Legal Alert: FY 2022 Green Book goes big for green energy
Posted on Jun 1, 2021
On May 28, 2021, Treasury released the General Explanations of the Administration’s Fiscal Year 2022 Revenue Proposals, more commonly referred to as the Green Book. The issuance of the Green Book provides further detail on the White House’s American Jobs Plan, one of the major proposals in the development of an infrastructure bill. The Green Book’s release comes as Congress works through its own proposals. While the various proposals have differences in approach, they indicate strong, continued and expanded support for green energy tax initiatives. Read the full Legal Alert...
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Legal Alert: Warren bill fundamentally changes financial account reporting requirements and substantially increases IRS funding
Posted on May 28, 2021
On May 24, 2021, Sen. Warren introduced Senate Bill 1788, the “Restoring the IRS Act” (the Proposed Legislation). The Proposed Legislation generally (1) imposes new information reporting obligations on financial institutions relating to various types of transaction information associated with an account of an individual or business at that institution, (2) provides for significantly increased IRS funding, (3) requires certain reports to Congress relating to IRS enforcement priorities, the tax gap, and racial disparities relating to IRS enforcement, (4) increases underpayment penalties under...
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Legal Alert: Rev. Proc. 2021-26 provides accounting method change procedures for CFCs seeking to use the alternative depreciation system
Posted on May 26, 2021
Recently released Revenue Procedure 2021-26 (the Revenue Procedure) provides taxpayers with guidance regarding accounting method changes made on behalf of foreign corporations. The Revenue Procedure: Allows controlled foreign corporations (CFCs) to obtain automatic consent to change depreciation methods to use the alternative depreciation system under section 168(g) (ADS) (or to change the convention or recovery period under ADS) for purposes of calculating taxable income and earnings and profits (E&P).Updates the rules for the computation of section 481(a) adjustments...
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State of play: A May methods update
Posted on May 19, 2021
At last week’s ABA May Tax Meeting, government attorneys from both the Internal Revenue Service National Office Income Tax & Accounting division (IT&A) and the Department of the Treasury provided updates to taxpayers and practitioners on the status of guidance projects, and offered clarification regarding certain recent legislative proposals. IT&A leadership acknowledged that while during the onboarding of a new administration the guidance process tends to slow, the Biden Administration came in quickly with experienced leadership, ready to work and “firing on all cylinders.” Our...
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The Made in America Tax Plan Webcast Series
Posted on May 11, 2021
This three-part series focused on President Biden’s Made in America Tax Plan and addressed changes to federal provisions, energy taxes and changes for companies with non-US operations.April 21 | An Overview of the Legislation Highlighting Key Federal Tax ProvisionsAs part of Biden’s American Jobs Plan, the President has rolled out his opening offer to change the American corporate tax rules to incentivize job creation and investment in the United States, reduce and prevent profit shifting outside the United States, and promote tax equity. Entitled the “Made in America Tax Plan,” the package...
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Who in the world is Joe Manchin: International tax proposals vary under Biden, Senate proposals
Posted on Apr 23, 2021
Just a few months after regulations were finalized, and as taxpayers were getting comfortable with the international tax provisions implemented by the 2017 Tax Cuts and Jobs Act (TCJA), proposals from President Biden1 and the Senate Finance Committee2 to overhaul international tax have arrived. While similarities are present between the two proposals, including raising the corporate tax rate, restructuring GILTI, and virtual replacement of the current BEAT and FDII regimes, the specific rates and details vary. Read our highlights from the current proposals from President Biden and the...
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Treasury and IRS Release Final Regulations under Section 163(j) with respect to Partnerships and CFCs
Posted on Jan 5, 2021
On January 5th, the Department of the Treasury and the Internal Revenue Service released final regulations under section 163(j). Amended by the Tax Cuts and Jobs Act (TCJA), section 163(j) generally limits a taxpayer’s interest deduction to the sum of its business interest income, floor plan financing interest, and 30% of its adjusted taxable income (ATI). The regulations finalize portions of the regulations that were proposed in September 2020, which related to the application of section 163(j) to partnerships and controlled foreign corporations (CFCs). The final regulations generally...
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OMB Completes Its Review of Proposed Regulations under Section 163(j)
Posted on Jan 5, 2021
The Office of Management and Budget (OMB) has completed its review of proposed regulations under section 163(j). Section 163(j) generally limits a taxpayer’s interest deduction to the sum of its business interest income, floor plan financing interest, and 30% of its adjusted taxable income. The proposed regulations provide rules applicable to partnerships and controlled foreign corporations in calculating interest limitations under section 163(j) for such entities and their owners. Read More: Final Business Interest Deduction Regs Possibly Days Away
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Illinois General Assembly passes $42 billion budget with several key tax provisions
Posted on Jun 1, 2021
On Memorial Day, and stretching into the early hours of June 1, the Illinois Legislature approved the state’s $42 billion budget for fiscal year 2022. It is anticipated that the budget’s tax provisions are expected to generate more than $600 million in additional revenue by addressing what governor J.B. Pritzker and others in the General Assembly have deemed corporate tax “loopholes.” While there are many provisions included in the bill aimed at raising that additional revenue, below are four of the most impactful: First, taxpayers will be required to addback certain deductions for purposes...
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Georgia Governor Signs Taxpayer Fairness Act Limiting Administrative Deference in Georgia Tax Controversies
Posted on Apr 30, 2021
On April 29, 2021, Georgia Governor Brian Kemp signed SB 185, limiting the application of administrative deference in Georgia tax controversies. This law seeks to level the playing field in state tax litigation matters by reducing the level of deference accorded to the Department of Revenue’s interpretations of ambiguous laws. The law provides that “all questions of law decided by a court or the Georgia Tax Tribunal, including interpretations of constitutional, statutory, and regulatory provisions shall be made without any deference to any determination or interpretation, whether written or...
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Treasury and IRS Release Final Regulations under Section 451
Posted on Dec 28, 2020
On December 22, the Department of the Treasury and the Internal Revenue Service released final regulations under section 451(b) and (c). Section 451(b) generally provides that a taxpayer must recognize income no later than when the taxpayer takes the income into account on its applicable financial statement, and section 451(c) provides rules regarding the timing of the recognition of advance payments. The regulations generally finalize regulations proposed in September 2019 with certain changes, such as adding additional special methods of accounting under Treas. Reg. §1.451-3(c)(5). Read...
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Tax on Broadband Service Providers is New York’s Newest Bad Idea
Posted on Dec 11, 2020
Companion bills recently introduced in New York State (A. 11180 and S. 9112) would impose a temporary tax on businesses that provide broadband internet access service. Revenues generated from the tax would be earmarked to fund the provision of broadband internet access services to students in the state during the COVID-19 pandemic. The tax proposal would assess an “annual charge” on a provider’s “gross intrastate telecommunication revenue”— which remarkably is undefined. Also astonishing is the lack of a tax rate — the New York State Department of Taxation and Finance is directed...
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District Court Holds Section 965 Constitutional
Posted on Nov 20, 2020
On November 19, the U.S. District Court for the Western District of Washington held that the transition tax under section 965 was constitutional. Section 965, enacted by the Tax Cuts and Jobs Act, generally imposes a transition tax on a US shareholder’s pro rata share of the accumulated earnings and profits of certain foreign corporations. The court found that the transition tax was a tax on income allowed under the Sixteenth Amendment and that the transition tax did not violate due process. Read More: Moore v. United States
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Treasury and IRS Release Final Regulations under Section 245A and Section 951A Anti-Abuse Rules
Posted on Nov 20, 2020
On November 20, the Department of the Treasury and the Internal Revenue Service released final regulations under sections 245A and 951A. The rules coordinate two anti-abuse rules directed at certain transactions that occurred in 2018 between related controlled foreign corporations. The guidance generally finalizes proposed regulations issued in August 2020, except that the final regulations expand the application of the disqualified basis reduction rule under section 951A. Read More: Final RegulationsRead More: Prior Proposed Regulations
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Something to Keep an Eye On: Texas Comptroller Says Web-Based Services for Eye Doctors Is Taxable Data Processing
Posted on Oct 6, 2020
The Texas Comptroller of Public Accounts issued a private letter ruling concluding that several services provided to optometrists and ophthalmologists were subject to sales tax as data processing. Specifically, the Comptroller determined that the taxpayer’s web-based software system, which doctors use to manage patient relationships, schedule appointments, refill prescriptions, and communicate about treatment, is a taxable data-processing service. The taxpayer’s software “captures and sends data” to and from the taxpayer’s servers and, according to the Comptroller, constitutes...
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