Part III. Administrative, Procedural, and Miscellaneous

Date for Compliance with Consistent Basis Reporting Between Estate and Person Acquiring Property from Decedent

Notice 2016–27

SECTION 1: PURPOSE

On July 31, 2015, the President of the United States signed into law the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, Public Law 114–41, 129 Stat. 443 (Act). Section 2004 of the Act added new sections 1014(f) and 6035. On August 21, 2015, the Treasury Department and the IRS issued Notice 2015–57, 2015–36 IRB 294. That notice delayed until February 29, 2016, the due date for any statements required under section 6035(a)(3)(A) to be provided before February 29, 2016. On February 11, 2016, the IRS issued Notice 2016–19, 2016–09 IRB 362, to provide that executors and other persons required to file or furnish a statement under section 6035(a)(1) or (a)(2) before March 31, 2016, need not do so until March 31, 2016. On March 4, 2016, the Treasury Department and the IRS published temporary and proposed regulations under sections 1014(f) and 6035. TD 9757, 81 FR 11431; REG–127923–15, 81 FR 11486. This notice provides that executors and other persons required to file or furnish a statement under section 6035(a)(1) or (a)(2) before June 30, 2016, need not do so until June 30, 2016.

SECTION 2: BACKGROUND

Section 1014(f) provides rules requiring that the basis of certain property acquired from a decedent, as determined under section 1014, may not exceed the value of that property as finally determined for federal estate tax purposes, or if not finally determined, the value of that property as reported on a statement made under section 6035.

Section 6035 imposes new reporting requirements with regard to the value of property included in a decedent’s gross estate for federal estate tax purposes.

Section 6035(a)(1) provides that the executor of any estate required to file a return under section 6018(a) must furnish, both to the Secretary and to the person acquiring any interest in property included in the decedent’s gross estate for federal estate tax purposes, a statement identifying the value of each interest in such property as reported on such return and such other information with respect to such interest as the Secretary may prescribe.

Section 6035(a)(2) provides that each person required to file a return under section 6018(b) must furnish, both to the Secretary and to each other person who holds a legal or beneficial interest in the property to which such return relates, a statement identifying the information described in section 6035(a)(1).

Section 6035(a)(3)(A) provides that each statement required to be furnished under section 6035(a)(1) or (a)(2) is to be furnished at such time as the Secretary may prescribe, but in no case at a time later than the earlier of (i) the date which is 30 days after the date on which the return under section 6018 was required to be filed (including extensions, if any) or (ii) the date which is 30 days after the date such return is filed.

Section 6035(b) authorizes the Secretary to prescribe such regulations as necessary to carry out section 6035. Section 7805(a) provides generally that the Secretary shall prescribe all needful rules and regulations for the enforcement of this title, including all rules and regulations as may be necessary by reason of any alteration of law in relation to internal revenue. Section 7805(b)(2) provides that regulations may apply retroactively if they are issued within 18 months of the date of the enactment of the statutory provision to which they relate.

SECTION 3: GUIDANCE

The Treasury Department and the IRS have received numerous comments that executors and other persons have not had sufficient time to adopt the systemic changes that would enable the filing of an accurate and complete Form 8971 and Schedule A. Accordingly, statements required under sections 6035(a)(1) and

(a)(2) to be filed with the IRS or furnished to a beneficiary before June 30, 2016, need not be filed with the IRS and furnished to a beneficiary until June 30, 2016.

SECTION 4: EFFECTIVE DATE

This notice is effective on March 23, 2016. This notice applies to executors of the estates of decedents and to other persons who are required under section 6018(a) or (b) to file a return if that return is filed after July 31, 2015.

DRAFTING INFORMATION

The principal author of this notice is Eliezer Mishory of the Office of the Associate Chief Counsel (Procedure & Administration). For further information regarding this notice, please contact Theresa Melchiorre at (202) 317-6859 (not a tollfree number).

Empowerment Zone Designation Extension

Notice 2016–28

I. PURPOSE

This notice provides the manner in which a State or local government may amend an empowerment zone nomination to provide for a new termination date of December 31, 2016. This notice is issued pursuant to § 1391 of the Internal Revenue Code, as amended by § 171(a) of the Protecting Americans from Tax Hikes Act of 2015 (PATH Act), enacted as part of the Consolidated Appropriations Act, 2016, Division Q, Pub. L. 114–113, ______ Stat. ______ (December 18, 2015).

II. BACKGROUND

Section 1391 was enacted in 1993 to allow a State or local government (“entity”) to nominate an area or areas in its jurisdiction for designation as an empowerment zone. The Secretary of Housing and Urban Development, in the case of any nominated area that is located in an urban area, and the Secretary of Agriculture, in the case of any nominated area

April 11, 2016 576 Bulletin No. 2016–15

that is located in a rural area, have since designated which of the nominated areas are empowerment zones. Unless an earlier termination date was provided by the nominating entity, a designation was originally effective for the period beginning on the date of designation and ending on the close of the 10 ^th taxable year beginning on or after the date of designation. Section 112 of the Community Renewal Tax Relief Act of 2000, Pub. L. No. 106– 554, 114 Stat. 2763A–587 (December 21, 2000) (CRTRA), amended § 1391(d)(1) to extend the designation period for all empowerment zones through December 31, 2009, regardless of the original termination date. Subsequent amendments to § 1391(d)(1)(A) further extended the designation period through December 31, 2014. See § 753(a) of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Pub. L. No. 111–312, 124 Stat. 3296 (December 17, 2010) (TRUIRJCA), § 327(a) of the American Taxpayer Relief Act of 2012, Pub. L. 112–240, 126 Stat. 2313 (January 2, 2013) (ATRA), and § 139(a) of the Tax Increase Prevention Act of 2014, Pub. L. 113–295, 128 Stat. 4010 (December 19, 2014) (TIPA).

In 2013, the Treasury Department and the Internal Revenue Service (IRS) issued Notice 2013–38, 2013–25 I.R.B. 1251, pursuant to § 753(c) of TRUIRJCA and § 327(c) of ATRA. Notice 2013–38 provided that any nomination for an empowerment zone that was in effect on December 31, 2009, is deemed to be amended to provide for a new termination date of December 31, 2013, unless the nominating entity declined the extension in a written notification to the IRS. In 2015, the Treasury Department and the IRS issued Notice 2015–26, 2015–13 I.R.B. 814, pursuant to § 139(b) of TIPA. Notice 2015–26 provided that any nomination for an empowerment zone that was in effect on December 31, 2013, is deemed to be amended to provide for a new termination date of December 31, 2014, unless the nominating entity declined the extension in a written notification to the IRS. No written requests were received under either Notice 2013–28 or Notice 2015–26. Accordingly, the designations of all empower

ment zones currently have a termination date of December 31, 2014.

In 2015, Congress further amended § 1391(d)(1) to extend the period for which an empowerment zone designation is in effect by an additional two years. As amended by § 171(a)(1) of the PATH Act, § 1391(d)(1) provides that any designation of an empowerment zone ends on the earliest of (A) December 31, 2016, (B) the termination date designated by the State and local governments as provided for in their nomination, or (C) the date the appropriate Secretary revokes the designation. Section 171(a)(2) of the PATH Act provides that where a nomination of an empowerment zone included a termination date of December 31, 2014, § 1391(d)(1)(B) shall not apply with respect to such designation if, after the date of the enactment of the PATH Act, the entity that made such nomination amends the nomination, in such manner as the Secretary of the Treasury may provide, to provide for a new termination date. The amendments made by § 171(a) of the PATH Act apply to taxable years beginning after December 31, 2014.

Thus, pursuant to the PATH Act, an entity must amend its nomination to provide for a new termination date of December 31, 2016, in order to retain an empowerment zone designation that is effective through that date. Section III of this notice provides the procedures that an entity must follow to amend its termination date.

III. AMENDMENT OF A NOMINATION TO EXTEND EMPOWERMENT ZONE DESIGNATION THROUGH DECEMBER 31, 2016

Any nomination for an empowerment zone with a current termination date (as amended by CRTRA, Notice 2013–38, and Notice 2015–26) of December 31, 2014, is deemed to be amended to provide for a new termination date of December 31, 2016, unless the nominating entity sends written notification to the IRS by May 24, 2016. The written notification must affirmatively decline extension of the empowerment zone nomination through December 31, 2016. If the United States mail is used, the notification should be sent to the following address:

Internal Revenue Service Attn: Charles Magee, CC:ITA:7, Room 4136 P.O. Box 7604 Ben Franklin Station Washington, DC 20044

If a private delivery service is used, the notification should be sent to the following address:

Internal Revenue Service Attn: Charles Magee, CC:ITA:7, Room 4136 1111 Constitution Ave., NW Washington, DC 20224

If the entity that nominated an empowerment zone does not send written notification, the nomination of that empowerment zone will be deemed extended from December 31, 2014, through December 31, 2016. Accordingly, § 1391(d)(1)(B) does not apply and, pursuant to § 1391(d)(1)(A)(i), the designation of that empowerment zone ends on December 31, 2016.

IV. DRAFTING INFORMATION

The principal author of this notice is Charles Magee of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding this notice contact Mr. Magee at (202) 317-7005 (not a toll-free number).

26 CFR 601.106: Appeals Functions

Rev. Proc. 2016–22