TaxReformLaw.com
content top

Repatriation Holiday in the Driver’s Seat?

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...
Continue Reading

Internet Tax Freedom Act Extension Clears Congressional Committee

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...
Continue Reading

Tax Extenders Debate is Extended — EXPIRE Act Stalls in the Senate

- 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...
Continue Reading

The Topsy Turvy Status of Inversions – Levins Move Forward, Wyden and Pfizer Move Back

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...
Continue Reading

House Bill Would Make R&D Credit Permanent on Bi-Partisan Vote

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...
Continue Reading

Senate Extenders Legislative Language Released

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.
Continue Reading

FATCA Enforcement Relaxed Until 2016

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...
Continue Reading

The House Ways and Means Committee Approves 6 Permanent Business Tax Extenders

On April 29, 2014, the House Ways and Means Committee approved six bills that would make several expired business tax provisions permanent. Included among the “tax extenders” that would become permanent are a simplified version of the research credit, the subpart F active financing exception, and the controlled foreign corporation look-through rule. Ways and Means Chairman Dave Camp (R-Mich.) is taking a distinctly different approach than Senator Ron Wyden (D-Ore.), chairman of the Senate Finance Committee. Sen. Wyden’s tax extenders package temporarily extended almost all...
Continue Reading

OECD Releases Digital Economy Discussion Draft: Few Surprises–No Conclusions

On March 24th, the Organisation for Economic Cooperation and Development (OECD) released its discussion draft on e-commerce, as part of its base erosion and profit shifting (BEPS) project.  The draft is a result of BEPS Action 1: address the tax challenges of the digital economy. After 58 pages describing the digital economy and the tax challenges it presents, the discussion draft presents different options on how to potentially address the issues, but confirms the view of the OECD that “ring fencing” the digital economy and applying a separate set of tax rules from the traditional...
Continue Reading

OECD Releases Discussion Draft on Treaty Abuse

On March 14, the Organisation for Economic Cooperation and Development (OECD) released a public discussion draft on Action 6 of its Base Erosion and Profit Shifting (BEPS) project, on how to prevent treaty abuse.  The discussion draft covers many issues, but five key recommendations stand out.  The first four are changes to the OECD Model Tax Convention itself (the “Model Convention”), and the fifth is an addition to the introduction of the Model Convention: A limitation-on-benefits clause A general anti-abuse rule A savings clause A new title and preamble A discussion of tax policy...
Continue Reading

Now it’s a Trend: Another Tax-Writer Stepping Down, as Camp set to Retire

House Ways & Means Chairman Dave Camp (R-Mich.) formally announced that he would retire at the end of the current Congress.   Many saw this decision coming, as House Republican conference rules will require Rep. Camp to relinquish his chairmanship of the powerful Ways & Means Committee after this Congress.  As Chairman, Rep. Camp has pushed hard for comprehensive tax reform, a goal which has eluded him to date and he is unlikely to achieve in his last 9 months in office.  In yesterday’s press release, Camp promised that during his remaining time in Congress he would “redouble...
Continue Reading

Finance Chairman Releases Extenders Package; Drops Look-Through (or Maybe Not)

Update 2: The two-year extension of the look-through provision was officially added back into Sen. Wyden’s extenders package. Update: Dropping look-through lasted approximately 6 hours today.  The extenders package released this morning would not have extended the related party look through rule as discussed in the original post, but by 4 PM, a two-year extension of the look-through provision was included on a list of provisions the Senate Finance Committee said may be added to the extenders package either before the mark up or as amendments. Original Post: On April 1, Senate Finance...
Continue Reading

Time for a Little Spring Cleaning: IRS Releases Final Version of Form W‑8BEN-E for FATCA Compliance

On March 28, the IRS released the final version of Form W-8BEN-E for use by entities to meet the reporting and withholding requirements under the Foreign Account Tax Compliance Act (FATCA).  With FATCA’s initial compliance deadline of July 1, 2014, quickly approaching, the release of the final Form W-8BEN-E is a welcome event for those striving to meet the requirements of the new regime.  Although the instructions to the new form are pending, the form nevertheless should be completed in accordance with the rules of the final and temporary FATCA regulations. Notably, the final...
Continue Reading

The IRS: Taking the “Coin” Out of Bitcoin

The IRS released guidance on March 25 that Bitcoins and other virtual currency should be treated as property for U.S. federal income tax purposes, and not as a currency.  In addition to the determination that virtual currency is property, the IRS notice made clear that some of the typical rules on transactions in property apply to virtual currencies.  For example, the recipient of virtual currency as payment for goods or services is treated as having received income equal to the fair market value of the virtual currency.  In addition, under the guidance, payments made in virtual currency...
Continue Reading

OECD Goes 2-for-2: Releases Two Discussion Drafts on Action 2

The Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) action plan is moving forward.  On March 19, 2014, the Organisation for Economic Co-operation and Development (OECD) released two discussion drafts on “action 2” of the OECD’s BEPS action plan (Action 2). Action 2 is targeted at neutralizing the potential tax advantages, including elimination of taxation, double deduction and long-term deferral, of certain instruments or entities that are treated differently under domestic laws of two countries, so-called “hybrid mismatch...
Continue Reading