Eversheds Sutherland Tax Reform Law Blog
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Hearing on Proposed Qualified Opportunity Zone Regulations – Requests for Greater Flexibility

On February 14, 2019, the Internal Revenue Service (IRS) and the Department of the Treasury (Treasury) held a hearing on the proposed regulations for the Qualified Opportunity Zone (QOZ) program (the Proposed Regulations), which were released on October 19, 2018. More than 20 witnesses provided comments and recommendations on a variety of topics, generally stressing a desire for greater flexibility under the Proposed Regulations. Suggestions included: Relaxing the proposed 50% gross income test – which requires that 50% of the gross income of an opportunity zone investor be derived from the...
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Georgia Bill Proposes Changes to Sales and Use Tax Reporting and Collection Rules

On February 14, 2019, the Georgia House Ways and Means Committee voted in favor of House Bill 182. Effective for January 1, 2020, the bill would amend O.C.G.A. § 48-8-2(8)(M.1) to lower the sales threshold on the requirement to collect or report sales and use tax from $250,000 to $100,000 and would repeal subsection (c.2) of O.C.G.A. § 48-8-30 in its entirety to eliminate the option to provide notification to the purchaser and state in lieu of collecting and remitting tax. O.C.G.A. § 48-8-2 currently requires out-of-state sellers to collect and remit sales tax if the seller obtains gross...
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OECD Proposal

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Podcast: New Jersey apportionment of GILTI

In this podcast, our state tax team discusses New Jersey guidance regarding the apportionment treatment of GILTI income.
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New Jersey Tax Court Rejects Alternative Apportionment Formula

The New Jersey Tax Court rejected the Division of Taxation’s application of a five-factor alternative apportionment formula as invalid rulemaking under New Jersey’s Administrative Procedures Act (APA). The Tax Court previously determined that an application of the statutory apportionment formula in effect prior to 2011 for companies without a “regular place of business” outside New Jersey did not fairly reflect the taxpayer’s in-state business activities and remanded the case to the Division so that other apportionment methods could be considered. The Division then proposed a modified...
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Legal Alert: We are not in Kansas anymore – OECD proposes way forward for digital tax solution

The OECD has again weighed in on the question of taxation of the digital economy, following on its original report as part of Action 1 of the BEPS initiative. On January 29, 2019, the OECD issued a policy note that sets out two “pillars” to evaluate proposals for a global digital tax solution. The first pillar focuses on the allocation of taxing rights. The second pillar focuses on anti-BEPS measures. The OECD’s approach is important as it continues to consider significant changes to historic concepts, and as multiple taxing jurisdictions, as well as the European Union, have introduced their...
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Massachusetts ATB Finds that Indiana Utility Receipts Tax Not a Deductible Transaction Tax for Massachusetts Corporate Excise Tax

The Massachusetts Appellate Tax Board disallowed a deduction for Indiana utility receipts tax (URT) paid by a natural gas distribution operator with operations in Indiana. The deduction for the URT was disallowed, for purposes of computing Massachusetts net income for corporate excise tax, because the URT is not a deductible “transaction tax.” The Board found that while the URT may have some characteristics of a transaction tax, on balance the URT is more akin to the types of income and franchise taxes that must be added back to net income under the Massachusetts statute. Bay State Gas Co....
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Passthrough Regulations and Guidance Released

Final section 199A regulations and additional proposed rules concerning passthrough deductions were released on January 18. The final regulations concern the 20 percent business income deduction available to passthrough owners meeting certain income thresholds that was introduced under the Tax Cuts and Jobs Act (TCJA). Included in the final regulations are a technical definition of “net capital gain,” an expansion of the definition of “relevant passthrough entities” to include certain common trust funds, and retain, with a small adjustment, the technical definition of “trade or business.”...
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IRS Issues Final Transition Tax Regulations

On January 15, 2019, the IRS and Treasury released final regulations on the section 965 transition tax. The final regulations largely adopt the basic approach and the structure of the proposed regulations (REG-104226-18) issued on August 9, 2018 but with some changes, including modifications to the election to reallocate basis to reflect the offset of positive earnings with deficits under section 965(b) and the introduction of an exception for certain commodities used in an active business from treatment as a cash-equivalent asset that implicates the higher transition tax rate. Read More:...
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Discussion Draft of the “Tax Technical and Clerical Corrections Act” Released

Rep. Kevin Brady, former Chairman of the House Ways and Means Committee, issued a draft of technical changes to the Tax Cuts and Jobs Act (TCJA) on January 2, 2019, just prior to relinquishing the Chair to Rep. Richard Neal.  The dozens of proposed changes, written to implement Congressional intent and correct provisions in the TCJA, include restoration of the applicable recovery period for qualified improvement property for restaurants and retailers, clarifications to the qualified business income deduction, and clarification of issues with respect to both the interest deduction limitations...
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It’s Not the Eggnog – New Jersey Proposes to Specially Allocate GILTI Based on GDP

On December 21, the New Jersey Division of Taxation released Technical Bulletin TB-85, which addresses how the Division will expect taxpayers to calculate the amount of so-called global intangible low-taxed income (GILTI) and foreign derived intangible income (FDII) that are taxable for New Jersey corporation business tax (CBT) purposes. Background: GILTI and FDII under Federal Tax Law The Federal Tax Cuts and Jobs Act (TCJA) created a new category of income under Internal Revenue Code (IRC) section 951A, known as GILTI.  This provision imposes a tax on U.S. shareholders based on income from...
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IRS Releases Proposed Regulations Addressing Hybrid Arrangements

On December 20, the IRS released proposed regulations under sections 245A(e) and 267A. Section 245A allows a deduction for certain related party dividends, except in the case of certain hybrid dividends, and section 267A disallows deductions for certain amounts paid in a related-party hybrid transaction or to a related hybrid entity. The proposed regulations under section 267A clarify the application of the provision, and the guidance under section 245A(e) defines hybrid dividends and clarifies the interaction between the provision and foreign tax laws. Read the Proposed Regulations:...
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Legal Alert: BEAT, FATCA and Insurance—proposed regulations clarify the application of the BEAT and the treatment of insurance premiums under FATCA

On December 13, 2018, the Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) issued two sets of proposed regulations of importance to insurance companies. One set was the long-awaited regulations under section 59A of the Internal Revenue Code of 1986, as amended (Code), commonly referred to as the base-erosion anti-abuse tax (BEAT). The other set of proposed regulations amended the Foreign Account Tax Compliance Act (FATCA) regulations that apply to sections 1441-1446 of the Code. Read the full legal alert...
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Legal Alert: The season of giving – proposed regulations ease FATCA reporting burdens

On December 13, 2018, proposed regulations (Proposed Regulations) were issued that reduce certain compliance obligations under Sections 1471-1474 (the Foreign Account Tax Compliance Act (FATCA)) of the Internal Revenue Code of 1986, as amended (Code) and Sections 1441-1446 of the Code. FATCA generally requires withholding 30% on certain US source payments made to foreign financial institutions (FFIs) unless the FFI has entered into an FFI agreement with the Internal Revenue Service (IRS) or the FFI is resident in a country that has an Intergovernmental Agreement (IGA) in force. Sections...
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Joint Committee on Taxation Releases Blue Book of TCJA

The General Explanation of Public Law 115-97, prepared by the staff of the Joint Committee on Taxation in consultation with the staffs of the House Committee on Ways and Means, the Senate Committee on Finance, and the Treasury Department’s Office of Tax Policy, was released this week. The explanation provides a discussion of the Tax Cuts and Jobs Act (TCJA) including a description of pre-TCJA provisions and an explanation of the new provisions. Read the General Explanation of Public Law...
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