USA, McDermott Will & Emery updates

Corporate Tax

Contributed by McDermott Will & Emery
New Jersey reconsiders financial transaction tax
  • USA
  • 25 September 2020

A troubling New Jersey financial transaction tax proposal, which appeared to be gaining popularity over the past few months, has reportedly been left out of the 2021 budget deal that Governor Phil Murphy recently struck with legislative leaders. The decision to drop the transaction tax from the deal came days after the Wall Street Journal reported that prominent stock exchanges with data centres in New Jersey were prepared to exit the state if the tax plan was adopted.

IRS issues proposed regulations intended to clarify carried interest rules
  • USA
  • 04 September 2020

The Internal Revenue Service recently issued proposed regulations under Section 1061, a provision enacted as part of the Tax Cuts and Jobs Act 2017 that recharacterises certain net long-term capital gain with respect to applicable partnership interests as short-term capital gain. The proposed regulations provide clarity on some of the statutory provisions. This article discusses some of the noteworthy provisions in the proposed regulations.

Section 965 statutes of limitations for partnerships
  • USA
  • 03 July 2020

The Internal Revenue Service (IRS) recently issued guidance on the period of limitations for Section 965 of the Internal Revenue Code transition tax-related adjustments of partnerships. Typically, pursuant to Section 6501, the IRS has three years to assess a tax liability for a tax year. However, Section 6501(e)(1)(C) states that if the taxpayer omits from gross income an amount properly includible in income under Section 951(a), the tax may be assessed at any time within six years after the return was filed.

California bill would make taxpayer information available to public
  • USA
  • 19 June 2020

A concerning bill is pending in the California Senate which would require the California state controller's office to make taxpayer information publicly available. The bill would require that the controller post on its website a list of all taxpayers subject to the California corporation tax with gross receipts of $5 billion or more and information about each taxpayer, including tax liability and the amount of tax credits claimed in the previous calendar year.

IRS flexes its administrative summons power in recent tax case
  • USA
  • 05 June 2020

A recent US Court of Appeals for the 10th Circuit decision underlines the Internal Revenue Service's ability to obtain information that it needs to examine taxpayers' returns using its powerful summons tool. To be successful in defending against a summons, taxpayers must ensure that they have a strong case – for example, non-disclosure based upon a privilege claim.

Employment & Immigration

Contributed by McDermott Will & Emery
DOL creates path for 401(k) plans to offer private equity investment options
  • USA
  • 23 September 2020

The US Department of Labour recently issued an information letter indicating that, in limited circumstances, it will allow defined contribution retirement plans (eg, 401(k) plans) to indirectly invest in private equity funds. Specifically, the information letter allows plans to offer their participants a professionally managed asset allocation fund with a private equity component as an investment option.

Off-duty conduct: COVID-19 and social media ranting – what's an employer to do?
  • USA
  • 02 September 2020

Many employers that reopened recently are now facing a new challenge – employee off-duty conduct. At stake are both workplace and customer safety, as well as the company's reputation. This article highlights different scenarios that employers are likely to face and provides tips on how they can practically navigate and mitigate any potential risks when responding to off-duty conduct issues.

SDNY vacates portion of DOL final rule on FFCRA
  • USA
  • 19 August 2020

The US District Court for the Southern District of New York recently struck down four parts of the US Department of Labour's final rule implementing the Families First Coronavirus Response Act (FFCRA). The FFCRA provides COVID-19-related sick leave and family leave to employees of businesses which have fewer than 500 employees. This article examines what this decision means for employers.

Illinois federal court dismisses ERISA claims against 401(k) fiduciaries
  • USA
  • 12 August 2020

The Employee Retirement Income Security Act (ERISA) requires plan fiduciaries to act prudently and loyally when making decisions about a plan. In a recent case, a federal district court held that the plaintiff's allegations about expensive record-keeping costs and imprudent investment options failed to give rise to an inference that the defendants had violated their ERISA obligations.

COVID-19 reopening plans
  • USA
  • 05 August 2020

States have imposed their own obligations on employers as part of their reopening plans. Employer requirements and best practices depend on the employer's locations of operation and type of business but, at a high level, there are general trends with respect to state-imposed employer obligations, including maintaining safe working conditions and monitoring employee health, undertaking sanitisation efforts, requiring the use of personal protective equipment and promoting telework.

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