State Tax After TCJA: Treatment Of International Income
Posted on May 8, 2018
The Tax Cuts and Jobs Act, P.L. 115-97,[1] made sweeping changes to the Internal Revenue Code, and will have far-reaching implications for state tax systems that broadly conform to the IRC. In this article for Law360, Eversheds Sutherland attorneys Jeffrey Friedman, Eric Tresh, Todd Lard and Todd Betor focus on the major state income tax implications of the TCJA’s international tax provisions, including: The transition tax imposed by revised IRC § 965; The foreign-source dividends received deduction, or DRD, allowed by new IRC § 245A; The tax on global intangible low-taxed income, or GILTI,...
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New York City: Penalty Relief Available for Certain Section 965 Underpayments
Posted on May 7, 2018
The New York City Department of Finance recently announced the availability of penalty abatements for certain taxpayers that have underpaid business taxes due to the inclusion of Section 965 income. NYC Finance Memorandum No. 18-4 (PDF) describes tax considerations and late payment penalty relief for NYC taxpayers affected by Section 965 and subject to the General Corporation Tax (GCT), the Banking Corporation Tax (BTX), and the Unincorporated Business Tax (UBT). Like many states and localities, New York City does not provide for the deferred payment of NYC tax attributable to net Section...
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IRS Considering the Definition of a “Trade or Business” under Section 163(j)
Posted on May 4, 2018
The IRS is in the process of defining a “trade or business” for purpose of determining what counts as business interest for the purposes of section 163(j). The text of the statute and Notice 2018-28 indicate that all income earned by a corporation is business interest, but questions still remain on whether a corporation that receives only passive dividend income is a business and whether interest paid by a partnership in which a C corporation is a partner should necessarily be classified as business interest. Read more: IRS Weighing Definitions of “Trade or Business,” “Business...
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Rhode Island: Section 965 Income Is not Deferrable for State Tax Purposes
Posted on Apr 30, 2018
The Rhode Island Department of Revenue recently released Advisory #2018-21 (PDF), which deals with “Section 965” income. The advisory states that the repatriation transition tax is not deferrable for Rhode Island state tax purposes. Section 965 Background On December 22, 2017, President Donald Trump signed into a law a bill popularly known as the Tax Cuts and Jobs Act (TCJA). A new Internal Revenue Code (IRC) provision introduced by the TCJA is Section 965, which provides for a transition tax on untaxed foreign earnings of certain specified foreign corporations as if those earnings had been...
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New Notice Requests Recommendations for the IRS and Treasury 2018-2019 Priority Guidance
Posted on Apr 30, 2018
Notice 2018-43 was released by the IRS, asking taxpayers for recommendations on the 2018-2019 Priority Guidance Plan. The Priority Guidance Plan is used each year by the Treasury and IRS to identify and prioritize what tax issues to prioritize and address through guidance such as regulations, rulings, procedures and notices. According to the Notice, there has been focus on the implementation of the new tax law since its enactment. The Treasury and IRS expect to continue such focus through this year and throughout the future 2018-2019 plan. They will prioritize suggestions that would...
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IRS Releases Fact Sheet on Depreciation
Posted on Apr 24, 2018
The IRS recently released a factsheet that provides an overview of the changes to depreciation and expensing under the new tax law. The fact sheet addresses immediate expensing for section 179 property, first year bonus depreciation, limitations on luxury automobiles and personal use property, treatment of certain farm property, the applicable recovery period for real property, and the use of the alternative depreciation system for farming businesses. Read more: New rules and limitations for depreciation and expensing under the Tax Cuts and Jobs Act
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What are the State Tax Implications of International Tax Reform?
Posted on Apr 19, 2018
What are the State Tax Implications of International Tax Reform? Jeff Friedman and others outline the key points at the COST 2018 Spring Audit Session/Income Tax Conference in snowy Boston, Massachusetts. These issues were also addressed in a recent article, “Waiting for the Other Shoe to Drop: State and Local Tax Implications of Federal Tax Reform – International Tax Provisions,” in Bloomberg Tax – Daily Tax Report: State by Jeff Friedman, Todd Betor and Michael Spencer.
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Fiscal Year Taxpayers Reminded about Blended Corporate Tax Rate
Posted on Apr 18, 2018
Notice 2018-38, released April 16, reminds fiscal year taxpayers about the requirement to apply a blended tax rate under Section 15 of the Code to their taxable year that includes January 1, 2018. The Tax Cuts & Jobs Act (the “TCJA”) changed the corporate tax rate, effective for taxable years beginning after December 31, 2017, in the middle of fiscal year taxpayers’ tax year. Under Section 15(a) of the Code, a corporation with a tax year that includes January 1, 2018, but does not start on that day, must apply a blended tax rate, calculated by applying the rates before and after the...
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Oregon Legislature Passes IRC Conformity Legislation, But Decouples from Certain Federal Tax Reform Provisions
Posted on Apr 17, 2018
On April 10, 2018, and April 13, 2018, Oregon Governor Kate Brown signed into law S.B. 1529 and S.B. 1528 (the Bills), respectively, which provide a series of changes to Oregon’s income tax laws in response to recent federal tax changes as part of the federal Tax Cuts and Jobs Act. Most notably, the Bills: (i) update the state’s IRC conformity date to December 31, 2017; (ii) decouple from the federal temporary dividend received deduction with respect to the transition tax under IRC § 965 by requiring an addback of the federal deduction allowed under IRC § 965(c); (iii) provide relief from...
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Notice Confirms Business as Usual for Taxpayers with Advance Payments
Posted on Apr 16, 2018
The IRS issued Notice 2018-35 on April 13, which permits taxpayers to continue to rely on Rev. Proc. 2004-34 for the treatment of advance payments under Section 451. According to the Notice, the IRS will not challenge taxpayers’ use of the current guidance that provides for the limited deferral of advance payments. Additionally, the Notice requests comments with suggestions on Section 451 guidance, including: the applicability of Rev. Prov. 2004-34; whether the definition of “advance payments” should be expanded; and the possibility of expanding the rules under section 451(c), which allows...
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IRS Updates Q&As about Section 965 Reporting
Posted on Apr 16, 2018
On April 13, the IRS updated its Questions and Answers page to include additional discussion on reporting amounts owed under section 965—the so-called “transition tax”—on a taxpayer’s 2017 tax return. The Q&As provide answers to questions on reporting requirements, such as how section 965 amounts are reported or steps that a taxpayer should take if the taxpayer had previously filed its return without reporting section 965 amounts where such reporting was required. The update also discusses what additional reporting is required in connection with section 965 amounts and how a taxpayer...
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The OMB and Treasury Release Memo on OMB’s Oversight of Tax Regulations
Posted on Apr 12, 2018
The Office of Management of Budget (OMB) and the Department of Treasury recently issued a memo describing the framework for the OMB’s review of tax regulations. The memo provides that regulations will be subject to review if they 1) create a serious inconsistency or interfere with an action of another agency, 2) raise novel legal or policy issues, or 3) have an annual non-revenue effect on the economy of $100 million or more. OMB oversight has raised concerns about the efficiency of the tax regulation process, however the memo was positively received by the Treasury officials. Read more:...
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LEGAL ALERT: IRS RELEASES NOTICE 2018-26 – RETROACTIVELY DISREGARDING CERTAIN ACCOUNTING METHOD CHANGES AND ENTITY CLASSIFICATION ELECTIONS
Posted on Apr 9, 2018
View the Eversheds Sutherland Legal Alert summarizing the treatment of certain accounting method changes and entity classification elections in Notice 2018-26 here.
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LEGAL ALERT: TRANSITION TAX – ENOUGH ABOUT HOW IT WORKS; HERE IS WHAT DOESN’T WORK
Posted on Apr 9, 2018
View the Eversheds Sutherland Legal Alert summarizing the new anti-avoidance rules and other technical guidance described in Notice 2018-26 with respect to which the Treasury and the IRS intend to issue regulations, effective as of the first taxable year of a foreign corporation to which section 965 applies, here.
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VIDEOCAST: TOOLS OF ENGAGEMENT – BEST PRACTICES TO MAXIMIZE CERTAINTY AND MINIMIZE CONTROVERSY
Posted on Apr 9, 2018
The tax reform bill passed at the end of 2017, but Congress continues to propose and make changes to the Internal Revenue Code. Many provisions provided welcome relief; others created uncertainty. In this Bottom Line videocast, Susan Seabrook and Daniel Strickland discuss the administrative controversy processes and procedures available to taxpayers, as well as the certainty achievable in an otherwise uncertain climate. View the Videocast
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