The White House Office of Management and Budget Has Not Yet Reviewed any New Tax Law Rules
Posted on Jul 12, 2018
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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Legislative Changes to the International TCJA Provisions to Be Considered
Posted on Jul 11, 2018
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 Says
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Top New Jersey Tax Changes in the 2018 Budget Deal
Posted on Jul 6, 2018
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
Posted on Jul 5, 2018
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
Posted on Jul 5, 2018
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
Posted on Jul 5, 2018
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 name
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Trump Anticipates Tax Reform 2.0 in October
Posted on Jul 2, 2018
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 Futures’
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Proposed Regulations and Guidance on Sections 199A and 163(j) Will Draw on Existing Regulations
Posted on Jun 29, 2018
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 199A
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New Jersey Legislature Passes Corporate Tax Increases, Still Negotiating with Governor
Posted on Jun 28, 2018
In the midst of a budget showdown between New Jersey’s Legislature and Governor Murphy, on June 25, 2018, the Legislature passed a replacement bill that seeks to raise revenue with a temporary Corporation Business Tax “surtax” on corporations meeting certain income thresholds and by limiting New Jersey’s dividend exclusion. The Legislature also responded to the Tax Cuts, and Jobs Act (TCJA) passed by the United States Congress late last year by decoupling from the IRC § 199A qualified business income deduction. However, the current version of the bill fails to address other TCJA provisions,...
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Brady Anticipates Legislative Outline of Tax Reform 2.0 in Early August
Posted on Jun 27, 2018
House Ways and Means Committee Chairman Kevin Brady, at a Washington Post event held on June 26th, stated that Committee Republicans would begin circulating a draft of the next tax package after the July 4th holiday, followed by the release of an outline of the tax cut package in early August and a vote in the fall. Brady sees the next round of tax cuts as a package of multiple bills focused on encouraging savings for retirement and education, as well as permanently extending individual tax cuts set to expire in 2025. Read more here: GOP Chairman Envisions Tax Reform 2.0 as a Package of...
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Proposed Regulations Related to Previously Taxed Income (PTI) Are Expected This Year
Posted on Jun 26, 2018
Marjorie Rollinson, IRS Associate Chief Counsel International, has indicated that issuing new proposed PTI regulations is a priority for the IRS this year. The new PTI regulations would address issues related to the global intangible low-taxed income (GILTI) and deemed repatriation provisions of the Tax Cuts and Jobs Act, specifically, how to allocate deductions against tested income for CFCs and how to treat GILTI inclusions in excess of E&P. Read More: Proposed U.S. Regs on Previously Taxed Income Coming This Year
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Markup for Legislation for Phase 2 of Tax Reform Is Expected After August
Posted on Jun 26, 2018
House Ways and Means Committee Chair Kevin Brady indicated that a new tax bill may be marked up after the August recess, a date later than his previous estimate. Brady also noted that parts of the phase 2 legislation may be pulled from previous Senate and House proposals. Read More: Phase 2 Markup Likely Delayed Until After August Recess
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Congress Unlikely to Act on Technical Corrections until after November Elections
Posted on Jun 26, 2018
Congress appears unlikely to pass a technical corrections bill for the Tax Cuts and Jobs Act prior to the November elections. Senate Majority Whip John Cornyn stated that the corrections are not imminent, and as an indication of further delay, Kevin Brady, Chair of the House Ways and Means Committee, has stated that any technical corrections will be affected by the guidance released by the Treasury Department. Read more: Clock Ticks on Technical Corrections
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State Tax Reform Roundtables
Posted on Jun 22, 2018
The Tax Executives Institute’s (TEI) State and Local Tax Committee is holding a series of State Tax Reform Roundtables to enable SALT professionals to stay abreast of state tax developments associated with the Tax Cuts and Jobs Act, to engage with subject-matter experts, and to hear from peers regarding their “boots on the ground” knowledge and experience. This series of calls will create a platform for all members to learn, share and engage about issues of interest. Each call will highlight a particular topic and will provide a general update of state tax reform developments. Partners Jeff...
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New Rev. Proc. Provides that Citrus Replanting Costs Not Included in Automatic Accounting Method Changes
Posted on Jun 22, 2018
Released Tuesday, Rev. Proc. 2018-35 provides that the new automatic change procedures under Rev. Proc. 2018-31 do not apply section 263A to replanting costs for damaged or lost citrus plants. Section 263A generally requires taxpayers to include the costs of certain property produced or acquired for resale to be included in inventory costs. However, under section 263A(d)(2)(A) as revised by the 2017 tax act, such costs associated with replanting plants following certain loss or damage are not included. Rev. Proc. 2018-35 provides that a taxpayer wanting to change its method of accounting...
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