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Senate Passes 2014 Tax Extenders, White House Opposition Unlikely

On December 16, in a vote of 76 to 16, the Senate passed the long-anticipated “extenders bill,” extending 55 tax provisions that expired at the end of 2013.  The bill had been passed by the House of Representatives on December 3, 2014 and now heads to the President’s desk where it is expected to be signed into law. As a one-year extension of tax provisions that expired on December 31, 2013, it is retroactive to January 1, 2014; but it allows all the extended provisions to expire again on December 31, 2014, just 15 days after the bill’s passage by the Senate. Expressing...
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IRS Commissioner: Congressional Action Required to Stop Inversions

As the Treasury Department considers additional steps it may take addressing corporate inversion transactions, IRS Commissioner John Koskinen is saying that, to a “substantial extent,” Congress would need to act if it wishes to prevent the transactions.  In a conversation with Bloomberg BNA Koskinen stated that, while the inversion issue is being carefully examined by the administration and the policy decisions rest with the Treasury, “it has been clear from the start that there are limits as to what the Treasury and IRS regulatory process can accomplish.”  According to...
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New York State on Bitcoins: Transactions Are Barters for Sales Tax Purposes; Follow Federal Guidance for State Income Taxes

The New York State Department of Taxation and Finance has issued guidance on the sales tax, corporation franchise tax, and personal income tax implications of transactions involving convertible virtual currency, such as bitcoins.  See N.Y. TSB-M-14(5)C, (7)I, (17)S, Dec. 5, 2014. The Department’s guidance can be found here. As summarized below, the Department explains in its guidance that convertible virtual currency will be treated as intangible personal property, and the resulting New York tax consequences will flow from that characterization. For New York sales tax purposes, the...
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President Obama Says Deal Possible on Tax Reform

Even as a veto threat derailed a large tax extenders deal, President Obama is holding out hope that Congress can move forward on tax reform.  Addressing corporate CEOs at a Business Roundtable meeting on December 3rd, the President said there was “definitely a deal to be done.”  He told the corporate leaders he may be willing to accept the short-term tax break extensions (which passed in the House hours after the meeting) in order to jumpstart cooperation on broader reform.  The President said he still prioritizes simplification of the tax code for both individuals and corporations,...
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New York Tax Reform Made Easy: A Recap

When the ball drops in Times Square on New Year’s Eve, New Yorkers won’t just be celebrating a change in the calendar – they’ll also be figuring out how to address a slew of tax changes under New York state law.  On March 31, 2014, New York State Governor Andrew Cuomo signed into law the 2014-2015 New York State Budget (Budget), which results in the most significant overhaul of New York’s franchise tax in decades. The Budget brings about monumental change for corporate taxation in New York by eliminating the Bank Franchise Tax (Article 32), subjecting financial institutions to...
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House Passes 2014 Tax Extenders, Senate Will Likely Follow Suit

In an overwhelming vote of 378 to 46, the House of Representatives passed a one-year extension on 55 tax provisions which expired at the end of 2013, so called “tax extenders.”  The tax extenders bill includes numerous popular business tax breaks, like the research credit (with a price tag of $7.6 billion according to the Joint Committee on Taxation), the new markets tax credit ($978 million), bonus depreciation ($1.5 billion), renewable fuels, corporate expensing, and the Subpart F exception for active financing income.  The bill also includes some popular tax breaks for...
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One Extenders Deal Put Off After Veto Threat, 2014 Extension Vote May Be Coming Soon

For a few hours last week, it appeared that there was a bipartisan agreement on expiring tax provisions, but shortly after press reports on the deal, the agreement fell apart under threat of a White House veto.  In a surprise to many, about 10 expiring tax provisions would have been made permanent under the agreement, including the research credit and expanded section 179 expensing.  The agreement would have extended almost all the remaining expiring tax provisions through 2015.  A notable exception is that the wind production tax credit would have been phased out. Almost as soon as news...
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More Countries Joining the Transparency Trend

On October 29, more than 50 countries signed on to implement OECD standard for automatic exchange of information starting in 2017 or 2018.  The Secretary-General of the OECD, Angel Gurria, announced at the end of the Global Forum on Transparency and Exchange of Information for Tax Purposes that of the 123 Global Forum members, close to 90 agreed to implement the international standards.  The new measures will be employed by 51 of the signatories beginning in 2017 or 2018, with the remaining jurisdictions to follow thereafter. Signatories include countries that have historically shied away...
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New Inversion Notices Forthcoming

Our prior post on Notice 2014-52, Treasury’s crackdown on corporate inversions, outlined potential tools Treasury would consider using to counteract the attractiveness of inverting.  The Treasury Office of International Tax Council announced that at least one additional notice will likely be released prior to the issuance of the regulations, although the timing of the release is still unclear. Douglas Poms, senior counsel at the Treasury Dept., stated that the upcoming notice(s) will address earnings stripping and “additional inversion issues.”  Poms indicated, however, that if the...
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Treasury Dropping Hints on Earnings Stripping

Treasury Department officials are stating publicly the potential methods it is considering to reduce the benefit of inversion transactions through so-called “earnings stripping.”  According to reports of an October 29 panel discussion, Treasury is considering cutting back on interest deductions under section 163(j), or treating certain instruments as equity rather than debt under section 385. Treasury issued Notice 2014-52 in September (see our prior post), announcing forthcoming regulations which would impact what mergers would be within the purview of section 7874, the tax...
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Switzerland Moving Towards International Standards

Switzerland recently announced intentions for draft legislation to provide authority for amending existing double taxation avoidance agreements that would bring them in line with the OECD’s standard for exchange of information provisions.  The proposal would authorize the use of a unilateral extension to execute the amendments.  The amendments would apply the OECD standard to any existing treaty in which the counterparty agrees to exchange tax information with Switzerland upon request. In addition to the renegotiation of existing tax treaties (currently numbering 69), under the draft...
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Ireland Announces the End to the “Double Irish” Tax Structure

A tax structure often referred to as the “Double Irish” is being shut down by the Irish government, although companies that are currently utilizing the structure will have a five-year transition period before the new law eliminates the tax structure completely. Finance Minister Michael Noonan announced that Ireland’s 2015 budget is “abolishing the ability of companies to use the ‘Double Irish’ by changing [Ireland’s] residency rules to require all companies registered in Ireland to also be tax resident.” Under current Irish law, a company is an Irish tax resident if...
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The “Very Near Future” is Now: Treasury and IRS Release Anti-Inversion Notice

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...
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Lew: Inversion Guidance Coming “Very, Very Soon,” Rather than Just in the “Very Near Future”

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...
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Senator Wyden Renews Push for Tax Extenders

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...
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