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Qualified Derivative Payment Reporting Under BEAT Rules Deferred Until 2027, Notice 2024-43

The IRS intends to amend the base erosion and anti-abuse tax (BEAT) regulations under Code Secs. 59A and 6038A to defer the applicability date of the reporting of qualified derivative payments (QDPs) until tax years beginning on or after January 1, 2027. Until these reporting rules apply, the current transition period rules for QDP reporting will continue to apply.

Background

Final BEAT regulations adopted with T.D. 9885 include rules under Code Secs. 59A and 6038A addressing the reporting of QDPs, which are not treated as base erosion payments for BEAT purposes. The final regulations generally apply to tax years ending on or after December 17, 2018.

In general, a payment qualifies for the QDP exception if the taxpayer satisfies certain reporting requirements. Reg. §1.6038A-2(b)(7)(ix) requires a taxpayer subject to the BEAT to report on Form 8991, Tax on Base Erosion Payments of Taxpayers with Substantial Gross Receipts, the aggregate amount of QDPs for the tax year and make a representation that all payments satisfy the requirements of Reg. §1.59A-6(b)(2). If a taxpayer fails to satisfy these reporting requirements, those payments are not eligible for the QDP exception and are treated as base erosion payments, unless another exception applies.

The QDP reporting rules of Reg. §1.6038A-2(b)(7)(ix) apply to tax years beginning on or after June 7, 2021. Before these rules are applicable, there is a transition period during which a taxpayer is treated as satisfying the QDP reporting requirements to the extent that the taxpayer reports, in good faith, the aggregate amount of QDPs on Form 8991, Schedule A (Reg. §1.59A-6(b)(2)(iv) and Reg. §1.6038A-2(g)).

In Notice 2022-30, I.R.B. 2022-28, 70, the IRS announced the intention to extend the transition period through tax years beginning before January 1, 2025, while it is studying the interaction of the QDP exception, the BEAT netting rule in Reg. §1.59A-2(e)(3)(vi), and the QDP reporting requirements. The IRS has not yet issued regulations amending the applicability date of Reg. §1.6038A-2(g). Since the IRS continue to study these provisions, it has determined that it is appropriate to further extend the transition period.

Deferred Applicability Date of QDP Reporting and Taxpayer Reliance

The IRS intends to amend Reg. §1.6038A-2(g) to provide that the QDP reporting rules of Reg. §1.6038A-2(b)(7)(ix) will apply to tax years beginning on or after January 1, 2027. Until these rules apply, the transition period rules described above will continue to apply. Taxpayers may rely on this Notice before the amendments to the final regulations are issued.

Notice 2022-30 is modified, and as so modified, is superseded.

Notice 2024-43

IRS Highlights Home Energy Credits for Taxpayers, IR-2024-137

The IRS has advised taxpayers that making specific energy-efficient updates to their homes could qualify them for home energy credits. This guidance comes under the expanded provisions of […]

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IRS Highlights Home Energy Credits for Taxpayers, IR-2024-137

IRS Issues FAQs on Disaster Relief Related to Retirement Plans, FS-2024-19; IR-2024-132

The IRS issued frequently asked questions (FAQs) related to distributions from retirement plans and IRS for individuals impacted by federally declared disasters. These FAQs cover the ongoing disaster relief for certain distributions […]

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IRS Issues FAQs on Disaster Relief Related to Retirement Plans, FS-2024-19; IR-2024-132

2025 Inflation Adjustments for Health Savings Accounts Released, Rev. Proc. 2024-25

The IRS has released the 2025 inflation-adjusted amounts for health savings accounts under Code Sec. 223. For calendar year 2025, the annual limitation on deductions under Code Sec. 223(b)(2) for an […]

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2025 Inflation Adjustments for Health Savings Accounts Released, Rev. Proc. 2024-25

FL - Eligibility for tax credit scholarship program expanded

The eligibility for the Florida Tax Credit Scholarship Program is expanded for sales and use tax purposes. The scholarship program […]

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FL - Eligibility for tax credit scholarship program expanded

FL - IRC conformity tie-in date updated, disaster extension established

Florida updated the IRC conformity tie-in date for computing corporate income tax liability from January 1, 2023 to January 1, […]

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FL - IRC conformity tie-in date updated, disaster extension established

FL - Gas and Sulfur production tax rates for 2024-2025 announced

Florida has issued the severance tax rates for the production of gas and sulfur effective July 1, 2024, through June […]

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FL - Gas and Sulfur production tax rates for 2024-2025 announced

No Further Funding Cuts For IRS In FY24

Other than a planned repurposing of Inflation Reduction Act supplemental funding, the Internal Revenue Service saw no other cuts as the President signed off on the resolution […]

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No Further Funding Cuts For IRS In FY24

IRS Criminal Investigation Releases COVID Fraud Conviction Statistics, IR-2024-83

The IRS released statistics that showed 1,644 tax and money-laundering cases related to COVID fraud, totaling $9 billion investigated by the Criminal Investigation (CI). CI is the law enforcement […]

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IRS Criminal Investigation Releases COVID Fraud Conviction Statistics, IR-2024-83

IRS Updates FAQ on Commercial Clean Vehicle Credits (FS-2024-14; IR-2024-111)

The IRS updated frequently asked questions (FAQ) on New, Previously Owned and Qualified Commercial Clean Vehicle Credits. These FAQs provide guidance on how the Inflation Reduction […]

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IRS Updates FAQ on Commercial Clean Vehicle Credits (FS-2024-14; IR-2024-111)

2024 Foreign Housing Expense Amounts Released, Notice 2024-31

KPMG TaxNewsFlash – United States March 20, 2024 The IRS today released Notice 2024-31 [PDF 156 KB] providing the adjustments to the limitation on housing expenses, under […]

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2024 Foreign Housing Expense Amounts Released, Notice 2024-31