Treasury announced that it will soon issue proposed regulations that will treat foreign-owned single-member limited liability companies (LLCs) as corporations solely for purposes of reporting under Section 6038A, according to a statement released this week by Robert Stack, Treasury deputy assistant secretary (international tax affairs). The future regulations will provide a mechanism for the government to require the filing of an information return, which itself will require the foreign-owned LLCs to obtain a tax identification number and disclose their foreign owner.

These new requirements will allow the IRS to determine whether an entity or its owner is liable for any federal tax or federal tax due, and to share information regarding the entity and its ownership with foreign tax authorities if allowed under US tax treaties or tax information exchange agreements. The regulations are meant to address situations whereby a small class of foreign-owned LLCs that have no obligation to report information to the Service, or even obtain a tax identification number because they do not have a sufficient US nexus. Stack said these entities "can pose a tax transparency risk" and "be used to dodge non-US taxes, or to shield the true beneficial owners of a foreign bank account."

The government announced last July that it would be issuing regulations in this area in the Treasury and IRS 2015-2016 Priority Guidance Plan.

The IRS this week released Revenue Procedure 2016-18, updating the list of countries with which the United States will engage in the automatic exchange of tax information on bank interest paid to nonresident aliens. Azerbaijan, Jamaica, and the Slovak Republic have been added to the list. The additions are the latest step in the government's implementation of the Foreign Account Tax Compliance Act to combat tax evasion, while providing that safeguards are in place in the foreign jurisdictions before information is exchanged.

The IRS also released its annual report on Advance Pricing Agreements (APAs) on 30 March covering 2015, in Announcement 2016-12. There were 110 APAs executed last year, with a noticeable uptick in the number of APA applications filed in 2015 over 2014. Nearly three quarters of the total number of bilateral APAs completed in 2015 involved the United States entering into mutual agreements with Japan or Canada. Last year also saw the first bilateral APA between the United States and Italy. An ITS TP alert is pending.

Both the House and Senate were not in session this week for the spring recess. The Senate is scheduled to reconvene on 4 April, and the House will return the following week. House Ways and Means Tax Policy Subcommittee Chairman Charles Boustany (R-LA) this week announced that the Subcommittee will hold the second in a series of hearings to address tax reform proposals by members of Congress. The hearing, titled "Fundamental Tax Reform Proposals," will take place on 13 April.