Eversheds Sutherland Tax Reform Law Blog
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IRS Provides Additional Q&A Guidance on Section 965

On July 16, 2019, the IRS released additional guidance in a Q&A format with respect to section 965. Enacted by the Tax Cuts and Jobs Act, section 965 generally imposes a transition tax on a US shareholder’s pro rata share of the accumulated earnings and profits of certain foreign corporations. The guidance includes information on making subsequent installment payments and filing transfer and consent agreements.   View the Q&A: General Section 965 Questions and...
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IRS Releases Proposed Regulations Addressing the Excise Tax on Certain Educational Institutions Under Section 4968

On June 28, 2019, the IRS released proposed regulations under section 4968. Section 4968 was added to the Code by the Tax Cuts and Jobs Act and generally imposes an excise tax of 1.4% on the net investment income of applicable educational institutions that have at least 500 tuition-paying students (of which more than 50% are located in the United States) and that have assets of at least $500,000 per student. The proposed regulations provide guidance with respect to the definitions of various terms, such as “applicable educational institution” and “student.” The regulations also provide...
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Treasury Releases Final and Proposed GILTI Regulations and Temporary Section 245A Regulations

On June 14, Treasury and the IRS (the Service) released final and proposed regulations on the new global intangible low-taxed income provisions, or GILTI, that were introduced under the Tax Cuts and Jobs Act. Along with finalizing regulations related to determining a US shareholder’s GILTI inclusion and their pro rata share of a CFC’s subpart F income, the regulations also address the GILTI high tax exception as well as the treatment of domestic partnerships that own CFCs. Among other proposed items, the regulations offer taxpayers an election to exclude highly taxed income from GILTI under...
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Washington Court Games the Sales Tax Trade-In Exclusion

The Washington Court of Appeals upheld the Washington Department of Revenue’s denial of a sales tax exclusion for trade-ins of software and hardware. GameStop provides customers with a trade-in credit for software and hardware and allows customers to apply these credits towards future purchases of software and hardware. The Department denied GameStop’s exclusion for two reasons: the Department relied on its interpretation of its regulation to conclude that software and hardware are “not of a like kind,” and GameStop violated the separate statement requirement on trade-in credits used for...
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IRS Releases Proposed Regulations Addressing the FDII and GILTI Deduction under Section 250

On March 4, 2019, the IRS released proposed regulations under section 250. Section 250 generally allows a domestic corporation a deduction for its foreign-derived intangible income (FDII) and its global intangible low-taxed income (GILTI). The proposed regulations provide rules for determining the amount of the deduction, including guidance related to the provision’s taxable income limitation. Read the Proposed Regulations: REG-104464-18...
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Hearing on Proposed Regulations for Limitation on Deduction for Business Interest Expense – Treasury and IRS Hear Targeted, Industry-Specific Requests

On February 27, 2019, the Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) held a hearing on the proposed regulations for the section 163(j) limitation on deduction for business interest expense (the Proposed Regulations), which were released on November 28, 2018. Nine witnesses, including Eversheds Sutherland Partner Wes Sheumaker, provided a variety of comments and recommendations on the Proposed Regulations, including the following: • The final regulations should give effect to the legislative history of the TCJA by clarifying that the electing real property...
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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

public-consultation-document-addressing-the-tax-challenges-of-the-digita. 
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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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Indiana Supreme Court Cites Business Purpose Requirement in Holding RV Dealership Liable for Uncollected Sales Tax

On December 5, 2018, the Indiana Supreme Court in a 3-2 split decision held that an RV dealership was liable for uncollected sales tax on RV sales even though it delivered the RVs to buyers at out-of-state locations. The RV dealership’s protocol for transferring possession of its RVs to customers depended on the customer’s state of residence. Customers from Indiana—or from one of the 40 states with reciprocal tax exemption agreements under Indiana Code section 6-2.5-5-39(c)—drove their RVs directly off the dealership lot and paid Indiana sales tax. Customers from the nine states without...
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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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