Federal
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February 15, 2023
Clarity Needed In Proposed Foreign Tax Credit Rules, IRS Told
The Internal Revenue Service should clarify the requirements to qualify for a proposed exception to foreign tax credit regulations that would otherwise deny credits for certain offshore withholding taxes on royalty payments, practitioners said Wednesday during an agency hearing.
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February 15, 2023
Judge Says BofA Can't Trim Tax Interest With Merrill Payments
Bank of America can't reduce interest owed to the IRS by offsetting its tax underpayments with overpayments made by Merrill Lynch that occurred before the two institutions merged because they were separate taxpayers at the time, a North Carolina federal judge ruled.
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February 15, 2023
Multiple Applicable Federal Rates To Drop In March
The short-term applicable federal rate for income tax purposes will increase in March, while other rates will decline, the Internal Revenue Service said Wednesday.
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February 15, 2023
IRS Seeks Comments On Real Estate Investment Trust Return
The Internal Revenue Service on Wednesday asked for comments on a return that real estate investment trusts file to pay an excise tax.
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February 15, 2023
US Plans To Appeal Order Nullifying IRS Benefits Notice
The U.S. government said it will appeal a Michigan federal court decision nullifying an Internal Revenue Service notice requiring companies to disclose potentially abusive employee benefit plans and asked the court to hold off canceling the notice in the meantime.
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February 15, 2023
Eversheds Adds Crowell & Moring Tax Trio In DC
Eversheds Sutherland has expanded its Washington, D.C., tax practice with three former Crowell & Moring LLP partners who have decades of experience navigating tax policies and issues, the firm said in a news release.
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February 15, 2023
DC Atty Facing $19M Captive Insurance Suit Files For Ch. 7
A Washington, D.C., tax attorney accused by a former client of helping lose $19 million in a captive insurance plan filed for personal bankruptcy on Tuesday in Maryland.
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February 14, 2023
Dem Senate Bill Aims To Quadruple Taxes On Stock Buybacks
A pair of Democrats on the Senate Finance Committee, including Chairman Ron Wyden, introduced legislation Tuesday that would quadruple the tax on corporate stock buybacks, a priority for President Joe Biden.
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February 14, 2023
IRS Insurance Summons Should Get Green Light, Judge Says
The IRS should be permitted to proceed with a summons seeking policy documents, marketing materials and other records from a captive insurance company that the agency suspects has promoted tax shelters, a federal magistrate judge recommended.
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February 14, 2023
Couple Underreported Pension Payouts, Tax Court Says
A Washington couple must pay taxes on pension distributions they failed to report as income, the U.S. Tax Court ruled Tuesday, rejecting the couple's argument that monthly distributions under $1,900 are not taxable.
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February 14, 2023
Tax Court Rejects IRS Reason For Denying $40.6M Deduction
The U.S. Tax Court rejected a bid by the IRS to uphold its reason for rejecting a partnership's $40.6 million conservation land deduction, saying Tuesday that the land's deed showed the IRS was wrong to argue the partnership was allowed to mine there.
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February 14, 2023
GOP Sens. Reintroduce Bill To Restrict IRS Audits
Senate Finance Committee Republicans are once again seeking to block the Internal Revenue Service from using the Inflation Reduction Act's funding boost for the agency to audit low- and middle-income taxpayers under a bill introduced Tuesday.
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February 14, 2023
Australian Software Guidance May Flout Tax Treaty, US Says
Guidance classifying some payments for computer software in Australia as royalties could lead to tax treaty disputes with the U.S., the U.S. Treasury Department said in a letter made public Tuesday.
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February 14, 2023
IRS Improperly Documented Access To Files, TIGTA Says
The Internal Revenue Service's appeals office may have failed to properly document taxpayers' rights to access appeals case files in more than 35,000 cases in 2021, the Treasury Inspector General for Tax Administration said in a report issued Tuesday.
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February 14, 2023
Timberland Parent Tells 1st Circ. To Rebuff $1.45B In Income
The U.S. Tax Court incorrectly upheld the Internal Revenue Service's decision to raise the income of Timberland's parent company by more than $1.45 billion, the company told the First Circuit, arguing that the corporate reorganization it underwent shouldn't have increased taxes.
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February 14, 2023
US Urges Court To Keep $283M Liberty Global Tax Suit Alive
The federal government has the right to sue multinational telecommunications company Liberty Global Inc. outside the administrative process over an alleged $283 million tax debt, the U.S. government told a Colorado federal court, urging it to reject the company's bid to toss the case.
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February 14, 2023
DC Circ. Not Convinced To Toss Citizenship Renunciation Fee
U.S. citizens living abroad failed to convince a D.C. federal court that a fee charged by the U.S. State Department for renouncing citizenship is unlawful, according to an opinion that the group said it will appeal.
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February 14, 2023
IRS Check Shouldn't Nullify Crypto Tax Suit, 6th Circ. Told
A taxpayer advocacy group asked the Sixth Circuit to overturn a decision that a check sent by the Internal Revenue Service to a Tennessee couple rendered their challenge to taxes on cryptocurrency they obtained moot, saying a decision favoring the couple could help low-income taxpayers.
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February 14, 2023
Trump Can't Nix $110K Sanction In NY AG Case, Court Says
A New York state appeals court on Tuesday rejected former President Donald Trump's attempt to undo a $110,000 civil contempt sanction levied against him for failing to properly search for records as part of the state attorney general's financial fraud investigation into the Trump Organization.
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February 14, 2023
Treasury Seeks Nominees For Bank Secrecy Advisory Group
The U.S. Treasury Department said it is seeking nominees for a Financial Crimes Enforcement Network advisory group focused on the anti-money laundering law known as the Bank Secrecy Act.
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February 13, 2023
Broadband Grant Tax Exemption Back In House
Now that Congress is back in session, a bipartisan quartet of senators are reintroducing a bill that would mean grantees wouldn't have to pay federal taxes on any of the billions of dollars in broadband infrastructure spending that the Biden administration is dishing out.
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February 13, 2023
Tax Court Rejects Tax On Disability 'Deductions'
A woman whose bank records show she received disability benefits by direct deposit must report the benefits as income, the U.S. Tax Court said Monday, but amounts the Social Security Administration described in a letter to her as "deductions" should not be taxed.
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February 13, 2023
Old Blog Posts Can Be Used As Evidence, Tax Court Says
A California woman's blog posts were justifiably used by the IRS during her trial challenging her overdue tax bill, the U.S. Tax Court said Monday, rejecting the woman's argument that the posts were inadmissible because they weren't newly discovered evidence.
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February 13, 2023
IRS Guidance Outlines Advanced, Low-Income Project Credits
The Internal Revenue Service released initial guidance Monday on two new programs authorized by the Inflation Reduction Act that will allocate $10 billion in tax credits for advanced energy projects and provide bonus tax credits for solar and wind energy projects in low-income communities.
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February 13, 2023
11th Circ. Urged To Affirm Nixing Ala. Fuel Tax On 6 Rail Cos.
The Eleventh Circuit should uphold a decision that barred Alabama from imposing a fuel tax on six railroad companies because the tax is discriminatory according to precedent, the companies said in a brief.
Expert Analysis
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Alcohol Taxation Provides Good Model For Cannabis Taxes
Although the alcohol taxation system isn't perfect, it could serve as a useful template for cannabis taxation with a three-tier licensing scheme and tax rates based on potency, says Louis Terminello at Greenspoon Marder.
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US Advance Pricing Agreements, Amid COVID And Before
Steptoe & Johnson's Matthew Frank, former director of the U.S. Advance Pricing Agreement Program, shares insights from an Internal Revenue Service report revealing an uptick in APA completions amid the pandemic, discusses trends over the program's 30-year history, and suggests ways taxpayers and the IRS could bolster program participation.
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High Court Hotels.com Case Could Alter Appellate Strategy
If the U.S. Supreme Court upholds the Fifth Circuit in the upcoming San Antonio v. Hotels.com case, ruling that district courts may not amend taxable appellate costs, it could reprioritize the incentive structure and decision-making calculus of appeals, says Patrick Hammon at McManis Faulkner.
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Choosing A Branch Or Subsidiary For Overseas Expansion
Samuel Pollack and Naoko Watanabe at Baker McKenzie examine the corporate and U.S. tax law considerations involved in deciding whether a branch or subsidiary is the most efficient way to expand operations overseas, now that recent Treasury regulations clarified the complicated international tax regime created by the Tax Cuts and Jobs Act.
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Why S Corporation Payments Are Almost Always Wages
The recent U.S. Tax Court ruling in Lateesa Ward v. Commissioner has employment and income tax lessons about why payments from an S corporation to its sole shareholder are wages and not distributions of profit in most cases, says Bryan Camp at Texas Tech University School of Law.
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3 Arthrex-Adjacent High Court Cases Could Affect PTAB's Fate
As patent practitioners await a decision on the constitutionality of Patent Trial and Appeal Board judges in U.S. v. Arthrex, they should keep their eyes on three other pending U.S. Supreme Court cases that, while not IP-related, involve overlapping legal issues, including the severability doctrine, says William Milliken at Sterne Kessler.
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Surveying Global Tax Updates For Sovereign Wealth Investors
As the market transitions to a post-pandemic phase, sovereign wealth fund and other foreign institutional investors must evaluate how recent U.S., EU and U.K. tax changes may affect their private fund investments, say attorneys at Morgan Lewis.
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Offshore Wind Push Is Good News For NYC Building Owners
With a surge of federal and state support for offshore wind power in New York state, the projects now in development should greatly benefit New York City building owners seeking to comply with the city's Climate Mobilization Act, says Raymond Pomeroy at Stroock.
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Coke, 3M Tax Cases May Not Settle Blocked Income Debate
Even if the challenged U.S. Department of the Treasury regulation on blocked income is struck down by the U.S. Tax Court in the pending Coca-Cola and 3M cases, the obligations of a taxpayer that had, but failed to avail itself of, alternative means to secure payment will remain an open question, say Matthew Frank and Amanda Varma at Steptoe & Johnson.
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OCC Rule Misaligned With Some Tax Equity Safe Harbors
The Office of the Comptroller of the Currency's recently finalized rule on national banks' participation in tax equity financings aligns with safe harbor guidance for renewable energy investments, but not with safe harbor structures for historic preservation and carbon capture tax credits, say attorneys at Nixon Peabody.
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IRS Should Level The Field For R&D Tax Credits
A recent increase in denials of research and development tax credits to small businesses in the architectural, engineering and construction community shows the Internal Revenue Service should issue new guidance to ensure a fair playing field and an opportunity to continue innovating in the U.S., says Julio Gonzalez at Engineered Tax Services.
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IRS Should Revise Private Debt Collection Methodology
To fulfill the congressional intent underlying the Taxpayer First Act, which aims to protect delinquent taxpayers from entering into payment plans they cannot afford, the Internal Revenue Service should use both last-return-filed and third-party income information in its methodology for identifying low-income taxpayers, says National Taxpayer Advocate Erin Collins.
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Applying OECD Guidance On COVID-19 Transfer Pricing
In light of the recently released Organization for Economic Cooperation and Development's guidance on the transfer pricing implications of the pandemic, taxpayers should be prepared to explain and defend their transfer pricing decisions for fiscal year 2020 for contemporaneous documentation and in future tax audits, say Susan Fickling and TJ Michaelson at Duff & Phelps.