Posted on Dec 10, 2018 by JMS Advisory Group |
Recently, the IRS announced an extension of the transition relief described in Revenue Ruling 2018-17, 2018-25 IRB 753. The latest announcement will provide a temporary reprieve for institutions trying to comply with the new ruling, which considers the escheatment of an IRA an includible part of the account owner’s gross income for federal tax withholding and reporting purposes.
In the original Rev. Rul. 2018-17 , tax withholdings associated with remittances to the states made pursuant to escheat law had to be reported to the IRS before either January 1, 2019 or the “date it becomes reasonably practicable” to apply the new rule (whichever is earlier).
The Treasury Department and the IRS received many requests for extensions of time to comply with the original deadline. In light of the large number of requests, the IRS made an additional announcement extending the transition relief by one year. The latest development states that the IRS will not consider a person as noncompliant regarding withholding or reporting requirements if that person makes payments before either January 1, 2020 or the date it becomes reasonably practicable to comply with the new rule.
This latest announcement gives institutions an extra year to designate escheatment of an IRA as part of the owner’s gross income for tax withholding and reporting purposes. JMS is currently advising affected clients implement processes surrounding this the new rule,. We may be able to assist your organization as well. Contact us today if you have any questions about escheatment of IRAs, the original Rev. Rul. 2018-17, or the latest transition relief extension.