Tier I Issue: IRC § 118 Abuse Directive #9
LMSB Control No. LMSB-4-0710-020
Impacted IRM 4.51.5
July 9, 2010
|
MEMORANDUM FOR |
INDUSTRY DIRECTORS |
|
FROM: |
Patricia C. Chaback |
|
SUBJECT: |
Tier I Issue: IRC § 118 Abuse Directive #9 |
This Directive is intended to provide field direction on a Tier I Issue relating to the leaking Underground Storage Tank (UST) state remediation reimbursement programs.
Change of Status:
The leaking Underground Storage Tank state remediation reimbursement program sub-issue within the Tier I issue IRC § 118 Abuse has been moved from active Tier I status to monitoring status; however, it remains a Coordinated Issue in accordance with IRM 4.51.2.4 (12-9-2005). The State and Local Tax (SALT) incentive sub-issue under the IRC § 118 Abuse issue remains in active Tier I status until further notice.
The IRC § 118 UST state remediation reimbursements issue was designated a Tier I issue to emphasize a consistent tax position that UST state remediation reimbursements are subsidies that enable owners and operators to pay for environmental remediation and do not qualify for the exclusion from gross income under IRC § 118(a). See Tier I Issue: Section 118 Abuse Directive #8 issued June 3, 2009.
This Directive amends the Tier status and procedural requirements outlined in Directive #8 solely with respect to the IRC § 118 UST state remediation reimbursements issue. The UST remediation reimbursements issue is no longer in active Tier I status, but will continue as a monitored issue since it is well-defined, and guidance in the form of a Coordinated Issue Paper ("CIP") has been issued. CIP- Leaking Underground Storage Tank Remediation Reimbursement Program (February 5, 2009)
Examination Guidance:
The UST state remediation reimbursements issue should be examined under the guidance of IRM 4.51.2.4 “LMSB Coordinated Issues”. When examining the issue, the UIL code 118.01-02 listed in the CIP should be used. Issue guidance and support will continue through the LMSB Environmental Technical Advisor.
Examiners should utilize the following guidance to develop the issue:
Coordinated Issue Paper on Leaking Underground Storage Tank State Reimbursement Funds (published 2/5/09.) The CIP concludes payments received by corporate owners or operators of underground storage tanks, in the form of payments from state financial assurance funds or other state underground storage tank cleanup reimbursement programs are not nonshareholder contributions to capital under IRC § 118(a) . Therefore, amounts from state financial assurance funds or other reimbursement programs are included in gross income under IRC § 61(a).
Contact:
For questions, contact David Carter, PFTG Technical Advisor Manager at 404-338-9444.
This Directive is not an official pronouncement of law, and cannot be used, cited, or relied upon as such.
cc: Commissioner, LMSB
Deputy Commissioner, Operations
Deputy Commissioner, International
Division Counsel, LMSB
Chief, Appeals
Directors, Field Operations
Director, Planning, Quality, Analysis & Support
