions by providing an executive officer, employee, director, or principal shareholder with excessive compensation, fees or benefits, or that could lead to material financial loss to the covered financial institution. The Dodd-Frank Act also requires such agencies to jointly prescribe regulations or guidance requiring each covered financial institution to disclose to its regulator the structure of all incentive-based compensation arrangements offered by such institution sufficient to determine whether the compensation structure provides any officer, employee, director, or principal shareholder with excessive compensation or could lead to material financial loss to the institution. The proposed rule was issued on April 14, 2011, 76 FR 21170.
Source of Strength (12 CFR part 47). The banking agencies plan to issue a proposed rule to implement section 616(d) of the Dodd-Frank Act. Section 616(d) requires that bank holding companies, savings and loan holding companies and other companies that directly or indirectly control an insured depository institution serve as a source of strength for the insured depository institution. The appropriate Federal banking agency for the insured depository institution may require that the company submit a report that would assess the company's ability to comply with the provisions of the statute and its compliance.
Net Stable Funding Ratio (12 CFR part 50). The banking agencies plan to issue a proposed rule to implement the Basel net stable funding ratio standards. These standards would require large, internationally active banking organizations to maintain sufficient stable funding to support their assets, generally over a one-year time horizon.
Financial Crimes Enforcement Network
As chief administrator of the Bank Secrecy Act (BSA), the Financial Crimes Enforcement Network (FinCEN) is responsible for developing and implementing regulations that are the core of the Department's anti-money laundering and counter-terrorism financing efforts. FinCEN's responsibilities and objectives are linked to, and flow from, that role. In fulfilling this role, FinCEN seeks to enhance U.S. national security by making the financial system increasingly resistant to abuse by money launderers, terrorists and their financial supporters, and other perpetrators of crime.
The Secretary of the Treasury, through FinCEN, is authorized by the BSA to issue regulations requiring financial institutions to file reports and keep records that are determined to have a high degree of usefulness in criminal, tax, or regulatory matters or in the conduct of intelligence or counter-intelligence activities to protect against international terrorism. The BSA also authorizes requiring designated financial institutions to establish anti-money laundering programs and compliance procedures. To implement and realize its mission, FinCEN has established regulatory objectives and priorities to safeguard the financial system from the abuses of financial crime, including terrorist financing, money laundering, and other illicit activity. These objectives and priorities include: (1) issuing, interpreting, and enforcing compliance with regulations implementing the BSA; (2) supporting, working with, and as appropriate, overseeing compliance examination functions delegated to other Federal regulators; (3) managing the collection, processing, storage, and dissemination of data related to the BSA; (4) maintaining a government-wide access service to that same data and for network users with overlapping interests; (5) conducting analysis in support of policymakers, law enforcement, regulatory and intelligence agencies, and the financial sector; and (6) coordinating with and collaborating on anti-terrorism and anti-money laundering initiatives with domestic law enforcement and intelligence agencies, as well as foreign financial intelligence units.
During fiscal year 2015, FinCEN issued the following regulatory actions:
Anti-Money Laundering Program and SAR Requirements for Investment Advisers. On August 25, 2015, FinCEN published in the Federal Register a Notice of Proposed Rulemaking (NPRM) to solicit public comment on proposed rules under the BSA that would prescribe minimum standards for anti-money laundering programs to be established by certain investment advisers and to require such investment advisers to report suspicious activity to FinCEN.
Imposition of Special Measure against FBME Bank Ltd., formerly known as Federal Bank of the Middle East, Ltd., as a Financial Institution of Primary Money Laundering Concern. On July 29, 2015, FinCEN issued a final rule imposing the fifth special measure under section 311 of the USA PATRIOT Act against FBME. The fifth special measure prohibits or conditions the opening or maintaining of correspondent or payable-through accounts for the designated institution by U.S. financial institutions. This action followed a notice of finding issued on July 22, 2014 that FBME is a financial institution of primary money laundering concern and an NPRM proposing the imposition of the fifth special measure. FBME filed suit on August 7, 2015 in the United States District Court for the District of Columbia; FBME also moved for a preliminary injunction. On August 27, 2015, the Court granted the preliminary injunction and enjoined the rule from taking effect until a final judgment is entered.
Imposition of Special Measure against Banca Privada d'Andorra as a Financial Institution of Primary Money Laundering Concern. On March 10, 2015, FinCEN issued a finding that Banca Privada d'Andorra is a financial institution operating outside of the United States that is of primary money laundering concern under section 311 of the USA PATRIOT Act. Also on March 10, 2015, FinCEN issued an NPRM to impose the fifth special measure against the institution. The fifth special measure prohibits or conditions the opening or maintaining of correspondent or payable-through accounts for the designated institution by U.S. financial institutions.
Administrative Rulings and Written Guidance. FinCEN published 4 administrative rulings and written guidance pieces, and provided 30 responses to written inquiries/correspondence interpreting the BSA and providing clarity to regulated industries.
FinCEN's regulatory priorities for fiscal year 2016 include finalizing any initiatives mentioned above that are not finalized by fiscal year end, as well as the following in-process and potential projects:
Customer Due Diligence Requirements. On August 4, 2014, FinCEN issued a Notice of Proposed Rulemaking (NPRM) to solicit public comment on proposed rules under the BSA to clarify and strengthen customer due diligence requirements for banks, brokers or dealers in securities, mutual funds, and futures commission merchants and introducing brokers in commodities. The proposed rules contain explicit customer due diligence requirements and include a new regulatory requirement to identify beneficial owners of legal entity customers, subject to certain exemptions.
Report of Foreign Bank and Financial Accounts. FinCEN has drafted an NPRM to address requests from filers for clarification of certain requirements regarding the Report of Foreign Bank and Financial Accounts (FBAR), including requirements with respect to employees, who have signature authority over, but no financial interest in, the foreign financial accounts of their employers.
Cross Border Electronic Transmittal of Funds. On September 27, 2010, FinCEN issued an NPRM in conjunction with the feasibility study prepared pursuant to the Intelligence Reform and Terrorism Prevention Act of 2004 concerning the issue of obtaining information about certain cross-border funds transfers and transmittals of funds. As FinCEN has continued to work on developing the system to receive, store, and use this data, FinCEN has drafted a Supplemental NPRM to update the previously published proposed rule and provide additional information to those banks and money transmitters that will become subject to the rule.
Anti-Money Laundering Program Requirements for Banks Lacking a Federal Functional Regulator. FinCEN has drafted an NPRM to remove the anti-money laundering (AML) program exemption for banks that lack a Federal functional regulator, including, but not limited to, private banks, non-federally insured credit unions, and certain trust companies. The proposed rule would prescribe minimum standards for AML programs and would ensure that all banks, regardless of whether they are subject to Federal regulation and oversight, are required to establish and implement AML programs.
Amendments to the Definitions of Broker or Dealer in Securities. FinCEN has drafted an NPRM that proposes amendments to the regulatory definitions of broker or dealer in securities under the BSA regulations. The proposed changes would expand the current scope of the definitions to include funding portals and would require them to implement policies and procedures reasonably designed to achieve compliance with all of the BSA requirements that are currently applicable to brokers or dealers in securities.
Amendment to the Bank Secrecy Act Regulations - Registration Requirements of Money Services Businesses. FinCEN is considering issuing an NPRM to amend the requirements for money services businesses with respect to registering with FinCEN.
Changes to the Travel and Recordkeeping Requirements for Funds Transfers and Transmittals of Funds. FinCEN is considering changes to require that more information be collected and maintained by financial institutions on funds transfers and transmittals of funds and to lower the threshold.
Changes to the Currency and Monetary Instrument Report (CMIR) Reporting Requirements. FinCEN will research, obtain, and analyze relevant data to validate the need for changes aimed at updating and improving the CMIR and ancillary reporting requirements. Possible areas of study to be examined could include current trends in cash transportation across international borders, transparency levels of physical transportation of currency, the feasibility of harmonizing data fields with bordering countries, and information derived from FinCEN's experience with Geographic Targeting Orders.
Other Requirements. FinCEN also will continue to issue proposed and final rules pursuant to section 311 of the USA PATRIOT Act, as appropriate. Finally, FinCEN expects that it may propose various technical and other regulatory amendments in conjunction with its ongoing, comprehensive review of existing regulations to enhance regulatory efficiency, and as a result of the efforts of an interagency task force currently focusing on improvements to the U.S. regulatory framework for anti-money laundering.
Bureau of the Fiscal Service
The Bureau of the Fiscal Service (Fiscal Service) administers regulations pertaining to the Government's financial activities, including: (1) Implementing Treasury's borrowing authority, including regulating the sale and issue of Treasury securities, (2) Administering Government revenue and debt collection, (3) Administering Governmentwide accounting programs, (4) Managing certain Federal investments, (5) Disbursing the majority of Government electronic and check payments, (6) Assisting Federal agencies in reducing the number of improper payments, and (7) Providing administrative and operational support to Federal agencies through franchise shared services.
During fiscal year 2016, the Fiscal Service will accord priority to the following regulatory projects:
Notice of Proposed Rulemaking for Publishing Delinquent Debtor Information. The Debt Collection Improvement Act of 1996, Pub. L. 104-134, 110 Stat. 1321 (DCIA) authorizes Federal agencies to publish or otherwise publicly disseminate information regarding the identity of persons owing delinquent nontax debts to the United States for the purpose of collecting the debts, provided certain criteria are met. Treasury proposes to issue a notice of proposed rulemaking seeking comments on a proposed rule that would establish the procedures Federal agencies must follow before promulgating their own rules to publish information about delinquent debtors and the standards for determining when use of this debt collection remedy is appropriate.
Offset of Tax Refund Payments to Collect Past-Due Support. Currently, there is no time limit to recoup offset amounts that were collected from tax refunds to which the debtor taxpayer was not entitled. An interim rule with request for comments would provide a time limit for such recoupments.
Debt Collection Authorities Under the Debt Collection Improvement Act of 1996. The Data Accountability and Transparency Act of 2014 changed the statutory requirement for federal agencies to submit delinquent debts to Treasury for purposes of administrative offset from 180 days delinquent to 120 days delinquent. The direct final rule will amend the regulations to conform to that statutory change.
Amendment to Savings Bond Regulations. Fiscal Service plans to amend regulations in 31 CFR Parts 315, 353, and 360 to allow consideration of certain state escheat claims when the state cannot show that the owner, coowner, or beneficiary is deceased.
Internal Revenue Service
The Internal Revenue Service (IRS), working with the Office of Tax Policy, promulgates regulations that interpret and implement the Internal Revenue Code (Code) and related tax statutes. The purpose of these regulations is to carry out the tax policy determined by Congress in a fair, impartial, and reasonable manner, taking into account the intent of Congress, the realities of relevant transactions, the need for the Government to administer the rules and monitor compliance, and the overall integrity of the Federal tax system. The goal is to make the regulations practical and as clear and simple as possible.
During fiscal year 2016, the IRS will accord priority to the following regulatory projects:
Tax-Related Affordable Care Act Provisions. On March 23, 2010, the President signed the Patient Protection and Affordable Care Act of 2010 (Pub. L. 111-148) and on March 30, 2010, the President signed the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152) (referred to collectively as the Affordable Care Act (ACA)). The ACA's reform of the health insurance system affects individuals, families, employers, health care providers, and health insurance providers. The ACA provides authority for Treasury and the IRS to issue regulations and other guidance to implement tax provisions in the ACA, some of which are already effective and some of which will become effective over the next several years. Since enactment of the ACA, Treasury and the IRS have issued a series of temporary, proposed, and final regulations implementing over a dozen provisions of the ACA, including the premium tax credit under section 36B of the Code, the small-business health coverage tax credit under section 45R of the Code, new requirements for charitable hospitals under section 501(r) of the Code, limits on tax preferences for remuneration provided by certain health insurance providers under section 162(m)(6) of the Code, the employer shared responsibility provisions under section 4980H of the Code, the individual shared responsibility provisions under section 5000A of the Code, insurer and employer reporting under sections 6055 and 6056 of the Code, and several revenue-raising provisions, including fees on branded prescription drugs under section 9008 of the ACA, fees on health insurance providers under section 9010 of the ACA, the tax on indoor tanning services under 5000B of the Code, the net investment income tax under section 1411 of the Code, and the additional Medicare tax under sections 3101 and 3102 of the Code.
In fiscal year 2016, Treasury and the IRS will continue to provide guidance to implement tax provisions of the ACA, including:
Proposed and final regulations related to numerous aspects of the premium tax credit under section 36B, including the determination of minimum value of eligible-employer-sponsored plans;
Regulations under section 4980I of the Code relating to the excise tax on high cost employer-provided coverage;
Regulations on expatriate health plans under the Expatriate Health Coverage Clarification Act of 2014 for purposes of sections 36B, 4980I, and 5000A of the Code, and section 9010 of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act;
Final regulations regarding issues related to the net investment income tax under section 1411 of the Code.
Interest on Deferred Tax Liability for Contingent Payment Installment Sales. Section 453 of the Code generally allows taxpayers to report the gain from a sale of property in the taxable year or years in which payments are received, rather than in the year of sale. Section 453A of the Code imposes an interest charge on the tax liability that is deferred as a result of reporting the gain when payments are received. The interest charge generally applies to installment obligations that arise from a sale of property using the installment method if the sales price of the property exceeds $150,000, and the face amount of all such installment obligations held by a taxpayer that arose during, and are outstanding as of the close of, a taxable year exceeds $5,000,000. The interest charge provided in section 453A cannot be determined under the terms of the statute if an installment obligation provides for contingent payments. Accordingly, in section 453A(c)(6), Congress authorized the Secretary of the Treasury to issue regulations providing for the application of section 453A in the case of installment sales with contingent payments. Treasury and the IRS intend to issue proposed regulations that, when finalized, will provide guidance and reduce uncertainty regarding the application of section 453A to contingent payments.
Rules for Home Construction Contracts. In general, section 460(a) of the Code requires taxpayers to use the percentage-of-completion method (PCM) to account for taxable income from any long-term contract. Under the PCM, income is generally reported in installments as work is performed, and expenses are generally deducted in the taxable year incurred. However, taxpayers with contracts that meet the definition of a "home construction contract," under section 460(e)(4), are not required to use the PCM for those contracts and may, instead, use an exempt method. Exempt methods include the completed contract method (CCM) and the accrual method. Under the CCM, for example, a taxpayer generally takes into account the entire gross contract price and all incurred allocable contract costs in the taxable year the taxpayer completes the contract. Treasury and the IRS believe that amended rules are needed to reduce uncertainty and controversy, including litigation, regarding when a contract qualifies as a "home construction contract" and when the income and allocable deductions are taken into account under the CCM. On August 4, 2008, Treasury and the IRS published proposed regulations on the types of contracts that are eligible for the home construction contract exemption. The preamble to those regulations stated that Treasury and the IRS expected to propose additional rules specific to home construction contracts accounted for using the CCM. After considering comments received and the need for additional and clearer rules to reduce ongoing uncertainty and controversy, Treasury and the IRS have determined that it would be beneficial to taxpayers to present all of the proposed changes to the current regulations in a single document. Treasury and the IRS plan to withdraw the 2008 proposed regulations and replace them with new, more comprehensive proposed regulations.
Research Expenditures. Section 41 of the Code provides a credit against taxable income for certain expenses paid or incurred in conducting research activities. To assist in resolving areas of controversy and uncertainty with respect to research expenses, Treasury and the IRS plan to issue final regulations with respect to the definition and credit eligibility of expenditures for internal use software.
Income Inclusion When Lessee Treated as Having Acquired Investment Credit Property. Section 50(d)(5) of the Code provides that, for purposes of the investment credit, rules similar to former section 48(d) (as in effect prior to the enactment of Revenue Reconciliation Act of 1990 (Public Law 101-508)) apply. Former section 48(d)(5)(B) of the Code generally provides that when a lessor of investment credit property elects to treat the lessee as having acquired the property, the lessee of the property must include an applicable amount in gross income. Treasury and the IRS plan to issue regulations to address how the section 50(d)(5) income-inclusion rules operate when a partnership is the lessee.
Domestic Production Activities Income. Section 199 of the Code provides a deduction for certain income attributable to domestic production activities. To assist in resolving areas of controversy and uncertainty with respect to the eligibility of income from online computer software, Treasury and the IRS plan to issue regulations regarding the application of section 199 to online computer software.
Consistent Basis Reporting between Estate and Person Acquiring Property from Decedent. On July 31, 2015, the President of the United States signed H.R. 3236, Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (Act) (P.L.114-41), into law. Section 2004 of the Act added new Code sections 1014(f), 6035, and 6662(k). Section 1014(f) provides rules requiring that the basis of certain property acquired from a decedent be consistent with the estate tax value of the property. Section 6035 requires executors who are required to file a return under section 6018(a) of the Code (and other persons required to file a return under section 6018(b)) after July 31, 2015, to furnish statements with the IRS and certain estate beneficiaries providing information regarding the value of certain property acquired from a decedent. Section 6662(k) provides a penalty for certain recipients of property acquired from an estate required to file a return after July 31, 2015, who do not report a basis that is consistent with the value determined under section 1014(f) when the property is sold (or deemed sold). On August 21, 2015, Notice 2015-57 was issued. This notice delayed the due date for any statements required by section 6035 to February 29, 2016. The IRS is in the process of issuing a form, a schedule, and instructions thereto to facilitate the reporting required by section 6035. It is expected these documents will be available in draft form for taxpayers' use prior to February 29, 2016. Treasury and the IRS will issue proposed regulations providing guidance under sections 1014(f), 6035, and 6662(k) within 18 months of July 31, 2015.
Arbitrage Investment Restrictions on Tax-Exempt Bonds. The arbitrage investment restrictions on tax-exempt bonds under section 148 of the Code generally limit issuers from investing bond proceeds in higher-yielding investments. On September 16, 2013, Treasury and the IRS published proposed regulations (78 FR 56842) to address selected current issues involving the arbitrage investment restrictions, including guidance on the issue price definition used in the computation of bond yield, working capital financings, grants, investment valuation, modifications, terminations of qualified hedging transactions, and selected other issues. On June 24, 2015, Treasury and the IRS published proposed regulations (80 FR 36301) that revise the 2013 guidance on the issue price definition. Treasury and the IRS plan to finalize the proposed regulations on the arbitrage investment restrictions, including the issue price definition used in the computation of bond yield.
Guidance on the Definition of Political Subdivision for Tax-Exempt, Tax-Credit, and Direct-Pay Bonds. A political subdivision may be a valid issuer of tax-exempt, tax-credit, and direct-pay bonds. Concerns have been raised about what is required for an entity to be a political subdivision. Treasury and the IRS plan to provide additional guidance under section 103 of the Code for determining when an entity is a political subdivision.
Contingent Notional Principal Contract Regulations. Notice 2001-44 (2001-2 CB 77) outlined four possible approaches for recognizing nonperiodic payments made or received on a notional principal contract (NPC) when the contract includes a nonperiodic payment that is contingent in fact or in amount. The Notice solicited further comments and information on the treatment of such payments. After considering the comments received in response to Notice 2001-44, Treasury and the IRS published proposed regulations (69 FR 8886) (the 2004 proposed regulations) that would amend section 1.446-3 and provide additional rules regarding the timing and character of income, deduction, gain, or loss with respect to such nonperiodic payments, including termination payments. On December 7, 2007, Treasury and the IRS released Notice 2008-2 requesting comments and information with respect to transactions frequently referred to as prepaid forward contracts. On May 8, 2015, Treasury and the IRS published temporary and proposed regulations (80 FR 26437) relating to the treatment of nonperiodic payments. Treasury and the IRS plan to finalize the temporary regulations and to re-propose regulations to address issues relating to the timing and character of nonperiodic contingent payments on NPCs, including termination payments and payments on prepaid forward contracts.
Tax Treatment of Distressed Debt. A number of tax issues relating to the amount, character, and timing of income, expense, gain, or loss on distressed debt remain unresolved. During fiscal year 2016, Treasury and the IRS plan to address certain of these issues in published guidance.
Definition of Real Property and Qualifying Income for REIT Purposes. A taxpayer must satisfy certain asset and income requirements to qualify as a real estate investment trust (REIT) under section 856 of the Code. REITs have sought to invest in various types of assets that are not directly addressed by the current regulations or other published guidance. On May 14, 2014, Treasury and the IRS published proposed regulations (79 FR 27508) to update and clarify the definition of real property for REIT qualification purposes, including guidance addressing whether a component of a larger item is tested on its own or only as part of the larger item, the scope of the asset to be tested, and whether certain intangible assets qualify as real property. Treasury and the IRS plan to finalize the proposed regulations in the fiscal year. Treasury and the IRS also plan to provide guidance clarifying the definition of income for purposes of section 856.
Corporate Spin-offs and Split-offs. Section 355 and related provisions of the Code allow for the tax-free distribution of stock or securities of a controlled corporation if certain requirements are met. For example, the distributing corporation must distribute a controlling interest in the controlled corporation, and both the distributing and controlled corporations must be engaged in the active conduct of a trade or business immediately after the distribution. Treasury and the IRS intend to provide guidance on the qualification of a distribution for tax-free treatment under section 355, including (1) regulations that address when a corporation is treated as engaged in an active trade or business, and (2) final regulations that define predecessor or successor corporation for purposes of the exception to tax-free treatment under section 355(e). Treasury and the IRS also intend to provide guidance relating to the tax treatment of other transactions undertaken as part of a plan that includes a distribution of stock or securities of a controlled corporation, such as changes to the voting power of the controlled corporation's stock in anticipation of the distribution, the issuance of debt of the distributing corporation and retirement of such debt using stock or securities of the controlled corporation, and the transfer of cash or property between a distributing or controlled corporation and its shareholder(s) in connection with the distribution.
Disguised Payments for Services. Section 707(a)(2)(A) of the Code provides that if a partner performs services for a partnership and receives a related direct or indirect allocation and distribution, and the performance of services and the allocation and distribution, when viewed together, are properly characterized as a transaction occurring between the partnership and a partner acting other than in its capacity as a partner, the transfer will be treated as occurring between the partnership and one who is not a partner. Treasury and the IRS published proposed regulations on July 23, 2015, to provide guidance on when an arrangement that is purported to be a distributive share under section 704(b) of the Code will be recharacterized as a disguised payment for services under section 707(a)(2)(A). The proposed regulations also provide for modifications to the regulations governing guaranteed payments under section 707(c) to make those regulations consistent with the proposed regulations under section 707(a)(2)(A). Treasury and the IRS expect to issue final regulations during fiscal year 2016.
Transfers of Property to Partnerships with Related Foreign Partners. Section 721(c) of the Code provides authority to issue regulations that prevent the use of a partnership to shift gain to a foreign person. Treasury and the IRS exercised this authority on August 6, 2015, by issuing Notice 2015-54. The notice denies nonrecognition treatment to certain contributions by U.S. persons to partnerships that have foreign partners related to the transferor, unless conditions that preserve U.S. taxing nexus with respect to the built-in gain in the transferred property are met. The notice also addresses the consequences under section 482 of the Code of controlled transactions involving partnerships. Treasury and the IRS intend to issue the regulations described in the notice in this fiscal year.
Country-by-Country Reporting. This fiscal year, pursuant to authority granted under sections 6011, 6012, 6031, and 6038 of the Code, Treasury and the IRS expect to issue regulations requiring reporting of country-by-country information by large U.S. multinational enterprises (MNEs). The regulations will require those MNEs to report income, earnings, taxes paid, and certain economic activity for each country in which the MNE group conducts business, consistent with a template released by the Organisation for Economic Co-operation and Development (OECD) as part of its report "Guidance on Transfer Pricing Documentation and Country-by-Country Reporting." The information will be used for transfer pricing risk assessment.
Currency. On September 6, 2006, Treasury and the IRS published a notice of proposed rulemaking under section 987 of the Code that proposes rules for translating a section 987 qualified business unit's income or loss into the taxpayer's functional currency for each taxable year, as well as for determining the amount of section 987 currency gain or loss that must be recognized when a section 987 qualified business unit makes a remittance. Treasury and the IRS expect to finalize the proposed regulations in this fiscal year.
Disguised Sale and Allocation of Liabilities. A contribution of property by a partner to a partnership may be recharacterized as a sale under section 707(a)(2)(B) of the Code if the partnership distributes to the contributing partner cash or other property that is, in substance, consideration for the contribution. The allocation of partnership liabilities to the partners under section 752 of the Code may impact the determination of whether a disguised sale has occurred and whether gain is otherwise recognized upon a distribution. Treasury and the IRS published proposed regulations on January 30, 2014, to address certain issues that arise in the disguised sale context and other issues regarding the partners' shares of partnership liabilities. Treasury and the IRS are considering comments on the proposed regulations and expect to issue regulations on this issue in fiscal year 2016.
Certain Partnership Distributions Treated as Sales or Exchanges. In 1954, Congress enacted section 751 to prevent the use of a partnership to convert potential ordinary income into capital gain. In 1956, Treasury and the IRS issued regulations implementing section 751 of the Code. The current regulations, however, do not always achieve the purpose of the statute. In 2006, Treasury and the IRS published Notice 2006-14 (2006-1 CB 498) to propose and solicit alternative approaches to section 751 that better achieve the purpose of the statute while providing greater simplicity. Treasury and the IRS published proposed regulations following up on Notice 2006-14 on November 3, 2014. These regulations were intended to provide guidance on determining a partner's interest in a partnership's section 751 property and how a partnership recognizes income required by section 751. Treasury and the IRS expect to issue final regulations during fiscal year 2016.
Penalties and Limitation Periods. Congress amended several penalty provisions in the Internal Revenue Code in the past several years. Treasury and the IRS intend to publish a number of guidance projects in fiscal year 2016 addressing these penalty provisions. Specifically, Treasury and the IRS intend to publish final regulations under section 6708 of the Code regarding the penalty for failure to make available upon request a list of advisees that is required to be maintained under section 6112 of the Code. The proposed regulations were published on March 8, 2013. Treasury and the IRS also intend to publish proposed regulations under sections 6662, 6662A, and 6664 of the Code to provide further guidance on the circumstances under which a taxpayer could be subject to the accuracy related penalty on underpayments or reportable transaction understatements and the reasonable cause exception.
Inversion Transactions. On September 22, 2014, Treasury and the IRS issued Notice 2014-52, addressing the application of sections 7874 and 367 of the Code to inversions, as well as certain tax avoidance transactions that are commonly undertaken after an inversion transaction. In this fiscal year, Treasury and the IRS expect to issue regulations implementing the rules described in Notice 2014-52. Also in this fiscal year, and as announced in Notice 2014-52, Treasury and the IRS expect to issue additional guidance to further limit inversion transactions that are contrary to the purposes of section 7874 and the benefits of post-inversion tax avoidance transactions.
Information Reporting for Foreign Accounts of U.S. Persons. In March 2010, chapter 4 (sections 1471 to 1474) was added to subtitle A of the Internal Revenue Code as part of the Hiring Incentives to Restore Employment Act (HIRE Act) (Pub. L. 111-147). Chapter 4 was enacted to address concerns with offshore tax evasion by U.S. citizens and residents and generally requires foreign financial institutions (FFIs) to enter into an agreement (FFI Agreement) with the IRS to report information regarding financial accounts of U.S. persons and certain foreign entities with significant U.S. ownership. An FFI that does not enter into an FFI Agreement, or that is not otherwise deemed compliant with FATCA, generally will be subject to a withholding tax on the gross amount of certain payments from U.S. sources. Treasury and the IRS have issued proposed, temporary, and final regulations under chapter 4, followed by proposed and temporary regulations modifying certain provisions of the final regulations; proposed and temporary regulations under chapters 3 and 61, and section 3406, to coordinate with those chapter 4 regulations; as well as implementing revenue procedures and other guidance. Treasury and the IRS expect to issue further guidance with respect to FATCA and related provisions in this fiscal year, including finalizing of the aforementioned chapter 3, 4 and 61 regulations and proposed regulations covering the compliance requirement of entities acting as sponsoring entities on behalf of certain foreign entities.
Foreign Tax Credits and Covered Asset Acquisitions. Section 901(m) of the Code limits the availability of foreign tax credits in certain cases in which U.S. tax law and foreign tax law provide different rules for recognizing income and gain. In 2014, Treasury and the IRS issued two notices providing guidance under section 901(m) regarding the treatment of gains and losses from dispositions. In this fiscal year, Treasury and the IRS expect to issue regulations to implement these notices, and also provide substantial additional guidance under section 901(m).
Transfers of Property to Foreign Corporations. Section 367 of the Code provides special rules to address the transfer of property, including intangible property, by U.S. persons to foreign corporations in certain nonrecognition transactions. Under existing temporary regulations issued in 1986, favorable treatment is afforded to the outbound transfer of "foreign goodwill and going concern value," which has created incentives for taxpayers to categorize transfers of high-value intangible property as such. On September 14, 2015, Treasury and the IRS released proposed regulations that would eliminate that favorable treatment. Treasury and the IRS released on the same day temporary and proposed regulations under section 482 that clarify the coordination of the application of the transfer pricing rules in conjunction with other provisions, including section 367. Treasury and the IRS intend to finalize the proposed section 367 regulations and the temporary and proposed section 482 regulations in this fiscal year.
Section 501(c) Guidance. After reviewing over 160,000 comments submitted on the proposed regulations under section 501(c)(4) published in fiscal year 2014, Treasury and the IRS plan to issue revised proposed regulations that provide guidance under section 501(c) relating to limitations on political campaign activities of certain tax-exempt organizations.
Guidance on Multiemployer Benefit Suspensions. The Multiemployer Pension Reform Act of 2014 (MPRA) enacted new rules for multiemployer plans that are projected to have insufficient funds, at some point in the future, to pay the full plan benefits to which individuals will be entitled. MPRA permits the sponsor of such a plan to reduce the pension benefits payable to plan participants and beneficiaries if certain conditions are satisfied, after submitting an application to Treasury for approval and conducting a participant vote. Two sets of proposed and temporary regulations, each set covering different aspects of the legislation, have been published, as well as a revenue procedure concerning the application process. A public hearing on the first set of regulations has been held and over 700 comments received. Treasury and the IRS plan to finalize both sets of regulations in this fiscal year.
ABLE Account guidance. On December 19, 2014, Congress passed The Stephen Beck, Jr., Achieving a Better Life Experience (ABLE) Act of 2014, adding section 529A to the Code to enable states to create qualified ABLE programs under which disabled individuals may establish a tax-advantaged account to pay for disability-related expenses. To be eligible to establish an ABLE account, the individual must have become disabled prior to age 26. As required by the statute, Treasury and the IRS on June 19, 2015, published proposed regulations implementing the provision. States may rely on the proposed regulations for establishing a qualified ABLE program. Treasury and the IRS intend to finalize the regulations during the 2016 fiscal year, taking into account all comments received.
Guidance Responding to the SEC's Money Market Reform Rule. On July 23, 2014, the SEC adopted a final rule to reduce the systemic risk that money market funds present to the national economy. Later that day, Treasury and the IRS issued simplifying guidance, including proposed regulations (79 FR 43694), designed to ameliorate the tax compliance difficulties that the SEC rule would otherwise pose for certain money market funds and their shareholders. In fiscal year 2016, Treasury and the IRS intend to finalize the proposed regulations.
Guidance Relating to Publicly Traded Partnerships. Section 7704 of the Code provides that a partnership whose interests are traded on either an established securities market or on a secondary market (a "publicly traded partnership") is generally treated as a corporation for Federal tax purposes. However, section 7704(c) permits publicly traded partnerships to be treated as partnerships for Federal tax purposes if 90 percent or more of partnership income consists of "qualifying income." Section 7704(d) provides that income is generally qualifying income if it is passive income or is derived from exploration, development, mining or production, processing, refining, transportation, or marketing of a mineral or natural resource. Treasury and the IRS issued proposed regulations in 2015 to provide guidance and reduce uncertainty regarding the scope of the natural resource exception. After considering comments on the proposed regulations, Treasury and the IRS expect to issue final regulations in fiscal year 2016.
 OCC, Board of Governors of the Federal Reserve System (Board), and Federal Deposit Insurance Corporation (FDIC).