Eversheds Sutherland Tax Reform Law Blog
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The White House Office of Management and Budget Has Not Yet Reviewed any New Tax Law Rules

Based on a new arrangement between the White House Office of Management and Budget (OMB) and Treasury, regulations and other guidance that have policy or economic significance will undergo a compliance review by the OMB. A senior administration official recently stated that Treasury and IRS have not yet sent any new tax regulations or guidance to the OMB for review, despite officials at those agencies indicating that guidance on several elements of the TJCA are forthcoming in the near term.  The effect of the OMB’s review on such guidance is uncertain, but the timeline of OMB’s review is...
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Tax Law Discourages U.S. Investment and Leaves Taxpayers in the Dark, According to New Report from Senate Finance Democrats

A recent report released by the Senate Finance Committee ranking member Ron Wyden asserts that the new tax legislation has resulted in “more complexity, loopholes and incentives to ship jobs overseas.” According to the report, the global intangible low taxed income (“GILTI”) provisions create a new web of complexity and leave taxpayers in the dark regarding future investment decisions. Additionally, instead of discouraging foreign investment, the new provisions reportedly have the opposite effect. With GILTI’s exemption for a routine return on depreciable assets outside of the U.S.,...
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David Kautter Announces that Guidance on the Section 199A Pass-through Deduction will be Released in Weeks

On July 17, 2018, David Kautter, the acting Commissioner of the Internal Revenue Service (“IRS”), announced that the Treasury Department is currently reviewing guidance under section 199A and anticipates the guidance to be released within weeks. Kautter further stated that the IRS is treating the section 199A deduction, the section 59A base erosion and anti-abuse tax (“BEAT”), and the section 951A global intangible low-taxed income (“GILTI”) guidance as integrated projects. While Kautter does not expect guidance on the provisions to be released together, he predicts that guidance on the BEAT...
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Brady Announces that the Outline of Phase 2 of Tax Reform will be Released Next Week

Kevin Brady, Chairman of the House Ways and Means Committee, announced on July 18, 2018 that an outline of the “phase 2” tax reform legislation will be released during the week of July 23rd. Brady also stated that the phase 2 legislation will not include any technical corrections or refinements to the 2017 tax act and that the focus of the legislation will be to make permanent the individual tax cuts of the 2017 tax act. Read more: Phase 2 Tax Bill Outline Coming Next...
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The Office of Management and Budget Received Draft Transition Tax Regulations

On July 13, the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA) acknowledged receipt on its website of proposed rules under section 965.  The rules are currently under review, but OIRA has indicated that they are not economically significant, and therefore the normal 45-day review timeline (subject to extension) applies. Read more: Transition Tax Regs Nearing Finish Line
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Tax Reform 2.0 Not Expected to Address International Provisions

According to Republican Congressman Carlos Curbelo, tax reform 2.0 will not address international tax provisions, such as BEAT or GILTI.  Instead, the next round of tax legislation is projected to focus on making the individual provisions permanent.  The excluded provisions are expected to be addressed in a future, separate technical corrections bill.  Curbelo also noted that the draft tax reform 2.0 legislation will likely be released after Congress returns from its August recess. Read more here: New Tax Overhaul Won’t Address GILTI, Congressman Says  ...
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Vote on Technical Corrections Bill Not Expected Until After Midterm Elections

While House Republicans are in the process of drafting a technical corrections bill, House Republican leaders do not expect vote a on the bill until after the midterm elections in November. The technical corrections bill would be separate from the “phase 2” tax legislation that would make the individual tax cuts implemented by the 2017 tax act permanent. Kevin Brady, chairman of the House Ways and Means Committee, has stated that House Republicans would see the phase 2 bill in July, while a legislative outline may be released in August. Read more: Tax Technical Corrections Vote Expected...
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European Commission Discussing Implementation of the TCJA with U.S. Officials

According to Valdis Dombrovskis, a European Commissioner, the European Commission is speaking with U.S. officials about the Commission’s concerns with the 2017 tax act. European finance ministers have claimed that some provisions of the act violate international norms and double taxation treaties, especially the Base Erosion and Anti-Abuse Tax (or BEAT), which some commentators claim violates the World Trade Organization’s discrimination rules. The European Commission’s discussions focus on how implementation of the act by U.S. authorities can lessen the Commission’s concerns. Read more: EU...
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Legislative Changes to the International TCJA Provisions to Be Considered

In a recent interview, Kevin Brady, chairman of the House Ways and Means Committee, stated that legislative changes to the international provisions of the TJCA are in the works and that these changes may be included in the legislation associated with phase 2 of tax reform, which Brady indicated would be reviewed by House Republicans in July. President Trump has also weighed in on the phase 2 legislation, suggesting that the legislation will be considered by Congress in October or sooner. Read more: BEAT, GILTI Provisions May Change in Upcoming Legislation, Brady...
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Top New Jersey Tax Changes in the 2018 Budget Deal

In a last-minute deal to avert a government shutdown, New Jersey Governor Phil Murphy and the New Jersey Legislature cobbled together a budget with numerous amendments to New Jersey’s tax law. View the full legal alert.
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LB&I Division Announces Campaign Targeting Transition Tax Compliance

On July 2, 2018, the Internal Revenue Service’s Large Business and International Division announced a compliance campaign focused on the transition tax provisions of section 965, enacted by the 2017 Tax Act. Section 965 generally requires that U.S. shareholders pay a tax on the untaxed foreign earnings of certain specified foreign corporations. The compliance campaign serves as a notice for taxpayers to fulfill their filing and payment obligations under this provision. Read more: IRS Announces the Identification and Selection of Five Large Business and International Compliance Campaigns; 2...
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Six Main Areas Identified For TCJA International Guidance

In anticipation of tax reform 2.0, six major international areas have been identified as prime for regulatory focus and guidance: the allocation of expenses to GILTI income; the application of the accumulated earnings tax under section 531 to GILTI;  treatment of consolidated tax return filers for GILTI purposes; potential carve-outs to the base erosion and anti-abuse tax (or BEAT); the treatment of intercompany deductible payments for purposes of the BEAT;  and the effect of the repeal of section 958(b)(4) on the portfolio interest exemption from withholding. Read more:  6 Possible TJCA...
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Phase Two of Tax Reform Will Retain Pretax Benefits of 401(k) Plans

A spokesperson from the House Ways and Means Committee recently stated that the new tax proposals will not revise the pretax treatment of 401(k) savings plans. House Ways and Means Committee Chairman Brady previously stated, in an interview, that the phase 2 tax proposal might address retirement and include a savings element. Read More: Ways & Means Quashes Rothification Concerns for ‘Tax Reform 2.0’; A tax by any other...
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Trump Anticipates Tax Reform 2.0 in October

President Trump, during an interview with Fox Business Network’s Maria Bartiromo, stated that he expects another tax overhaul to be proposed in October.  As part of the reform plan, President Trump is considering a further reduction of the recently enacted 21 percent corporate tax rate, to 20 percent. Read more here:  Trump expects another tax overhaul, says ‘probably in October’ Watch the video here:  Maria Bartiromo Sits Down with President Trump on ‘Sunday Morning...
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Proposed Regulations and Guidance on Sections 199A and 163(j) Will Draw on Existing Regulations

The IRS is incorporating relevant existing regulations in drafting the proposed regulations for sections 199A and guidance for section 163(j). However, as noted by Holly Porter, acting IRS associate chief counsel, there are limitations to the degree to which application of these two sections can rely on regulations already existing under other sections due to the differences in nature and purpose of the provisions. Read more: IRS Relying on Existing Regs to Interpret...
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