Talking Tax

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Tax Pros Grapple With Complex Corporate Book Tax Rules Oct 09, 2024

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After more than two years, the Treasury Department has proposed rules to implement the new minimum tax on companies’ book income. Now comes the hard part.

The regulations, which Treasury issued last month, would govern how the corporate alternative minimum tax is applied and calculated. CAMT, enacted in 2022, requires big companies to pay at least 15% in taxes on the income they report on their financial statements—a crackdown on companies that have been able to pay little or nothing in the past by taking advantage of tax breaks and tax-planning strategies.

The proposed regulations run to more than 600 pages, and set up a highly complex regime for companies that fall under CAMT. Tax professionals and companies continue to pore over the rules, to see what kind of effects they’ll have.

Bloomberg Tax senior reporter Michael Rapoport spoke with Monisha Santamaria, a principal in KPMG LLP’s Washington National Tax practice about the complexity of the CAMT regulations; some notable aspects of the rules; how CAMT will affect more than just the 100 or so companies that Treasury says will have to pay it; and the chance for companies to persuade Treasury to revise its plans.

Reading Signals From Apple's $14 Billion EU Tax Ruling Oct 02, 2024

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The European Court of Justice's ruling against Apple Inc. over a $14.4 billion Irish tax bill stunned members of the international tax community, who said it throws the high court's precedent on tax state aid cases into disarray.

The EU high court ruled last month that the company's tax positions in Ireland, which were agreed to by Irish authorities in 1991 and 2007, amounted to illegal state aid. EU law stipulates that member states shouldn't give companies preferential treatment—state aid—over other businesses. Unlawful state aid could come in the form of preferential tax benefits.

The decision was particularly perplexing to tax observers because it didn't rely on rulings in similar, previous high-profile cases involving Fiat Chrysler or Amazon, where the ECJ sided with the companies rather than the European Commission.

This week, Bloomberg Tax reporter Lauren Vella chats with University of Virginia professor Ruth Mason and Stephen Daly, reader in tax law at King’s College in London, who say that there is a possibility companies with structures similar to Apple aren't safe from EU probes into their tax positions. They also discuss what effect the decision could have on the court's reputation and the European Commission's power to investigate tax matters.

Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

Multistate Tax Group's Counsel Talks State Consistency Sep 25, 2024

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The Multistate Tax Commission dates to the 1960s, yet the intergovernmental tax agency and its mission on behalf of state revenue departments are often not well understood. The map of tax laws and regulations across the 50 states would be much more complicated and inconsistent without the efforts of committed attorneys, auditors, and administrators working on behalf of the commission.

On this episode of Talking Tax, Bloomberg Tax senior reporter Michael J. Bologna discusses the MTC's goals and achievements with former general counsel Nancy Prosser, who retired Sept. 24. Prosser talks about the agency’s essential mission to promote uniform and consistent tax policies across the states, and assist taxpayers in achieving full compliance. She also stresses the MTC’s efforts to advocate for state and local sovereignty in the development of tax policy.

Prosser retired after four years as general counsel and a 16-year career in tax administration with the Texas Comptroller for Public Accounts, including two years as the Texas tax agency’s general counsel. In the interview, Prosser also talks about her career in state tax administration and her hopes for improved state tax uniformity going forward.

Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

Reliving Lessons From Tax Overhaul Ahead of 2025 Cliff Sep 18, 2024

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The GOP's 2017 tax law—the biggest change in the US tax code in three decades—left a mammoth task for the IRS and Treasury Department.

It resulted in the Treasury and a severely underfunded IRS creating the blueprint for taxpayers and tax practitioners trying to follow the law, releasing over 200 pieces of formal guidance and more than 300 pieces of informal guidance.

Many of these provisions are set to expire next year and face an uncertain fate as the November election approaches with control of the House and Senate in play.

Dave Kautter, a partner at RSM US LLP, spoke with Bloomberg Tax reporter Erin Slowey on his time as the Department of Treasury's assistant secretary for tax policy and acting IRS commissioner during that major tax code overhaul. He also spoke about the agencies' role in policy making and how they can prepare for changes in 2025—if at all.

Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

How House Democrats Are Readying for 2025 Tax Talks Sep 11, 2024

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Rep. Brad Schneider (D-Ill.) likes to be prepared.

Schneider and fellow House Democrats are getting behind-the-scenes briefings that started this summer to bone up on their tax policy knowledge ahead of what's likely to become a big battle in 2025. The Illinois Democrat is a member of the tax-writing Ways and Means Committee and he's running to lead the influential New Democrat Coalition.

The hope, he said, is to find agreement on tax policy that will be permanent so lawmakers don't once again find themselves addressing provisions such as pieces of the 2017 GOP-led tax law that expire next year.

Schneider, a critic of the state and local tax deduction cap, said he's optimistic that lawmakers can come together on policy areas ranging from global tax to the child tax credit.

On this edition of Talking Tax podcast, Bloomberg Tax reporter Chris Cioffi talks with Schneider about the upcoming talks over expiring provisions in that 2017 tax overhaul and other priorities.

Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

Tax Bill, Appropriations Loom as Lawmakers Come Back Sep 04, 2024

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Lawmakers return to Washington next week for the final sprint of legislating before the November elections, on the heels of a failed tax bill vote, and with an appropriations deadline fast approaching.

Congress will be under pressure in the next few weeks to reach a deal on government funding to avoid a shutdown on Sept. 30. The Democratic-controlled Senate is set to clash with the GOP House over whether to slash IRS funds or keep them steady, though with so little time left in session lawmakers will likely use a short-term continuing resolution to punt the fight.

Also up in the air is whether tax writers will come back to the negotiation table on the $78 billion bipartisan tax package that failed to clear a procedural vote in the Senate just before the August recess. Some lawmakers already are attempting to peel off parts of that tax package—including disaster tax relief and an expansion to the low-income housing tax credit—and it's unclear if those efforts will heat up in September or the lame-duck session.

On this episode of Talking Tax, Bloomberg Tax congressional reporters Chris Cioffi and Samantha Handler discuss the weeks ahead in Congress, and how lawmakers are preparing for the 2025 tax cliff.

Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

Energy Tax Credit Market Booms as Regulations Come Out Aug 28, 2024

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The market for clean energy tax credits has been booming, with demand and supply skyrocketing since the 2022 tax-and-climate law established new credits and launched a way for energy developers to easily sell those credits to investors.

A midyear report by the energy tax marketplace Crux forecasts that energy tax credit transfer deals could total between $20 billion and $25 billion this year, while financial services firm Evercore ISI estimates that more than $100 billion in transferable credits will be generated annually by 2030.

Still, risks remain around certain energy tax credits that have yet to see final rules from the Treasury Department, and 2025 will bring additional changes, including the launch of so-called "tech-neutral" credits that aren't tied to any one piece of technology.

On this episode of Talking Tax, Bloomberg Tax reporter Caleb Harshberger talks to Crux CEO Alfred Johnson and Hannah Hawkins, principal at KPMG, about how the new market for these credits is developing and what uncertainty remains.

Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

Undoing Microsoft's California Tax Ruling Isn't Simple Aug 21, 2024

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When Microsoft Corp. won a $94 million income tax refund from the California Office of Tax Appeals in February, it was considered one of the biggest victories for corporate taxpayers ever in California. Now it’s unclear if Microsoft will get that refund, or if other multinationals with similar claims will either. A law passed in June reversed the ruling upholding Microsoft’s refund, and the first two lawsuits challenging the reversal landed last week.

The intent of the new law (S.B. 167) is to avoid $1.3 billion in refunds to companies with similar claims pending for past tax years and $200 million a year in refunds going forward. The law does this by declaring that the California Franchise Tax Board’s position in Microsoft’s case pertaining to the tax treatment of income repatriated from abroad has been law since it issued a legal notice on the subject in 2006.

The newly filed lawsuits from the California Taxpayers Association and National Taxpayers Union make it unclear when the dust will settle.

On this episode of Talking Tax, Bloomberg Tax senior correspondent Laura Mahoney talks to Gina Rodriquez and Josh Booth, principals in the Sacramento office of global tax services firm Ryan LLC, about what the tax changes mean for other multinationals and for California.

Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

Inside EY's Generative AI Rollout and Tax Challenges Aug 14, 2024

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Ernst & Young LLP is developing a generative AI tool for tax professionals that's meant to automate repetitive data work and make tax planning more efficient.

The Big Four company is investing $1.4 billion into gen AI globally. Other Big Four firms have made similar pledges. The investments are in part a bet that the technology can fill in some gaps from the longstanding accounting shortage.

But implementing the technology in tax departments is difficult, in part because of how often policies change and the vast amount of data. Daren Campbell, leader of EY Americas Tax Technology and Transformation team, gave Bloomberg Tax an inside look at how his team seeks to overcome these challenges, where the technology is today, and what's next.

Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

More States Welcome Cannabis Business Tax Deductions Aug 07, 2024

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Nearly 75% of cannabis businesses operate at a loss, and many in the industry point to a feature of the Internal Revenue Code as the reason why.

Cannabis companies are prohibited from deducting ordinary business expenses—like rent or payroll—from their federal taxes as long as marijuana remains under the most restrictive portion of the Controlled Substances Act.

That could change if marijuana is moved from Schedule I to Schedule III of the act, as the Biden administration has proposed. But in the meantime, 22 states plus Washington, D.C., have allowed medical or recreational cannabis businesses to take some deductions on their state returns, by decoupling their tax codes from Section 280E of the Internal Revenue Code, which imposes the federal ban. Pennsylvania was the most recent to make that change with a state budget adopted last month.

In this episode of Talking Tax, Bloomberg Tax reporters Angélica Serrano-Román and Owen Racer talk about their recent look into how states are increasingly decoupling their tax from 280E at the state level.

Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

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