Strategizing International Tax Best Practices – by Keith Brockman

US: The BEAT goes on

Complex new guidance continually is rolling off the press for scrutiny, especially for year-end compliance.  EY’s Global Tax Alert provides a summary of recent developments,  references to IRS Notice 2019-01, IRS FAQ’s, and Proposed Regulations for BEAT are provided for reference.

Highlights:

  • Proposed BEAT Regulations provide certainty re: Service Cost Method payments and the mark-up component that would be includable. BEAT is not limited to cash payments, and would also include amounts paid or accrued using any other form of consideration including property, stock or the assumption of a liability.
  • Notice 2019-01 was issued to address the rules for repatriations, generally arising from Sec. 959(c)(1), (2) and (3) in that order based on a LIFO approach.  Compliance complexity has expanded significantly, demanding more time from multinational tax departments that will require added resources, technology demands and external advisor costs.
  • A new House Ways and Means tax package was introduced Dec. 10th, preserving the (correct) notion that tax year 2017 overpayments would not exclusively be attributed to the deemed repatriation tax without offset to 2018 regular tax liability.    The package would also provide technical guidance for downward attribution rules.
  • IRS FAQ’s have been updated, attached for reference.
  • The IRS on 13 December issued proposed regulations (REG-132881-17) under Code Sections 1471–1474 (FATCA) and Sections 1441–1461.
  • The Organisation for Economic Co-operation and Development (OECD) will release a major update on its work on the taxation of the digital economy at the end of January 2019, according to Pascal Saint-Amans, Director of the OECD’s Centre for Tax Policy and Administration.

https://www.ey.com/Publication/vwLUAssets/Report_on_recent_US_international_tax_developments_-_14_December_2018/$FILE/2018G_012449-18Gbl_Report%20on%20recent%20US%20international%20tax%20developments%20-%2014%20Dec%202018.pdf

https://www.irs.gov/pub/irs-drop/n-19-01.pdf

https://www.irs.gov/pub/irs-drop/reg-104259-18.pdf

https://www.irs.gov/newsroom/questions-and-answers-about-reporting-related-to-section-965-on-2017-tax-returns

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