Breaking News! Final Regs on Equivalency Determinations

Good morning all!   I just got an alert in my mailbox that Treasury has issued final regulations on equivalency determinations – you may all recall the proposed regulations that were issued in 2012.

I’m in the process of printing out the final regs and comparing them to the proposed regs, so I’ll update the post later today.  Bloomberg BNA’s blurb on it says that the final regulations “incorporate the thrust of” the 2012 rules.   I’ll try to get some links up as soon as I can find them in a non-subscription database, although I know you can get them in both Bloomberg BNA and Tax Analyst already if you have access.     Citation is T.D. 9740, RIN 1545-BL23. 

EWW

 Update at 6:30 p.m., 9/23/2015

I’ve not gotten all the way through the final regs to give you all a complete summary, but I wanted to mention a few highlights from the preamble:

• It appears that the Regulations expand the definition of  “qualified tax practitioner” for purposes of who can make equivalency determinations that can be relied upon in good faith.
• The Regulations appear to scale back the ability of a charity to rely on a good faith affidavit as the sole means of making an equivalency determination.     Briefly, it appears that you can rely on the information in good faith, but there needs to be an additional showing that the evaluation of the data and the equivalency determination based on that data occurred in a manner that demonstrates a knowledge of US tax law.   In theory, anyway, there are more qualified tax practitioners (including folks that may be in house at the foundation) to help with such a determination, so it shouldn’t (in theory again) be a significant bar to international grant making.
• Some clarification on how long you can rely on written advice, which looks like (a) so long as there is no change in the law or otherwise for most things, except (b) two years for public charity determinations based on financials.
• It looks like there may be limited opportunity to share equivalency determinations, but it can’t be foundation to foundation – it may be that the first foundation has to authorize the release of that information to a second foundation from its qualified tax practitioner because only there would there be reasonable reliance.   So not quite the equivalency determination banking that the sector wanted, but it may be a step in that direction.   
• Looks like donor advised funds can use these rules, at least for now, for purposes of compliance with Section 4966(d)(4).

EWW