GainsKeeper Blog

IRS Asks for Comments to Assist its Drafting of Cost Basis Guidance

February 9, 2009

On Friday, Feb. 6, 2009, the IRS released Notice 2009-17. The Notice indicates that the IRS intends to issue guidance regarding a number of important details relating to the new cost basis reporting law that was enacted on Oct. 3, 2008 (Pub. L. No. 110-343). To assist, the Notice requests public comments regarding the new law, including comments on 36 specifically listed topics. The Notice provides that comments are due by Monday, Mar. 2, 2009.

The 36 specifically listed topics are divided into sections regarding the applicability of reporting requirements, basis method elections, dividend reinvestment plans, reconciliation with customer reporting, special rules and mechanical issues, transfer reporting, issuer reporting and broker practices and procedures. Some of the listed topics are very specific. For example, issue number five is “[h]ow to facilitate customer elections of acceptable basis determination methods, including average cost basis, for an account to maximize customer flexibility and minimize broker burden.” The fact that the Notice includes all of these detailed topics suggests that the IRS has already been focusing on many of the issues arising under the new law.

The specifically listed topics included in the Notice and the Mar. 2 deadline for comments indicate that the IRS intends to work diligently to release guidance that will help brokers and other affected persons comply with the new cost basis reporting law.

Brokers, mutual funds, transfer agents, return preparers, vendors and other affected industry groups may want to act quickly to prepare and submit comments to the IRS by the Mar. 2 deadline. For those who may choose to wait until IRS guidance is issued, the failure to assess concerns regarding the new cost basis reporting law now and provide comments to the IRS in response to the Notice could result in being left behind when it comes to being ready to comply with the new law.

Stevie

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