The United States (US) Treasury and Internal Revenue Service (IRS) on 7 February released the second quarter update to the 2017–2018 Priority Guidance Plan, to reflect additional projects that have become near-term priorities as a result of the Tax Cuts and Jobs Act (TCJA) enacted in December. Several international tax projects are listed under the section on initial implementation of the TCJA:

• Computational, definitional, and other guidance under new Internal Revenue Code¹ Section 163(j)
• Guidance implementing new Section 965 and other international sections of the TCJA
• Guidance under new Section 1446(f) for dispositions of certain partnership interests

A Treasury official was quoted as saying the Government will be working on these initial projects "with intensity over the next six months." The Plan also lists projects unrelated to the TCJA. The Government indicated it may further update the 2017-2018 plan during the plan year "to reflect additional items that have become priorities and guidance that we have published during the plan year."

According to the Treasury official, taxpayers should not expect many notices relating to the TCJA, but to the extent they are issued they will be limited in scope and address basic questions. An example of a future notice includes certain "gating issues" under Section 163(j) to address items in the legislative history that are not in the provision.

The official said the Government also plans to issue a third repatriation transition notice to address procedural matters, but there reportedly is disagreement among government officials whether more transition notices will be released.

In other IRS news, a Treasury official said the Government plans to further delay the effective date of the final Section 987 branch currency regulations until 2020, citing the need to focus on TCJA guidance. The final regulations under Section 987 were issued in December 2016. Recall that the final foreign currency regulations were identified in Notice 2017-38 (along with seven other regulations) as significant tax regulations requiring additional review under Executive Order 13789. The Treasury official said the plan now is to issue additional proposed regulations sometime mid-year or early fall 2018.

This would be the second delay for the Section 987 regulations; on 2 October 2017, Treasury and the IRS announced in Notice 2017-57 that they intended to delay the applicability date of the final and related temporary regulations by one year. At the time, this made the final Section 987 regulations applicable to tax years beginning on or after two years after the first date of the first tax year following 7 December 2016 (i.e., 1 January 2019, for in-scope calendar-year taxpayers).

And Treasury Secretary Steven Mnuchin this week said the US would enter into tax treaty negotiations with Armenia. The Treasury Secretary made the statement during a 6 February hearing on Capitol Hill.

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ENDNOTE

¹ All "Section" references are to the Internal Revenue Code of 1986, and the regulations promulgated thereunder.

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CONTACTS

For additional information with respect to this Alert, please contact the following:

Ernst & Young LLP, International Tax Services, Washington, DC

• Arlene Fitzpatrick
  arlene.fitzpatrick@ey.com
• Joshua Ruland
  joshua.ruland@ey.com

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ATTACHMENT

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