Notice 2016–42 sets out a proposed Qualified Intermediary (“QI”) agreement revising and updating the current agreement, Rev. Proc. 2014–39, published in July 2014. The revised QI agreement updates the current agreement by providing more detailed procedures regarding how qualified intermediaries satisfy their compliance review obligations and sets out terms and requirements for qualified intermediaries that want to act as qualified derivatives dealers with respect to transactions subject to section 871(m).

This notice publishes the reference price under § 45K(d)(2)(C) of the Internal Revenue Code for calendar year 2015. The reference price applies in determining the amount of the enhanced oil recovery credit under § 43, the marginal well production credit under § 45I, and the percentage depletion in case of oil and natural gas produced from marginal properties under § 613A.

The notice announces the inflation adjustment factor and phase-out amount for the enhanced oil recovery credit for taxable years beginning in the 2016 calendar year. The format of the notice is identical to the format of previously published notices on this issue. The notice concludes that because the reference price for the 2015 calendar year ($44.39) does not exceed $28 multiplied by the inflation adjustment factor for the 2015 calendar year ($28 multiplied by 1.6464 = $46.01), the enhanced oil recovery credit for qualified costs paid or incurred in 2016 is determined without regard to the phase-out for crude oil price increases. The notice contains the previously published figures for taxable years beginning in the 1991 through 2015 calendar years. The enhanced oil recovery credit for qualified costs has been phased out completely for calendar years 2006 through 2015. The enhanced oil recovery credit for qualified costs was last determined without regard to the phase-out for crude oil price increases in the 2005 calendar year.

The notice announces that under § 613A(c)(6)(C) of the Internal Revenue Code, the applicable percentage for purposes of determining percentage depletion on marginal properties for calendar year 2016 is 15 percent. The format of the notice is identical to the format of notices previously published on this issue.

These final regulations provide guidance on the information required to be reported for country-by-country (CbC) reporting. The final regulations generally require U.S. business entities that are the ultimate parent of a U.S. multinational enterprise (MNE) group earning annual revenues of $850,000,000 or more in the prior reporting period to report certain financial information on a tax jurisdiction-by-tax jurisdiction basis. The regulations require the U.S. ultimate parent to list the U.S. MNE group’s business entities indicating each entity’s tax jurisdiction (if any), country of organization, tax identification number (if any), and main business activity, as well as CbC financial information for each tax jurisdiction in which the U.S. MNE does business. The CbC financial information includes income, profits, income taxes, stated capital, accumulated earnings, number of employees, and tangible assets other than cash.

Rev. Proc. 2016–37 sets forth the procedures for the determination letter program for individually designed plans and the six-year remedial amendment cycle system for pre-approved plans. Rev. Proc. 2007–44 is clarified, modified, and superseded. Sections 2.07 and 24.03 of Rev. Proc. 2015–36 are modified. Sections I and III of Notice 2015–84 are modified.