United States

IRS releases annual ruling guidance update with Rev. Proc. 2017-1

TAX ALERT  | 

The IRS has released IRB 17-01, the first revenue procedure of the year, with revised procedures for letter rulings and information letters issued by various divisions of the Associate Chief Counsel Offices of the Internal Revenue Service.

Significant changes include increases in user fees, some of which include an increase in the user fee for non-automatic (advance consent) accounting method changes, an increase in the user fee for non-automatic requests for a change in accounting period, as well as an increase in the user fee for requests for an extension of time for making a regulatory election under Reg. section 301.9100-3. The changes also reflect the IRS’s expansion of user fee payments through www.pay.gov.

The fee to request a non-automatic change in method of accounting increases from $8,600 to $9,500, while the fee to request an extension of time to file Form 3115, Application for Change in Accounting Method, increases from $9,100 to $10,000. Fees for additional applicants seeking the identical change in method of accounting on the same Form 3115 increase from $180 to $200.

For a requested change in accounting period that cannot be made under the automatic procedures, the user fee increases from $4,200 to $5,800. A request to grant an extension to file a late request for a change in accounting period increases from $3,700 to $5,400.

Similarly, the user fee to request an extension of time to make a regulatory election that cannot be made under the automatic procedures provided for in Reg. section 301.9100-2, increases from $9,800 to $10,000. A reduced user fee is available if the request comes from a person whose gross income is less than $250,000. In such cases, the user fee increases from $2,200 to $2,400. For persons whose income is more than $250,000, but less than $1 million, a reduced user fee is also available and increases from $6,500 to $7,600.

All user fee increases are effective for requests received after Feb. 1, 2017.

Additionally, the revenue procedure expands the accepted user fees through www.pay.gov. This website is a means for taxpayers to electronically submit required user fees for requests described in the guidance. The IRS is transitioning toward using www.pay.gov as the exclusive means for making payment for user fees described in Rev. Proc. 2017-1, or any future updates. If a taxpayer chooses to make a payment through www.pay.gov, it should indicate as such on its administrative procedure request stating, “The required user fee of $X has been paid through www.pay.gov or is enclosed.”

The revenue procedure also indicated that the IRS will issue an announcement that will provide more details about the transition period to www.pay.gov, which will accept credit card payments under $25,000 and direct debit through a checking or savings account. During the transition period, payment may be made by either www.pay.gov or by sending a check or money order in U.S. dollars, payable to the Internal Revenue Service, in the appropriate amount.

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