The IRS has been busy on the COVID front, extending reliefs available for qualified opportunity funds (QOFs), in response to the pandemic.
Opportunity zones, created by the 2017 Tax Cuts and Jobs Act, are designed to spur investment in distressed communities through tax benefits. Opportunity zones retain their designation for 10 years and investors may defer tax on almost any capital gain up to December 31, 2026, by making an appropriate investment in a zone, making an election after December 21, 2017, and meeting other requirements.
The regulations allow the deferral of all or part of a gain that is invested into a QOF that would otherwise be includible in income. The gain is deferred until the investment is sold or exchanged, or until December 31, 2026, whichever is earlier. If the investment is held for at least 10 years, investors may … Read More »
The IRS’s specialist compliance teams revealed recently that they have significantly increased their focus on virtual currency tax issues during the 2020 fiscal year.
The newly published Criminal Investigation (CI) division’s annual report highlights the agency’s successes and criminal enforcement actions taken in fiscal 2020, the majority of which occurred during the COVID-19 pandemic. During the 2020 fiscal year, over USD10bn was identified as tied to tax fraud and other financial crimes, the report revealed.
The report showed that the key focuses of CI in fiscal year 2020 included COVID-19-related fraud, cybercrimes, with an emphasis on virtual and cryptocurrencies, traditional tax investigations, international tax enforcement, employment tax, refund fraud, and tax-related identity theft.
In response to COVID-19 related crimes, CI special agents quickly adapted their investigative techniques to initiate cases into fraudulent claims for Economic Impact Payments, Paycheck Protection Program loans, and refundable … Read More »
According to announcements made during the election campaign, Biden’s tax proposals include a potential increase in the federal headline rate of corporate tax from 21 to 28 percent, reforming the GILTI rules, and introducing a 15 percent minimum tax, or “book tax,” on companies with reported income in excess of USD100m. He also discussed imposing sanctions on jurisdictions deemed to facilitate corporate tax avoidance and voiced support in July 2020 for tax relief for manufacturing companies.
In terms of personal taxes, Biden has said he would restore the top rate of personal income tax to 39.6 percent from 37 percent; restrict tax breaks for wealthy taxpayers; and tax capital gains as ordinary income and prevent wealthy taxpayers from deferring tax through investments. He also proposed that estate taxes, also reduced by the TCJA, should be raised back to “the historical norm.” … Read More »
In the United States, the American Institute of CPAs and the Council on State Taxation have urged Congress to pass legislation to simplify state tax rules for remote and mobile workers.
In a joint letter to congressional leaders, dated August 27, 2020, AICPA and COST said lawmakers should focus on the Remote and Mobile Worker Relief Act of 2020, and a particular section of the American Workers, Families and Employers Assistance Act, in any final COVID-19 relief package.
Under current law, non-resident employees who visit a state for as little as 24 hours to do work can be subject to certain state income tax laws. Businesses must also comply with states’ varying withholding requirements with regards to employees who travel out of state for work purposes.
However, under the Remote and Mobile Worker Relief Act 2020, introduced in the Senate on June 18, … Read More »
In the United States, while all eyes are on the forthcoming Presidential election, behind the bluster and bombast there are attempts to keep the business of doing business running smoothly, with the US Chamber of Commerce joining calls for the Treasury Department to issue clear guidance on the recently announced payroll tax deferral.
Earlier this month, President Trump signed an executive order requiring Treasury to defer the collection and payment of employee payroll taxes for the period September 1, 2020, until December 31, 2020. The deferral is available to employees whose wages or compensation was less than USD4,000 during any bi-weekly pay period, calculated on a pre-tax basis, or the equivalent amount with respect to other pay periods.
Trump signed the order, bypassing Congress, after talks between Republicans and Democrats on a new COVID-19 tax bill stalled. Trump said in comments alongside … Read More »
The finance ministers of France, Italy, Spain, and the United Kingdom have reportedly sent a letter to the US Treasury Secretary, Steven Mnuchin, proposing that new international tax rules for digital companies could be gradually phased in.
The ministers suggest in the letter, seen by Bloomberg News, that tax rules for providers of digital services could initially be restricted to those companies providing “automated” digital services and later could be applied more widely.
By offering such a compromise, the European countries are hoping to persuade the US to re-join negotiations towards the creation of an internationally-agreed framework of tax rules for digital companies. They reportedly suggested that an agreement that includes the US could be reached by the end of 2020 if a phased approach to the introduction of these rules was on the table.
For more information on this, and other topical … Read More »
The US Internal Revenue Service has reminded overseas taxpayers living and working abroad that they have an extra month to file their 2019 federal income tax return and pay any tax due. This includes Americans who live and work abroad, non-resident aliens and foreign entities with a US filing and payment requirement.
The deadline for these taxpayers is normally June 15. However, it has been extended to July 15 as part of the various COVID-19-related tax relief measures announced by the Treasury Department and the IRS in April 2020.
For more information on this, and other topical international tax matters, please visit: https://www.cchgroup.com/roles/corporations/international-solutions/research/global-tax-weekly-a-closer-look
The tax authorities in the United States have been busy on the international tax front. On April 16, 2020, the United States Internal Revenue Service issued a set of frequently asked questions and answers to help inform taxpayers about transfer pricing documentation best practices.
The six new FAQs deal with topics such as the advantages of preparing and providing “robust” transfer pricing documentation; the IRS’s guiding principle in establishing whether arm’s-length prices were charged in intercompany transactions; areas that the IRS has identified in transfer pricing documentation reports that could benefit from improvement; and examples of a presentation of a company’s intercompany transactions for examiners to use in summary when preparing risk assessments.
The US Treasury Department and the IRS additionally recently issued for comment proposed guidance involving hybrid arrangements and the allocation of deductions attributable to certain disqualified payments under section … Read More »
On February 14, 2020, AmCham EU, the representative body for American business in the European Union, wrote a request for greater transparency on the progress of the 2021 VAT e-commerce package and its implementation.
The reforms, agreed by EU member states on March 12, 2019, are intended to simplify VAT rules for goods sold online and introduce new obligations on online marketplaces to require them to contribute in the fight against tax fraud.
Under the changes, due to be implemented on January 1, 2021, online marketplaces will be considered to act as the seller when they facilitate sales of goods with a value up to EUR150 (USD162) to customers in the EU by non-EU businesses using their platform. The same rules will apply when non-EU businesses use online platforms to sell goods from “fulfillment centers” in the EU, irrespective of their value, … Read More »
The United States Internal Revenue Service has issued final regulations and proposed regulations on the base erosion and anti-abuse tax (BEAT) under section 59A of the tax code, which provide guidance for taxpayers affected by the tax provision.
Added to the tax code by the Tax Cuts and Jobs Act of 2017, the BEAT is designed to penalize those companies that make deductible payments to foreign affiliates to substantially reduce their exposure to US taxation. The BEAT is calculated by adding back certain deductible payments made to foreign affiliates and applying a minimum tax to a percentage of the difference between the taxpayer’s modified taxable income and their regular tax liability, at a rate of five percent for 2018, 10 percent from 2019, and 12.5 percent from 2025.
The provision primarily affects corporate taxpayers with gross receipts averaging more than USD500m over … Read More »