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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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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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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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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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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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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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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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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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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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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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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Posted on Sep 29, 2020
On September 29, the Department of the Treasury and the Internal Revenue Service released final and proposed regulations that provide guidance with respect to the calculation of foreign tax credits. The final regulations address a variety of computational issues, such as the allocation and apportionment of deductions under sections 861 through 865, the allocation of apportionment of foreign taxes, and the application of the foreign tax credit limitation to consolidated groups. The proposed regulations also address a variety of issues, such as the determination of foreign income taxes subject...
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Posted on Sep 22, 2020
Mississippi Notice 72-20-09 provides additional guidance on Mississippi’s marketplace facilitator law, which took effect on July 1, 2020. The Notice explains that a sale facilitated and delivered by a third-party food delivery service is not a “retail sale” by the facilitator. Rather, the restaurant will charge sales tax on the selling price it charged for the food. But if a third-party delivery company additionally makes direct sales of items from its own inventory, the delivery company must collect and remit sales tax on those sales.
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Posted on Sep 22, 2020
On September 21, the Department of the Treasury and the Internal Revenue Service released final regulations under section 864(c)(8). Section 864(c)(8) generally treats gain from the sale or exchange by a nonresident alien individual or foreign corporation of an interest in a partnership that is engaged in a trade or business in the United States as effectively connected with such trade or business. The final regulations generally adopt proposed regulations issued in 2018 that provided rules for determining the amount of gain or loss treated as effectively connected with the conduct of a...
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Posted on Sep 22, 2020
On September 21, the Department of the Treasury and the Internal Revenue Service released final regulations under section 168(k). Amended by the Tax Cuts and Jobs Act, section 168(k) generally allows full expensing of certain depreciable property. The final regulations generally finalize proposed regulations released in 2019 that address the requirements to qualify for the additional depreciation deduction. Read More: Final RegulationsRead More: 2019 Proposed Regulations
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