On January 17, 2008, the IRS released an advance notice (the “Advance Notice”) of proposed rulemaking for the long-awaited final regulations relating to qualified tuition programs under Section 529 of the Internal Revenue Code (“Section 529”). The Advance Notice indicates that the rulemaking notice, when published, will repropose most of the initial Section 529 regulations proposed in 1998, with adjustments reflecting statutory changes and comments received to date. The Advance Notice focuses on the expected content of new regulations primarily designed to prevent what Treasury officials perceive as a risk of abusive gift tax avoidance through the funding of Section 529 accounts. The Advance Notice also addresses
certain income tax and recordkeeping requirements under Section 529. The Advance Notice invites comments on its description of the proposed rules prior to the release of the actual proposed rules. Any comments must be submitted to the IRS by March 18, 2008.
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