608, 2018

The Wayfair Ruling and What it Means for Small Business

By |August 6th, 2018|publishedarticles|0 Comments

I know it’s August and probably the last thing on your mind is the Supreme Court’s recent Wayfair decision on out-of-state sellers.

However, given the long-term implications of the case and its anticipated impact on your clients and e-commerce in general, I thought you’d be interested in this recent Accounting Today piece. In the article, I discuss the ruling’s potential effect on small and medium businesses:

  • Although there was nothing about protecting small business in the actual holding of the Wayfair decision, it did have a lot of vague ideas on the subject, observed Dean Zerbe, alliantgroup’s national managing director and former senior counsel with the Senate Finance Committee. “Good luck with that! I don’t think states will show a restraining hand,” he said.
  • “Right after they have sales tax nexus, they’ll try to extend it to business activity tax,” Zerbe predicted. “You’re here for sales tax — […]
208, 2018

U.S. Transition Tax Regs Provide Clarity, Limited Relief

By |August 2nd, 2018|publishedarticles|0 Comments

August 2, 2018
By Andre Velarde
Published in Tax Notes

Lengthy transition tax regs may offer practitioners some reassurance in fleshing out more details, but they don’t venture much outside the original scope of previous guidance.

“With the release of the regs, not absolute certainty as to the transition tax liability, but pretty close,” Jose Murillo of EY said.

The highly anticipated proposed regs (REG-104226-18), released August 1, are one of the first pieces of key guidance from the Tax Cuts and Jobs Act (P.L. 115-97) to be released.

Practitioners had been anxiously awaiting more guidance on the transition tax because three previous notices, while detailed, left many questions unanswered. The 249-page reg package is divided into nine sections, including rules on adjustments to earnings and profits and basis, determining section 965(c) deductions, disregarding some transactions, foreign tax credits, elections and payments, and affiliated groups.

“Despite their length, the proposed regulations do not break […]

2706, 2018

Unclear if the IRS Can Save the Client Business Meal

By |June 27th, 2018|publishedarticles|0 Comments

June 27, 2018
By Stephanie Cumings
Published in Tax Notes

Tax observers are torn on whether the IRS has the power to restore the deduction for client business meals that Congress seems to have unintentionally axed in the 2017 tax law.

While some practitioners contend that the IRS can salvage the deduction, one professor argues that Congress will have to amend the law if it really intended to keep client business meals deductible. The answer hinges on whether client business meals constitute “entertainment.” Under the prior law, entertainment expenses were 50 percent deductible if they met certain qualifications, but the Tax Cuts and Jobs Act (P.L. 115-97) eliminated the deduction altogether.

“Up until this change in the law, it didn’t really matter whether or not food and beverage was considered entertainment because it was 50 percent deductible either way,” Michael L. Hadley of Davis & Harman LLP told Tax Analysts.

The TCJA conference report […]

3105, 2018

Global Settlement Offer for Captive Transactions Could Be Tricky

By |May 31st, 2018|publishedarticles|0 Comments

May 31, 2018
By Emily L. Foster
Tax Notes

The IRS could resolve captive insurance transaction disputes with a global settlement, as it did for abusive transactions in the 2000s, but tax professionals say the trick is to root out the bad actors.

Microcaptive insurance cases are seeing high volume in three areas — examination, appeals, and litigation — and could be ripe for a global settlement initiative, according to several tax professionals. Their estimates range from hundreds of outstanding cases involving captive insurers — companies wholly owned and controlled by their insureds — to potentially thousands of them. The IRS had no immediate comment on how many cases it is dealing with.

But the tax professionals warned that the solution won’t be as simple as offering settlement programs to captive insurance abusers, because the agency’s first and largest hurdle is determining which operations are legitimate and which are misusing the tax code.

Global settlement […]

1403, 2018

CICA: Standing up to the IRS can be good for the industry

By |March 14th, 2018|captives, publishedarticles|0 Comments

March 14, 2018
By Ned Holmes
Published in captive insurance times

For a good captive, standing up to the Internal Revenue Service (IRS) may be the right answer and could positive for the industry as a whole, says John Dies, managing director of tax controversy at alliantgroup.

Speaking at Captive Insurance Companies Association’s (CICA) 2018 Conference, Dies suggested the impact of winning a case against the IRS could be felt across the captive industry.

He said: “It is great for the industry when a captive stands up to the IRS, wins and creates a precedent that the industry can use.”

“We have seen the impact in cases where outsiders thought there was not a chance a captive could win and they made changes in the industry–and I believe that is positive for the industry.”

According to Dies, in the right context fighting the case is the correct move for a captive.

He explained: “In many cases, great […]

903, 2018

How Will TCJA Affect Individuals Electing Corporate Taxation?

By |March 9th, 2018|publishedarticles|0 Comments

March 9, 2018
By Andre Velarde
Published in Tax Notes

The Tax Cuts and Jobs Act has brought newfound attention to an election by individuals to treat themselves as corporations, as well as important questions about uncertainties surrounding its interplay with newly enacted international provisions.

Section 962 was drafted in 1962 and until recently was largely unknown to many practitioners. Under that section, U.S. individual shareholders may annually elect to be taxed at the corporate tax rate for their section 951(a) subpart F inclusions. The taxpayer may also claim the deemed- paid foreign tax credit under section 960. The election has its limits, however, as under section 962(d), when an actual distribution is made, the earnings and profits from a controlled foreign corporation that exceed the tax applicable under the section 962 election are also treated as income.

The TCJA committee report, in a terse footnote about section 965, cites to the section 962 […]

2602, 2018

Republicans Just Bought the IRS

By |February 26th, 2018|publishedarticles|0 Comments

February 26, 2018
by Mark W. Everson, former IRS Commissioner and alliantgroup Vice Chairman
The Hill

After nine years of a contentious relationship with the Internal Revenue Service, Republicans find themselves in the uncomfortable position of needing the IRS to deliver on tax reform. The stakes are high. In 2016 there were 30 percent more individual income tax returns processed by the IRS than votes cast in the presidential election. And execution matters. Just think of the ObamaCare exchanges, when a botched rollout of the website – involving only a small fraction of the people who interact with the IRS – did lasting damage to a signature legislative achievement supported by a single political party. Here’s what should be done:

Give the IRS the money it needs to pull this off. The service will have to staff up and train personnel in its call centers to accommodate a spike in taxpayer and practitioner […]

1402, 2018

Transition Tax Guidance Restricts Tax-Year Changes for 2017

By |February 14th, 2018|publishedarticles|0 Comments

February 14, 2018
By Ryan Finley
Published in Tax Notes

To prevent unintended deferral of transition tax, calendar-year specified foreign corporations (SFCs) will be barred from changing their tax years if the resulting 2017 year would end before December 31, new IRS guidance says.

With its February 13 release of Rev. Proc. 2018-17, the IRS modified prior guidance on changes of tax year to address foreign entities classified as SFCs under the Tax Cuts and Jobs Act (P.L. 115-97). The revenue procedure amends Rev. Proc. 2002-39 and Rev. Proc. 2006-45 to deny any request to change the tax year of an SFC with deferred earnings and profits and a 2017 tax year beginning January 1, 2017, to any date other than December 31, 2017. (Related analysis.)

The new rules will prevent “changes to the annual accounting periods of certain foreign corporations in 2017 under either the existing automatic or general procedures if such change […]

1701, 2018

TAS Report Could End ‘Hall of Mirrors’ in IRS Appeals Talks

By |January 17th, 2018|publishedarticles|0 Comments

January 17, 2018
By Stephanie Cumings
Published in Tax Notes

IRS Appeals could reverse course on letting counsel and compliance employees participate in its work, after the latest Taxpayer Advocate Service report said the collaboration threatens Appeals’ independence.

If the IRS continues allowing this type of participation, it will further erode taxpayer faith in the appeals process, practitioners told Tax Analysts.

Sheri A. Dillon of Morgan, Lewis & Bockius LLP hopes the TAS report leads to compliance and counsel only being invited to an appeal when “it’s mutually agreed upon with the taxpayer.” Not only will this ensure that taxpayers “do not get caught in an IRS hall of mirrors” during the negotiations, it will also protect Appeals’ independence, efficiency, and integrity, Dillon said January 12. She also wants Appeals to reestablish face-to-face conferences.

Kathy Petronchak of Alliantgroup LP said compliance personnel’s participation in appeals needs to change. “There are substantial opportunities for compliance to […]

1001, 2018

John Dies: Captives Must Be Mindful of Trump’s Tax Reform

By |January 10th, 2018|captives, publishedarticles|0 Comments

January 10, 2018
By Ned Holmes
Published in captive insurance times

Captives need to be mindful of the changes brought by Trump’s US tax reform plan, despite its positive effect on the insurance industry in general, according to John Dies, managing director of tax controversy at alliantgroup.

The Tax Cuts and Jobs Act, which was signed into law on 22 December 2017 by President Trump, brings a permanent cut on corporate tax rates and a temporary cut on individual rates.

The decrease in tax rate means improved profitability and therefore represents a positive for the insurance industry in general.

Although this improved profitability will in turn impact the competitiveness of the market, Dies explained that while rates may go down, he doesn’t expect this to have a huge effect on the captive market.

Dies commented: “I don’t expect captive insurance to take a competitiveness hit, although, it’s undeniable that insurance rates and other things may go […]

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