Posted by Jonathan Goldman on Sep 23, 2014
After much anticipation, the Treasury Department and IRS released new “anti-inversion” guidance on September 22, in Notice 2014-52. The Notice announces forthcoming regulations that are targeted at reducing some of the perceived economic benefits of inverting. The forthcoming regulations would apply primarily to companies which complete inversions on or after September 22, 2014, and generally would:
Expand the reach of section 7874 inversion rules by requiring certain adjustments to the value of U.S. target and foreign acquiring corporation shares to reflect pre-transaction...
Posted by Meyer Berman on Sep 19, 2014
Anti-inversion guidance from Treasury is now a near-certainty, but when they arrive and how they will operate remains a mystery. Treasury Secretary Jacob Lew used strong language to warn corporations against inverting in a September 17th interview with Bloomberg Television. “Any company considering an inversion is now on notice that there is action that is going to be taken,” Lew said, warning that administrative action would come “very, very soon.” On September 8th, Lew stated that Treasury would crack down on corporate tax inversions “in the very near future.” Tax...
Posted by Rich Sun on Sep 18, 2014
The Congressional tax agenda for the end of 2014 is now clear: tax extenders and inversions. Even as inversions dominate the news, Senate Finance Committee Chairman Ron Wyden (D-Ore.) is continuing his push to pass legislation which extends expired tax provisions. On September 15, Senator Wyden issued a statement on the need to renew expired tax provisions, stating that the actions are needed to provide certainty and relief to American workers and businesses. Specifically, Sen. Wyden said that Congress’s failure to renew expired tax provisions is forcing American companies that are...
Posted by Jonathan Goldman on Sep 17, 2014
The change from summer to fall did nothing to alter the focus of the Congressional tax debate – inversions. To that end, two Senators have introduced a new bill on “earnings stripping.”
Senators Charles Schumer (D-NY) and Dick Durbin (D-Ill.) introduced new legislation on September 11 that would significantly limit earnings stripping by inverted companies. The Schumer-Durbin bill follows on the heels of, and in many ways closely resembles, a discussion draft introduced by Representative Sander Levin (D-Mich.) (see our prior post on the Levin discussion draft). Unlike the...
Posted by Jonathan Goldman on Aug 18, 2014
With numerous Congressional legislative proposals, and increasingly heated and political rhetoric, regarding corporate inversions, it was probably only a matter of time before state legislators entered the political fray. New Jersey state senator Shirley Turner (D-Mercer, Hunterdon) has proposed legislation which would deny certain state benefits to companies that have taken part in corporate inversions. Her two proposals would:
Prohibit the state’s pension board from investing in companies that have been involved in a corporate inversion; and
Make inverted companies ineligible for...
Posted by William Pauls on Aug 7, 2014
Inversion transactions are making waves, and politicians are taking notice, with the number of legislative proposals dealing with inversions and other international tax issues growing at a fast rate.
Of particular note, Representative Sander Levin (D-Mich.), the ranking member of the House Ways and Means Committee, released a discussion draft of the Stop Corporate Earnings Stripping Act of 2014 on August 1. Among other changes, the discussion draft would tighten the so-called “earnings stripping” provisions of section 163(j) of the Internal Revenue Code by:
Reducing a U.S....
Posted by Rich Sun on Aug 5, 2014
On July 11, 2014, the House of Representatives passed a bill to renew bonus depreciation and to make the provision permanent. Bonus depreciation is one of several expired provisions that House Ways and Means Committee Chairman Dave Camp (R-Mich.) has made sought to make permanent.
Bonus depreciation allows businesses to immediately deduct 50 percent of qualified purchased property and was one of the tax provisions that expired at the end of 2013. The bill passed by the House makes a number of changes to the bonus depreciation provision such as expanding the definition of qualified...
Posted by Sutherland SALT on Jul 30, 2014
The Alaska Supreme Court held that a foreign member of a water’s edge unitary group must include its foreign dividend income in the Alaska apportionable tax base, regardless of whether the income is “effectively connected income” (ECI) for federal income tax purposes. Alaska law incorporates the Internal Revenue Code, including the ECI rules, “unless excepted to or modified” by state law. The taxpayer argued that because the foreign-source dividends were not ECI for federal income tax purposes and were not included in federal taxable income, the income should not be included in the...
Posted by Jonathan Goldman on Jun 25, 2014
Senator Harry Reid (D-Nev.) and Sen. Rand Paul (R.-Ky.) are in negotiations on a one-time repatriation “holiday,” which would allow U.S. corporations to repatriate foreign earnings at a special reduced rate. No proposal has formally been released, but reports on the negotiations say that the rate would be between 5 percent and 9.5 percent. The short-term revenue increase would be used to replenish the Highway Trust Fund, the primary source of federal spending for roads and bridges. The potential repatriation holiday would be similar to the 2004 repatriation holiday in...
Posted by Sutherland SALT on Jun 18, 2014
On June 18, the Judiciary Committee of the U.S. House of Representatives voted in favor of H.R. 3086, the Permanent Internet Tax Freedom Act (PITFA) by a vote of 30-4. PITFA permanently extends the moratorium on state and local taxation of Internet access and “multiple” or “discriminatory” taxes on electronic commerce.
Background: The Internet Tax Freedom Act’s Expiration
The Internet Tax Freedom Act (ITFA) is set to expire on November 1, 2014. In addition to permanently extending ITFA, PITFA will eliminate the “grandfather” provision that allows certain states to tax Internet...
Posted by Mikka Gee Conway on May 21, 2014
- Sen. Ron Wyden’s (D.-Ore.) EXPIRE Act, which would have revived several expired tax provisions (see prior post here), has been stalled in the Senate. Despite broad bipartisan support for the EXPIRE Act, an apparent disagreement over amendments is preventing a vote on final passage.
Senate Republicans proposed a number of amendments to the bill, including the repeal of the Affordable Care Act’s medical device tax and elimination of the wind production tax credit, but Senate Majority Leader Harry Reid (D.-Nev.) moved for cloture to end debate on the amendments and force a vote on the...
Posted by Jonathan Goldman on May 21, 2014
Senator Carl Levin (D-Mich.) and 13 other Senate Democrats introduced legislation on May 20th that would significantly reduce the ability of U.S. companies to expatriate. The Stop Corporate Inversions Act of 2014 would generally enact President Obama’s budget proposal targeting corporate inversions (see our prior post) by reducing from 80% to 50% the post-inversion ownership threshold for treating a foreign corporation as domestic. Sen. Levin’s brother, Congressman Sandy Levin (D-Mich.) introduced companion legislation in the House of Representatives.
Under current law, an...
Posted by Tory O'Connor on May 21, 2014
On May 9, the U.S. House of Representatives passed a bill that would permanently extend the research and development tax credit. The bill passed 274-131 with support from all-but-one Republican and 62 Democrats. House Majority Leader Eric Cantor (R-Va.) stated he believed that making the R&D credit permanent “is one of the most generative things we can do from a policy standpoint that has been confirmed by independent economic analysis, to grow jobs and to have America work again for more people.”
It has been estimated that making the R&D credit permanent will cost $156...
Posted by Jonathan Goldman on May 8, 2014
Almost a month after the Senate Finance Committee approved legislation which would extend expired tax provisions (see our prior post), Chairman Ron Wyden (D-Ore.) finally introduced in the Senate the legislative language of the bill. S. 2260, the Expiring Provisions Improvement, Reform, and Efficiency Act of 2014, or the EXPIRE Act, was introduced on April 28, and the text is available here.
Posted by Jessica Englert on May 6, 2014
Like the Rolling Stones, those facing FATCA obligations are saying “Time is On My Side.” Withholding agents, foreign financial institutions (FFIs), and other entities making “good faith efforts to comply with the new regulations, forms, and other requirements of [the Foreign Account Tax Compliance Act]” will only face light enforcement for two years, the IRS said in Notice 2014-33.
The IRS will treat 2014 and 2015 as a transition period for FATCA administration and enforcement, holding off on enforcing 30 percent withholding taxes against financial institutions developing...