The annual IRS priority guidance plan (PGP) lays out key areas for Treasury and the IRS. Comparing the 2023-2024 and 2024-2025 PGPs yields clues about what to expect in 2025.
The initial PGP is published annually in the fall. It contains a list of priority guidance projects that have received, or will receive, focus from the preceding July 1 through the following June 30.
The 2024-2025 PGP, released October 3, 2024, lists 231 guidance projects, while the 2023-2024 PGP, released September 29, 2023, lists 237 guidance projects.
The initial PGP for any year is typically followed by three quarterly updates. These lead to the following year’s initial PGP, which also functions as a first-quarter update because it includes guidance released or published during the three-month period between the preceding June 30 (the previous initial PGP’s year-end plan) and September 30 (the end of the current initial PGP’s first quarter).
In 2024, the IRS released quarterly updates to the 2024-2025 PGP March 18, June 25, and September 6.
Categories
Like the 2023-2024 PGP, the 2024-2025 PGP is divided into 16 subject matter categories listed in alphabetical order, with an appendix at the end for regularly scheduled publications (for example, the monthly revenue rulings that publish the adjusted applicable federal rate tables). The categories in both PGPs are:
- consolidated returns;
- corporations and their shareholders;
- employee benefits;
- energy security;
- excise tax;
- exempt organizations;
- financial institutions and products;
- general tax issues;
- gifts, estates, and trusts;
- insurance companies and products;
- international;
- partnerships;
- S corporations;
- tax accounting;
- tax administration; and
- tax-exempt bonds.
As in earlier PGPs, the category for international guidance is further broken down into seven subcategories, covering:
- deemed inclusions from foreign entities;
- inbound transactions;
- outbound transactions;
- foreign tax credits;
- transfer pricing;
- sourcing and expense allocation; and
- other topics.
All the international projects appear in one of the above subcategories in both PGPs.
2023-2024 PGP International Projects
The 2023-2024 PGP contains 34 international projects, while the 2024-2025 PGP contains 36. The 2024-2025 PGP removes one international project that appeared in the 2023-2024 PGP and adds three new ones.
Deemed Inclusions From Foreign Entities
This subcategory is dedicated to guidance on antideferral regimes, like subpart F, global intangible low-taxed income, and passive foreign investment companies. Both PGPs have assigned the same five projects to this subcategory, all of which have generally identical descriptions. However, the 2024-2025 PGP has added a sixth project.
1. Both PGPs prioritize regs under subpart F, including coordination with the repeal of section 958(b)(4) (downward ownership attribution). Proposed regs were published July 23, 2020 (REG-127732-19), and September 22, 2020 (REG-110059-20).
2. Both PGPs prioritize regs and other guidance addressing the treatment of foreign entities held by domestic partnerships and S corporations under sections 953 (definition of insurance income), 958 (stock ownership attribution), and 1291-1298 (PFICs). Both PGPs cite proposed regs published January 25, 2022 (REG-118250-20), as guidance for this project.
3. Both PGPs prioritize guidance under section 954 (foreign base company income), including guidance on the use of foreign statement reserves to measure qualified insurance income under section 954(i). Neither PGP cites previously issued guidance for this project.
4. Both PGPs prioritize regs under sections 959 and 961 addressing previously taxed earnings and profits under subpart F. The 2022-2023 PGP cites Notice 2019-01, 2019-3 IRB 275, which has been outstanding since January 7, 2019. The 2023-2034 PGP cites no previously issued guidance for this project.
The 2024-2025 PGP cites Notice 2024-16, 2024-5 IRB 622, published January 29, 2024, which announces the intent of Treasury and the IRS to issue proposed regs addressing the treatment of basis under section 961(c) in transactions in which a domestic corporation acquires stock of a controlled foreign corporation in a liquidation or asset reorganization.
Published December 2, 2024, new proposed regs (REG-105479-18) address core aspects of the PTEP system, including rules that address long-standing issues under sections 959 and 961, account for new provisions and amendments under the Tax Cuts and Jobs Act, and implement Notice 88-71, 1988-2 C.B. 374, and Notice 2019-01.
5. Both PGPs emphasize final PFIC regs under sections 1297 and 1298, including regs addressing exclusion of foreign insurance income from passive income under section 1297(f). Both PGPs cite as guidance for this project proposed regs published January 15, 2021 (REG-111950-20).
6. The 2024-2025 PGP added priority for a revenue procedure that clarifies the information required to request private letter rulings for PFIC retroactive qualified electing fund status under reg. section 1.1295-3(f). The guidance is expected to enable more efficient processing of these requests.
Inbound Transactions
This subcategory is dedicated to guidance on taxation of investment in the United States by non-U.S. persons, like the base erosion and antiabuse tax, effectively connected income, and withholding tax regimes. The 2024-2025 PGP has assigned four projects to this category. It removed one project that appeared in the prior PGP.
1. Both PGPs prioritize regs under section 59A that address qualified derivative payment reporting for BEAT purposes. The 2023-2024 PGP cites Notice 2022-30, 2022-29 IRB 70, published July 18, 2022, as guidance for this project. It provided that the regs in T.D. 9885 under sections 59A and 6038A will be amended to defer the effective date of reporting requirements for qualified derivative payments until tax years beginning on or after January 1, 2025.
The 2024-2025 PGP cites Notice 2024-44, 2024-25 IRB 1737, published June 17, 2024. It extends for two years the transition relief for reporting qualified derivative payments initially provided in Notice 2021-36, 2021-26 IRB 1227, published June 10, 2021.
2. Several PGPs have prioritized regs under section 871(m) to include guidance on withholding dividend-equivalent amounts in non-delta-one transactions (in which the ratio of the value of a contract to the value of the referenced asset is not 1).
Final and temporary regs (T.D. 9815) on this issue have been outstanding since January 24, 2017. Notice 2018-72, 2018-40 IRB 522, published October 1, 2018, delayed the applicability date of portions of those regs through 2020.
Additional final regs on section 871(m) transactions (T.D. 9887) were published December 17, 2019. Notice 2020-2, 2020-3 IRB 327, published January 13, 2020, extended the transition relief in Notice 2018-72 for two years, through 2022.
The 2023-2024 PGP cites Notice 2022-37, 2022-37 IRB 234, published September 12, 2022, which extends for two years through 2024 the transition relief provided in Notice 2020-2 for complying with the regs on dividend equivalents under sections 871(m), 1441, 1461, and 1473. The 2024-2025 PGP cites Notice 2024-44, published June 17, 2024, which delays for two more years the applicability date of portions of the 2017 final regs.
3. Both PGPs prioritize final regs to treat hybrid instruments and tax-favored equity as financing transactions under reg. section 1.881-3. Proposed regs (REG-106013-19) were published April 8, 2020, and final regs (T.D. 9922) on hybrid instruments (but not tax-favored equity) were published November 12, 2020.
4. Both PGPs prioritize regs under section 892 related to the tax exemption for qualified investments in the United States by foreign governments. Proposed regs under section 892 were published November 3, 2011 (REG-146537-06). Proposed regs revising prop. reg. section 1.892-5(b)(1) (REG-100442-22) and a notice reopening the comment period for the 2011 proposed regs were published December 29, 2022.
Outbound Transactions
This subcategory is dedicated to taxation of U.S. persons that receive income from non-U.S. sources, such as through foreign-source dividends, transfers of intangible property, and foreign currency gains and losses. Both PGPs assign the same seven projects to this category.
1. Both PGPs prioritize regs under section 245A on deduction of the foreign-source portion of dividends received by U.S. corporations from specified 10-percent-owned foreign corporations. Neither PGP cites any previously issued guidance for this project.
2. Both PGPs prioritize regs addressing the inbound transfer of intangible property subject to section 367(d). Both PGPs cite proposed regs published May 3, 2023 (REG-124064-19), as guidance for this project. Those proposed regs were finalized with amendments in T.D. 9994, published October 10, 2024.
3. Both PGPs prioritize modification of regs under section 987 on income and currency gains or losses of qualified business units. Proposed regs (REG-128276-12) were published December 7, 2016, and final regs were published December 8, 2016 (T.D. 9794). Additional final regs were published May 13, 2019 (T.D. 9857).
Several notices have delayed the applicability dates of the 2016 and 2019 regs between 2020 and 2023. Notice 2022-34, 2022-34 IRB 150, published August 22, 2022, deferred the regs’ applicability date to the tax year beginning January 1, 2024, for calendar-year taxpayers.
The 2024-2025 PGP cites as guidance for this project proposed regs (REG-132422-17) published November 14, 2023. Those proposed regs preserve the basic approach and structure of the 2016 and 2019 final regs, with simplifications and additional guidance for determining section 987 income, gain, or loss. Those proposed regs were finalized in T.D. 10016, published December 11, 2024. The same day, proposed regs (REG-117213-24) were published that provide an election to translate transfers between a qualified business unit and its owner using the yearly average exchange rate.
4. Both PGPs prioritize modification of regs under section 367 addressing triangular reorganizations involving foreign corporations. Both PGPs cite as prior guidance Notice 2016-73, 2016-57 IRB 1, published December 27, 2016, and Notice 2014-32, 2014-20 IRB 1006, published May 12, 2014. The 2024-2025 PGP cites proposed regs published October 6, 2023 (REG-117614-14), and final regs (T.D. 10004) published July 18, 2024.
5. Both PGPs prioritize regs under section 367 on their application to transfers of stock to foreign corporations in exchange for property under section 304. Both cite Notice 2012-15, 2012-9 IRB 424, published February 27, 2012, as prior guidance for this project. That notice provides guidance under section 367(a) and (b) for transfers of stock to foreign corporations in exchange for property under section 304. It also announces the intent of Treasury and the IRS to amend section 367 rules to incorporate the guidance in the notice.
6. Both PGPs prioritize regs under section 367 on their application to transfers of intangible property by a U.S. corporation to a foreign corporation in an exchange described in section 361(a) or (b).
Notice 2012-39, 2012-31 IRB 5, published July 30, 2012, is cited as prior guidance for this project in both PGPs. That notice provides guidance on transfers that target transactions intended to repatriate earnings from foreign corporations without the appropriate recognition of income. The new regs will incorporate the guidance described in Notice 2012-39.
7. Both PGPs prioritize regs under section 954 addressing the timing of elections on behalf of a CFC under reg. section 1.954-2(g)(3)-(4) to treat foreign currency gain or loss as foreign personal holding company income. The 2024-2025 PGP adds regs under section 988 providing an election to use mark-to-market accounting for foreign currency gain or loss and cites proposed regs (REG-111629-23) published August 20, 2024.
FTCs
Both PGPs have one project that prioritizes regs addressing FTCs.
Both prioritize regs related to the FTC, including those related to the global anti-base-erosion (GLOBE) rules. They cite Notice 2023-55, 2023-32 IRB 427, published August 8, 2023. That notice grants temporary relief to taxpayers for determining whether a tax is eligible for an FTC under sections 901 and 903 beginning December 28, 2021, and ending December 31, 2023.
The 2024-2025 PGP cites Notice 2023-80, 2023-52 IRB 1583, published December 26, 2023, which changes the end of the relief period in Notice 2023-55 to on or before the date that a notice or other guidance withdrawing or modifying the relief is issued or any later date specified in the guidance.
Transfer Pricing
The prior PGP contains five transfer pricing projects, while the new plan contains six. The 2024-2025 PGP has the same five projects as the prior plan but added one new project in this subcategory.
1. Both PGPs include the customary annual report on the advance pricing agreement program. Announcement 2024-16, 2024-16 IRB 909, was published March 29, 2024.
2. Both PGPs prioritize regs under sections 367 and 482, including regs addressing changes to sections 367(d) and 482 on aggregation, realistic alternatives, and the definition of intangible property. Both PGPs also include regs under section 482 that clarify aspects of the arm’s-length standard, including periodic adjustments. Pre-TCJA temporary (T.D. 9738) and proposed (REG-139483-10) regs have been outstanding since September 16, 2015.
3. Both PGPs prioritize regs under section 482 clarifying the effects of group membership (for example, passive association) in determining arm’s-length pricing, especially for financial transactions.
4. Both PGPs prioritize guidance updating Rev. Proc. 2015-41, 2015-35 IRB 263, published August 12, 2015, which provides procedures for requesting, obtaining, and administering APAs.
5. Both PGPs prioritize regs under section 482 addressing the treatment of intangible development costs that are incurred as part of a cost-sharing arrangement and charged to a capital account.
6. The 2024-2025 PGP adds a priority for guidance under section 482 for application of a simplified and streamlined approach for determining an arm’s-length return for marketing and distribution activities. The guidance will be consistent with the newly adopted annex to Chapter IV of the OECD’s transfer pricing guidelines referencing special considerations for baseline distribution activities.
Sourcing and Expense Allocation
Both PGPs have one project in this subcategory that prioritizes regs under section 861, including on the character and source of income arising in transactions involving intellectual property and the provision of digital goods and services. Both PGPs cite proposed regs (REG-130700-14) published August 14, 2019.
Other
This catchall subcategory is dedicated to projects that do not fit into any of the previous six subcategories. The 2023-2024 PGP assigned 10 projects to this subcategory, while the 2024-2025 PGP assigns 11. The new PGP added one new project and did not remove any projects in this subcategory.
1. Both PGPs prioritize regs under section 894(c) on claiming treaty benefits for U.S.-source fixed, determinable, annual, or periodic income paid to a fiscally transparent entity, including guidance on beneficial ownership. Neither PGP cites prior guidance in connection with this project.
2. Several years of PGPs have prioritized regs addressing the definition of foreign currency contracts under section 1256(g)(2), given the decision in Wright v. Commissioner, 809 F.3d 877 (6th Cir. 2016). That decision held that over-the-counter currency options are section 1256 foreign currency contracts, in contrast to legislative history, tax court decisions, and IRS guidance.
Both PGPs cite proposed regs (REG-130675-17) published July 6, 2022, as previous guidance on this project. Those proposed regs define foreign currency contracts under section 1256 to include only foreign currency forward contracts.
3. The prior PGP prioritized withholding guidance under chapter 3 (sections 1441-1446) and chapter 4 (sections 1471-1474). These include updates to the qualified intermediary withholding agreement (primarily relating to regs under section 1446(a) and (f)) starting for the 2023 calendar year and to the foreign partnership and trust withholding agreements (limited changes only) starting for the 2024 calendar year.
The prior PGP cites three IRS guidance items. Notice 2022-23, 2022-20 IRB 1062, published May 16, 2022, contains proposed QI requirements under section 1446(a) and (f) that apply January 1, 2023. Rev. Proc. 2022-43, 2022-52 IRB 570, issued December 13, 2022, contains the final QI withholding agreement for 2023, broadly adopting the changes proposed in Notice 2022-23. Notice 2023-11, 2023-3 IRB 1, issued December 30, 2022, provides temporary relief to foreign financial institutions required to report U.S. taxpayer identification numbers for preexisting accounts as defined in a model 1 intergovernmental agreement under the Foreign Account Tax Compliance Act.
The 2024-2025 PGP limits this project to updating the foreign partnership and foreign trust withholding agreements in Rev. Proc. 2017-21, 2017-6 IRB 791, for the 2026 calendar year. It does not cite the guidance in the prior PGP.
4. Both PGPs prioritize revising final regs requirements for withholding agents provided under section 1446(f) published November 30, 2020 (T.D. 9926). Notice 2023-8, 2023-2 IRB 341, published January 9, 2023, addresses some of these issues and provides additional guidance for withholding on transfers of publicly traded partnerships.
5. Both PGPs prioritize regs under section 6045 addressing reporting by U.S. brokers of digital transactions in connection with the OECD’s cryptoasset reporting framework. Proposed regs (REG-122793-19) that address broker information reporting, the determination of amount realized and basis, and backup withholding for digital asset sales and exchanges were issued August 29, 2023, but are not cited in either PGP as guidance for this project. Final regs (T.D. 10000), published July 9, 2024, amend and adopt those proposed regs.
6. Both PGPs prioritize additional guidance under chapters 3 and 4 to modify proposed regs (REG-132881-17) published December 18, 2018, including provisions relating to withholding agent obligations under prop. reg. sections 1.1461-1 and -2, 1.1471-1 through -5, 1.1473-1, and 1.1474-1 and -2.
These proposed regs provide for the elimination of withholding on payments of gross proceeds, deferral of withholding on foreign passthrough payments, elimination of withholding on insurance premiums, clarification of the definition of investment entity, withholding agent due diligence and refund requirements, and refunds and credits of amounts withheld. Portions of the proposed regs were finalized in T.D. 9890, published January 2, 2020.
7. Both PGPs prioritize guidance under sections 6039F, 6048, and 6677 on foreign trust reporting, reporting large foreign gifts, and regs under sections 643(i) and 679 relating to transactions between U.S. persons and foreign trusts. The prior PGP cites Rev. Proc. 2020-17, 2020-12 IRB 539, published March 16, 2020, which exempted tax-favored foreign retirement and nonretirement trusts from section 6048 reporting.
The 2024-2025 PGP cites proposed regs (REG-124850-08), published May 8, 2024, that provide guidance on information reporting of transactions with foreign trusts, receipt of large foreign gifts, loans from foreign trusts, and uses of foreign trust property.
8. Both PGPs prioritize guidance updating Rev. Proc. 2015-40, 2015-35 IRB 236, published August 12, 2015, providing procedures for requesting and obtaining assistance from the U.S. competent authority under U.S. tax treaties.
9. Both PGPs prioritize regs addressing the dual consolidated loss rules in section 1503(d), including regs addressing intercompany transactions and items arising from stock ownership. The 2024-2025 PGP cites proposed regs (REG-105128-23), published August 6, 2024, as guidance for this project.
10. Both PGPs prioritize final regs under section 6011 that identify Malta personal retirement schemes as listed transactions. Proposed regs were published June 7, 2023 (REG-106228-22).
11. Included in the 2024-2025 PGP is a revenue procedure updating the list of countries with which the United States has an information exchange agreement so that bank deposit interest paid to their residents is reported by payers to the extent required under reg. sections 1.6049-8(a) and -4(b)(5). This project appeared as item G.7 in the 2022-2023 PGP but did not appear in the 2023-2024 PGP.
Changes From Prior-Year PGP
The 2024-2025 PGP removed one international project that appeared in the 2023-2024 PGP and added three new international projects.
Removed Project
Projects are removed from the PGP either because they are completed or are no longer priorities. The following international project that appeared in the 2023-2024 PGP is absent from the 2024-2025 PGP because it was sufficiently completed to warrant removal.
Item B.4: The 2023-2024 PGP prioritized final regs on dispositions of investments in U.S. property and related withholding requirements in sections 897 and 1445. The final regs concern changes in the Protecting Americans From Tax Hikes Act of 2015. Proposed regs (REG-109826-17) were published June 7, 2019, and finalized December 29, 2022 (T.D. 9971). Published the same day were proposed regs (REG-100442-22) that addressed these priorities. Those proposed regs were finalized in T.D. 9992, published April 25, 2024.
Added Projects
The following three international projects did not appear in the 2023-2024 PGP and were added to the international category in the 2024-2025 PGP.
1. Item A.6 calling for clarification of information requirements for retroactive QEF elections under reg. section 1.1295-3(f).
2. Item E.6 calling for section 482 guidance consistent with new OECD transfer pricing guidelines for baseline distribution activities.
3. Item G.11 calling for updates to the list of countries with which the United States has an information exchange agreement requiring bank deposit interest reporting.
Clues
The 2024-2025 PGP is very similar to its predecessor. TCJA-related guidance that remains a priority in the 2024-2025 PGP includes the guidance on subpart F, previously taxed earnings and profits, BEAT-qualified derivative payments, hybrid instruments, and the section 245A participation exemption.
Long-standing priorities unrelated to the TCJA that remain in the PGP may receive attention in 2025. Examples include guidance under sections 871(m), 987, and 1256, withholding under chapters 3 and 4, and guidance related to APAs and competent authority assistance.
New projects added to the 2024-2025 PGP address QEF elections, OECD-consistent transfer pricing guidance, and information exchange agreements. Newsworthy topics introduced in the prior PGP that remain priorities include GLOBE-related FTC rules, intangible development costs, withholding related to transfers of PTP interests, digital asset reporting under the OECD cryptoasset reporting framework, and Malta personal retirement schemes.
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