Taxes – IRS Issues Guidance on Some Provisions of Proposed Regulations

The Department of the Treasury and the Internal Revenue Service (IRS) issued Notice 2015-81, a guidance on how they intend to respond to public comments by revising three provisions of the proposed regulations under § 529A of the Internal Revenue Code when those regulations are finalized.  Specifically, the guidance addresses concerns raised during the public comment period for the notice of proposed rulemaking for the Achieving a Better Life Experience (ABLE) Act.  The Treasury Department and the IRS note that commenters maintained that the following three requirements for qualified programs in the proposed regulations would create significant barriers to the establishment of such programs: (1) the requirement to establish safeguards to categorize distributions from ABLE accounts, (2) the requirement to request the taxpayer identification number (TIN) of each contributor to an ABLE account, and (3) the requirements for disability certifications, and in particular the requirement to process disability certifications with signed physicians’ diagnoses.  Notice 2015-81 indicates that the Treasury Department and the IRS intend to address these issues in the final regulations in the same manner as indicated as in the Notice and that, pending the issuance of final regulations, taxpayers may rely on the guidance contained in the Notice.  Notice 2015-81 will appear in the Internal Revenue Bulletin (IRB) 2015-49, dated Dec. 7, 2015.

It appears that Notice 2015-81 positively addresses a number of issues raised by advocates in the disability community and by state ABLE administrators.  These decisions are expected to make the program easier to administer and, therefore, less costly to individual ABLE account holders.  Other issues in the proposed regulations still remain outstanding and advocates and state ABLE program administrators look forward to publication of final regulations.

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