On 11 December 2023, Treasury and the IRS issued Notice 2023-80 (the “Notice”), which represents the US government’s first attempt to address the US federal income tax implications of Pillar Two. The Notice provides guidance on certain foreign tax credit and dual consolidated loss issues that arise in the context of Pillar Two. The Notice also extends the period of relief for the 2021 final foreign tax credit regulations until more guidance is issued.
Potentially fraudulent employee retention credit (ERC) claims are an issue of great concern to both Congress and the IRS, resulting in civil and criminal investigations of certain “ERC mill” promoters. Larger employers have seen these kinds of claims arise in due diligence when looking to purchase a smaller company. We discuss actions taken by the IRS to combat potentially fraudulent claims.
The Irish Government enacted the Finance (No. 2) Act 2023 on 18 December 2023, and the new tax withholding and reporting requirements for the exercise of unapproved share options by employees in Ireland will become effective on 1 January 2024.
Despite concerns raised by various industry groups and tax practitioners, the final legislation did not include any amendments, and further guidance and instructions are expected to be issued by Irish Revenue shortly.
In the interim, companies should prepare to comply with these new requirements for any unapproved options exercised by employees in Ireland on or after 1 January 2024.
For months, Treasury’s attention may have been focused on guidance implementing the Inflation Reduction Act, particularly the green energy provisions. Seasoned tax professionals know better than to let their guards down as fall turns to winter, however. Treasury and the IRS are notorious for releasing a flurry of guidance before the new year, often addressing imminent deadlines or tidying up loose ends.
Two recent tax controversies demonstrate the authority of US courts in situations where a taxpayer’s assets are held in a country different than the taxpayer’s country of residence. In United States v. Kelly, a US person held assets in a Swiss bank account and failed to file a Foreign Bank Account Report (FBAR), and the court ordered repatriation of those assets to the United States. In Puri v. United States, an Indian taxpayer held assets in a US bank account, and the United States Supreme Court denied certiorari, finalizing the district court’s order that denied taxpayer’s motion to quash an administrative third-party summons issued by the IRS.
In a ministerial response dated 31 August 2023, the French Minister of the Economy recently commented on the obligation for French tax residents to annually declare their foreign bank accounts, clarifying that the fact that a person holds a shareholding in a foreign company or is its corporate officer is not in itself sufficient to fall within the scope of this reporting obligation.
The Ministry of Sustainability and the Environment (MSE) and the National Environmental Agency (NEA) set out the Eligibility Criteria under the International Carbon Credit Framework as part of Singapore’s efforts to achieve net-zero emissions by 2050.
With the new year comes the 1 January 2024 effective date of the Corporate Transparency Act, which will require approximately 32.6 million US entities to report beneficial ownership information (BOI) to the Treasury’s Financial Crimes Enforcement Network (FinCEN). On 28 September 2023, FinCEN published proposed regulations modifying the BOI Reporting Requirements, which are found in the CTA’s implementing regulations.
On 20 October 2023, the IRS issued a press release announcing a new initiative to send compliance alerts to roughly 150 US subsidiaries of large foreign corporations that distribute goods in the United States to challenge transfer pricing practices that it alleges resulted in improper losses and exceedingly low margins year after year. Further, in 2024 the IRS will expand the Large Corporate Compliance program to include audits of an additional 60 corporate taxpayers selected using artificial intelligence and input from subject matter experts.
The new EU foreign subsidies regime will impact all multinational companies regardless of their country of origin. As of 12 October 2023, companies engaging in large transactions and bidding for large public procurement contracts in the EU are obliged to seek prior clearance from the European Commission. Implementing rules provide some welcome reporting relief, but the notification process requires that companies put in place mechanisms to track in real time a wide range of foreign financial contributions granted directly or indirectly from non-EU state funding