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Corporate Tax
USA
Two recent judicial decisions addressing the so-called 'global netting' of interest in tax cases potentially offer corporate taxpayers new opportunities. Taxpayers may be able to obtain at least partial netting relief on underpayments and overpayments of federal tax in some circumstances where it had been commonly assumed to be unavailable.
The Internal Revenue Service (IRS) recently released a revenue procedure setting down formal correction procedures for sponsors of 403(b) plans that missed the deadline set out in the original regulations. Sponsors considering a voluntary submission under the IRS Employee Plans Compliance Resolution System to correct a failure to adopt timely a written 403(b) plan document must bear in mind a number of issues.
Internal Revenue Service (IRS) computer programs routinely locate disparities between amounts reported on a tax return and amounts reported to the IRS via information returns and other sources. When this occurs, the IRS may contact the taxpayer, generally via mail, to inquire about the disparity and, when appropriate, propose an adjustment. If a taxpayer knows the process used in deficiency cases, he or she can avoid surprises.
With the recent release of a discussion draft on proposed revisions to Chapter IV of its transfer pricing guidelines, the Organisation for Economic Cooperation and Development is poised to reverse course and endorse the use of transfer pricing safe harbours in appropriate situations. Comments from top officials indicate that the Internal Revenue Service is moving in the same direction.
The Internal Revenue Service (IRS) has announced that donors may claim charitable deductions for their contributions to domestic disregarded limited liability companies that are wholly owned and controlled by US charities. However, the IRS remains silent on the position of disregarded entities organised under foreign law, leaving their treatment to be determined under the existing regulations.
Challenging foreign tax credit generators
Actions by lenders in the 1990s and early 2000s resulted in a variety of transactions that the Internal Revenue Service (IRS) has disparagingly called 'foreign tax credit generators'. The IRS has had little success in challenging these transactions on technical grounds; instead, it has resorted to challenging them on the generic grounds of 'no business purpose' and 'no profit motive'.
