Meet the Co-chairs - TAGLAW
Williams Mullen (VA)
Meet the Co-chairs - TIAG
Mercer & Hole
Cohen & Company (Ohio)
Fineman West & Co. LLP
The Supreme Court announced its ruling today in the biggest sales tax case in 26 years. The ruling affects remote and online shopping by removing a limitation on a state’s ability to enforce its collection and remittance statutes against retailers who do not have a physical presence in the state.
Every state with a sales tax requires retailers to collect sales tax from customers and to pay that tax to the state’s department of revenue. A retailer with a brick-and-mortar store in a state has little choice but to comply since the law may be more easily enforced against it. However, retailers who sell by catalog or internet only, and have no presence in the state, have always argued that this requirement is unduly burdensome. The states, in turn, have had great difficulty in enforcing this law against these “remote retailers.”
If an employer settles a claim made by an employee (or former employee), the employer may generally claim a deduction for the amount that is paid to the employee to resolve his/her claims. The expense is treated as an ordinary and necessary business expense and a deduction may be claimed pursuant to Section 162(a) of the Internal Revenue Code.
On December 20, 2017, Congress passed the Tax Cuts and Jobs Act (the “Act”) instituting sweeping changes to the Internal Revenue Code. By now, many taxpayers are familiar with the ‘big ticket’ changes the Act brings to the tax code. Effective January 1, 2018, the federal estate, gift and generation-skipping transfer tax exemptions double, the standard deduction for individuals nearly doubles, personal exemptions are repealed, and the top ordinary income tax rate for individuals and trusts decreases from 39.6% to 37%, and the top corporate tax rate falls from 35% to 21%.
Contact: Anna K. Derewenda
Perhaps some of the most extensive changes in H.R. 1, known as the Tax Cuts and Jobs Act (the “Act”), deal with the taxation of multinational companies. The taxation of foreign earnings has long been a point of contention between taxpayers and Congress. The rules reflect a new policy approach to the income of multinationals, as well as carrots and sticks for certain types of activities.
Due to the significant nature of the changes, additional guidance is expected from the IRS and Treasury. The discussion below provides some highlights of the Act, but additional guidance may provide different interpretations.
100% Deduction for Foreign Source Dividends
Historically, U.S. shareholders were taxed on the U.S earnings of foreign companies if a dividend was made or the anti-deferral subpart F or passive foreign investment company (PFIC) regimes applied.
Under the Act, the subpart F and PFIC regimes are left largely intact. However, new Section 245A provides a 100% dividends received deduction (DRD) for the foreign source portion of dividends received from a specified 10-percent foreign corporation by domestic corporations that are U.S. shareholders. A specified 10-percent foreign corporation is a foreign corporation in which any domestic corporation is a U.S. shareholder. A U.S. shareholder is a U.S. person who owns 10-percent or more of the vote or value of a foreign corporation. (See Expansion of CFC Ownership). A one-year holding period is required to claim the DRD. No foreign tax credit or deduction is allowed for exempted dividends.
Authors: Matheus Bueno de Oliveira, Frederico Silva Bastos
The globalization and internationalization of companies are phenomena that must be considered by today’s tax administrations. In many situations, such as tax evasion, harmful tax competition and money laundering, domestic statutes seem to be ineffective in a global dimension. To cope with these issues, new forms of regulations have emerged.
In the past, fiscal policies were established in each country solely for domestic troubleshooting. With globalization and the free movement of capital, there has been a push towards the interaction between different tax systems and tax administrations.