This revenue procedure requires taxpayers to report to the Internal Revenue Service their groupings and regroupings of activities and the addition of specific activities within their existing groupings of activities for purposes of section 469 of the Internal Revenue Code and § 1.469-4 of the Income Tax Regulations.
This revenue procedure has been approved by Treasury and is ready for publication. Immediate approval is requested to track how taxpayers have chosen to treat their business activities relative to code section 469. Delay in approval would hinder the IRSs ability to audit taxpayers whose grouped activities may be at issue. This is the most pressing issue under section 469.
US Code:
26 USC 469
Name of Law: Passive activity losses and credits limited.
This revenue procedure requires taxpayers to report to the Internal Revenue Service their groupings and regroupings of activities and the addition of specific activities within their existing groupings of activities for purposes of section 469 of the Internal Revenue Code and § 1.469-4 of the Income Tax Regulations.
The IRS has not prescribed reporting requirements for taxpayer groupings under section 469 other than those provided for in § 1.469-9(g) (relating to the election available to certain real estate professionals). As a result, the IRS and taxpayers have had difficulty verifying taxpayers historical groupings.
Notice 2008-64 (the Notice) was published in the Internal Revenue Bulletin. The Notice proposed a disclosure regime for taxpayer groupings under section 469 and solicited comments on whether the proposal sufficiently balanced the need for disclosure with taxpayer burden, as well as alternative approaches. In response, the Service received several comments suggesting ways in which the proposal could be improved. This revenue procedure reflects some of the changes suggested by the comments received. Specifically, the Notice required taxpayers to make a disclosure whenever there is a disposition of an activity within a chosen grouping; this requirement has been removed. In addition, the Notice did not contain a relief provision for taxpayers who, in a given year, fail to make the required disclosure. Section 4.07 of this revenue procedure contains a relief provision for taxpayers who can meet certain additional criteria to demonstrate their grouping of activities. The creation of this relief provision results in an increase in responses by 144,000 and an estimated increase of 39,000 burden hours.
$0
No
No
Uncollected
Uncollected
No
Uncollected
Jonathan Cornwell 202 622-3050 jonathan.e.cornwell@irscounsel.treas.gov
No
On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).
The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:
(i) Why the information is being collected;
(ii) Use of information;
(iii) Burden estimate;
(iv) Nature of response (voluntary, required for a benefit, or mandatory);
(v) Nature and extent of confidentiality; and
(vi) Need to display currently valid OMB control number;
If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.
469 Grouping.doc
Revenue Procedure 123122-05, Disclosure of Activities Grouped under Section 469