Latest updates

Illinois amnesty programmes now underway
McDermott Will & Emery
  • Corporate Tax
  • USA
  • 11 October 2019

The Illinois Department of Revenue has begun a new amnesty programme, which is running from 1 October 2019 to 15 November 2019. All taxes paid to the Illinois Department of Revenue for taxable periods ending after 30 June 2011 and before 1 July 2018 are eligible for amnesty with relief from penalties and interest. In light of the phase-out of the corporate franchise tax by 1 January 2024 (enacted by Public Act 101-9), participants in the amnesty programme should proceed with extreme caution.

IRS is expanding 2020 Compliance Assurance Process
McDermott Will & Emery
  • Corporate Tax
  • USA
  • 27 September 2019

The Compliance Assurance Process (CAP) programme was developed to improve large corporate taxpayer compliance with US federal tax obligations. The IRS recently announced that it was accepting applications – for the first time since 2015 – from new corporate taxpayers that meet the CAP programme eligibility requirements. As such, eligible taxpayers interested in the programme for 2020 should prepare and submit an application as soon as possible.

Vultures circling as bill to expand CFCA to tax looms in legislature
McDermott Will & Emery
  • Corporate Tax
  • USA
  • 13 September 2019

Legislators in Sacramento are mulling over one of the most (if not the most) troubling state and local tax bills of the past decade. AB 1270, which was recently introduced and passed by the California Assembly in May 2019, would amend the California False Claims Act to remove the 'tax bar' – a prohibition that exists in the federal False Claims Act and the vast majority of states with similar laws.

Tax blog: new Q&A for Section 965
McDermott Will & Emery
  • Corporate Tax
  • USA
  • 02 August 2019

The Internal Revenue Service recently released new informal guidelines regarding Section 965 of the Internal Revenue Code. Among other things, the guidelines contain information on making successive instalment payments, filing transfer agreements as a result of certain acceleration or triggering events and other matters relating to S corporation shareholders making the Section 965(i) election.

Taxpayer First Act: changes to IRS appeals process
McDermott Will & Emery
  • Corporate Tax
  • USA
  • 26 July 2019

The enactment of the Taxpayer First Act brings with it several changes to the procedures and operations of the Internal Revenue Service (IRS). The act touches on (among other things) establishing the IRS Independent Office of Appeals, improving customer service and introducing changes to enforcement. However, it appears that many of the changes to the IRS appeals process are mere guidelines and do not apply to large taxpayers.

Wisconsin enacts discriminatory exit charge for businesses moving out of state
McDermott Will & Emery
  • Corporate Tax
  • USA
  • 19 July 2019

A Wisconsin governor recently signed into law an act that either bars a reduction for, or requires amounts deducted to be added back to, Wisconsin taxable income for moving expenses deducted on federal income tax returns if the expenses are associated with a business moving out of the state or country. However, the act blatantly discriminates against interstate and international commerce and is unconstitutional.

Is an increase in LB&I assertion of penalties on the horizon?
McDermott Will & Emery
  • Corporate Tax
  • USA
  • 05 July 2019

The Treasury Inspector General for Tax Administration recently released a report indicating that changes may be in the works regarding the assertion of accuracy-related penalties in examinations handled by the Internal Revenue Service's large business and international division. The report strongly indicates that large business and international examiners and their supervisors will increase their scrutiny of accuracy-related penalty criteria in examinations.

Tax Court declares state corporate incentives non-taxable income under federal law
McDermott Will & Emery
  • Corporate Tax
  • USA
  • 03 May 2019

Many states and municipalities offer substantial economic incentives to corporate taxpayers to move to and invest in their areas. Central to those offers is the belief that these incentives are received tax free. However, owing to changes in the Tax Code under the Tax Cuts and Jobs Act, taxpayers must ensure that such incentives are carefully structured.

Top takeaways for tax-exempt employers from IRS guidance on executive compensation
McDermott Will & Emery
  • Corporate Tax
  • USA
  • 01 February 2019

One of the more controversial and complex provisions of the Tax Cuts and Jobs Act has been the 21% excise tax on certain types of non-profit executive compensation. The Internal Revenue Service recently issued interim guidance that addresses how this tax will apply in various situations that commonly arise for tax-exempt employers. However, establishing internal systems to determine which employees are covered by this tax may prove challenging.

Proposed foreign tax credit regulations clarify taxpayers' ability to claim deemed paid credits
McDermott Will & Emery
  • Corporate Tax
  • USA
  • 25 January 2019

The Internal Revenue Service and the Department of the Treasury recently released proposed regulations that address the calculation of corporate US shareholders' deemed paid foreign tax credits under Section 960 of the Tax Act. The proposed regulations also clarify that certain foreign income taxes paid by controlled foreign corporations will be lost and that corporate US shareholders cannot claim a deemed paid credit with respect to such taxes.

Proposed BEAT regulations: tax-free transactions may lead to liability
McDermott Will & Emery
  • Corporate Tax
  • USA
  • 11 January 2019

The Department of the Treasury and the Internal Revenue Service recently released proposed regulations for the Base Erosion and Anti-abuse Tax (BEAT), which was added to the Internal Revenue Code as part of the Tax Act 2017. The proposed regulations provide helpful guidance on a range of important topics and generally go a long way towards a reasonable implementation of a very challenging statute.

Call for compliance: cryptocurrency may be subject to US tax
McDermott Will & Emery
  • Corporate Tax
  • USA
  • 04 January 2019

US taxpayers are generally taxable on income earned worldwide, regardless of the manner in which that income is paid (eg, currency (foreign or domestic) or property (tangible, intangible or virtual)). Therefore, if cryptocurrency has been bought, sold or exchanged, those transactions could be subject to federal tax. If the cryptocurrency is held offshore, a number of offshore reporting obligations could also apply to these holdings.

Proposed Section 956 regulations provide benefits for corporate taxpayers
McDermott Will & Emery
  • Corporate Tax
  • USA
  • 21 December 2018

The Internal Revenue Service and US Department of the Treasury recently released proposed regulations that would prevent, in many cases, income inclusions for corporate US shareholders of controlled foreign corporations (CFCs) under Section 956. The proposed regulations are highly favourable to corporate taxpayers by significantly expanding the ability of US corporate borrowers to benefit from the credit support of CFCs.

Tax benefits of Section 338(g) elections to US buyers of CFC stock
McDermott Will & Emery
  • Corporate Tax
  • USA
  • 14 December 2018

The 2017 Tax Act significantly increased the tax benefits of a Section 338(g) election for domestic corporate purchasers of stock in a controlled foreign corporation (CFC). If an election is made, buyers are treated as organising a 'new' CFC that purchases the assets of the 'old' target CFC for the amount paid for the CFC stock. For buyers, this stepped-up basis in the CFC's assets can facilitate tax-efficient post-acquisition integration and a reduction of future global intangible low-taxed income.

IRS real-time audit programme: further developments
McDermott Will & Emery
  • Corporate Tax
  • USA
  • 07 December 2018

The Internal Revenue Service (IRS) Compliance Assurance Process programme is a real-time audit programme that seeks to resolve the tax treatment of all or most return issues before tax returns are filed. Taxpayers and IRS leadership have generally praised it as one of the most successful corporate tax enforcement programmes. However, its fate has been uncertain in recent years given the IRS's shift in the examination process and the agency's dwindling resources.

Tax reform insight: eligibility requirements for reduced tax rate on FDII for royalties
McDermott Will & Emery
  • Corporate Tax
  • USA
  • 10 August 2018

A domestic corporation's royalty income derived in connection with business conducted outside the United States is generally eligible for the reduced 13.125% effective tax rate on foreign derived intangible income. To qualify, the licensee must be a foreign person and the intangible property must be used outside the United States for the ultimate benefit of an unrelated foreign person. The reduced tax rate is also available for certain royalties derived from licensing intangible property to related foreign persons.

Tax reform insight: new foreign tax credit rules may warrant restructuring foreign branches
McDermott Will & Emery
  • Corporate Tax
  • USA
  • 06 July 2018

The 2017 Tax Act added a separate foreign tax credit limitation category for income earned in a foreign branch. As a result, certain US groups may be limited in their ability to use foreign income taxes paid or accrued by a foreign branch as a credit against their US federal income tax liability. This new limitation could present a problem for taxpayers with losses in some foreign branches and income in other foreign branches.

Deductible payments to CFCs can result in exorbitant BEAT
McDermott Will & Emery
  • Corporate Tax
  • USA
  • 22 June 2018

A minimum tax has been imposed on domestic corporations with substantial amounts of deductible payments made to related foreign persons, referred to as the 'base erosion and anti-abuse tax' (BEAT). BEAT is particularly onerous if a controlled foreign corporation's income is subject to foreign taxation because, while foreign income taxes can be used as a credit to reduce regular tax liability, no foreign tax credit is permitted to offset the BEAT.

IRS implementation of tax reform continues to move forward
McDermott Will & Emery
  • Corporate Tax
  • USA
  • 15 June 2018

The latest announcement by the Internal Revenue Service (IRS) focuses on the $10,000 cap on the amount of state and local taxes that can be deducted for federal income tax purposes. In a press release and release of guidance in the form of Notice 2018-54, the IRS announced that proposed regulations will be issued to help taxpayers understand the relationship between federal charitable contribution deductions in exchange for a tax credit against state and local taxes owed.

IRS announces HSA contribution limit increase for 2018
McDermott Will & Emery
  • Corporate Tax
  • USA
  • 01 June 2018

The Internal Revenue Service has increased the 2018 maximum deductible health savings account (HSA) contribution for taxpayers with family coverage under a high deductible health plan to $6,900. Employers that previously lowered their plan's contribution limit for HSAs to $6,850 should consider how to address the increased limit and whether any changes or employee communications are necessary.