Federal
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June 18, 2024
IRS Guidance Doesn't Perceive Spinoff Abuse, Official Says
Recent IRS guidance limiting the corporate spinoffs that revenue officials will approve as tax-free ahead of time was designed to reflect the drafters' current views, rather than suggest perceived abuse of these transactions, a U.S. Treasury Department official said Tuesday.
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June 18, 2024
AbbVie Says IRS Can't Treat $1.6B Break Fee As Capital Loss
The Internal Revenue Service cannot reclassify as a capital loss a $1.6 billion payment AbbVie made to an Irish biotechnology company after their failed merger and thereby raise the pharmaceutical giant's tax bill by $572 million, the company's attorneys told the U.S. Tax Court.
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June 18, 2024
Applicable Federal Interest Rates To Fall In July
Applicable federal rates for income tax purposes will decrease in July, the Internal Revenue Service said Tuesday, reporting the first month-to-month drop since February.
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June 18, 2024
Treasury Finalizes Labor Rules For Bonus Energy Tax Credits
The U.S. Treasury Department released final labor rules Tuesday for clean energy projects seeking to significantly boost the value of their tax credits, emphasizing due diligence by developers and announcing that more IRS resources will go toward enforcement of the rules.
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June 17, 2024
$2.1B Danish Tax Fraud Defendant Pushes For Separate Trials
An attorney facing trial alongside his clients on allegations of filing $2.1 billion in fraudulent tax refund claims in Denmark urged a New York federal court to hear his case separately, saying disparate legal arguments could confuse a jury if only one trial is held.
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June 17, 2024
IRS Asks Court To Leave Alone Worker Retention Credit Pause
An Arizona federal court should reject a tax advisory firm's request to lift the IRS' moratorium on processing claims for the pandemic-era employee retention credit, the agency argued, saying the agency should be allowed to continue to run the program as it sees fit.
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June 17, 2024
IRS Correctly Assessed Md. Man's Deficiency, Tax Court Says
There were no genuine disputes of facts with the Internal Revenue Service's determination that a Maryland man had failed to file a return reporting nearly $255,000 in gross income, leading to a tax deficiency of more than $61,000, the U.S. Tax Court ruled Monday.
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June 17, 2024
IRS Issues Corp. Bond Monthly Yield Curve Guidance
The Internal Revenue Service published guidance Monday on the corporate bond monthly yield curve used in calculations for defined benefit plans as well as corresponding segment rates and other related provisions.
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June 17, 2024
Treasury Says Partnership Crackdown Could Raise Over $50B
A regulatory project to stop large, complex partnerships from using murky business structures to boost deductions and dodge taxes, an effort launched Monday by the U.S. Department of the Treasury and the IRS, could ultimately raise over $50 billion in a decade, Treasury said.
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June 17, 2024
IRS Didn't Fully Solve All IT Issues, TIGTA Says
A review of planned corrective actions reported as closed by the Internal Revenue Service's information technology organization found one not fully implemented while another was not fully effective, the Treasury Inspector General for Tax Administration said Monday.
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June 17, 2024
Feds Take Hard Line On Tycoon's Pilots After He Goes Free
Manhattan federal prosecutors asked a sentencing judge to consider aggravating circumstances for two pilots who allegedly traded on stock tips from U.K. billionaire Joe Lewis, despite not seeking a prison term for the private equity honcho and former soccer club owner.
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June 17, 2024
House Bill Seeks Tax Credit For Med Student Supervisors
Some licensed medical professionals who supervise medical and nursing students during clinical rotations would be entitled to a $1,000 tax credit under a bipartisan bill introduced in the U.S. House.
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June 17, 2024
Marathon Ineligible For $247M Fuel Tax Refund, IRS Says
Energy giant Marathon Petroleum isn't entitled to $247 million in tax refunds for its alternative fuel mixtures because its eligibility for the credits hadn't yet been approved by the Internal Revenue Service when it made the refund request, the agency told an Ohio federal court.
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June 14, 2024
Ga. CPA Admits To Role In $1.3B Tax Fraud Scheme
After a federal jury convicted two of his co-conspirators in a landmark conservation easement tax shelter trial last year, a Georgia accountant who'd previously denied culpability elected to change course Friday and plead guilty to two felony charges.
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June 14, 2024
5th Circ. Says Jury Instructions Deeply 'Flawed' In Tax Suit
A Fifth Circuit panel has found that the jury instructions for a $580,000 tax dispute were "irredeemably flawed," vacating the verdict and handing a loss to a partnership that claimed it had reasonable cause for its tax filing problems due to an employee's mental health issues.
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June 14, 2024
US Urges 5th Circ. To Back $2M Tax Bill For Tire Imports
The Fifth Circuit should overturn a lower court's ruling that a Houston truck company was not an importer responsible for nearly $2 million in excise taxes on tires it bought from a Chinese manufacturer, the U.S. told the Fifth Circuit on Friday.
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June 14, 2024
Eaton Says Court Improperly Required Int'l Employee Evals
An Ohio federal court should reconsider its decision that multinational power management company Eaton must disclose the personnel records of its foreign employees that were requested by the Internal Revenue Service in a transfer pricing investigation, the company told the court.
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June 14, 2024
The Tax Angle: More GOP TCJA Teams, Nonprofit Hospitals
From a look at efforts by the Republicans on the Senate Finance Committee to prepare for next year's expiration of the 2017 tax overhaul law to a new call for nonprofit hospitals to provide more charity care, here's a peek into a reporter's notebook on a few of the week's developing tax stories.
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June 14, 2024
IRS Says Ariz. Lacks Standing To Fight Taxation Of Rebates
Arizona did not have standing to lodge its claim that its 2023 income tax rebates should be exempt from federal tax, the Internal Revenue Service told a federal court, arguing the taxes paid by Arizonans did not amount to harm to the state itself.
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June 14, 2024
Tax Preparer Blames Customers For Errors In $42.5M Dispute
A tax preparer who once worked for the IRS said the government wrongly accused him of underestimating clients' tax liabilities, telling a Washington federal court in response to allegations that he caused $42.5 million in tax losses that his customers had made the errors.
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June 14, 2024
Taxation With Representation: Kirkland, Arnold & Porter
In this week's Taxation with Representation, Noble Corp. PLC buys Diamond Offshore Drilling Inc., Cognizant buys Belcan, AlphaSense raises funding to buy Tegus, and Matador Resources Co. acquires a subsidiary of the EnCap Investments portfolio company Ameredev II Parent.
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June 14, 2024
House Panel Approves Slashing $2B From IRS Budget
The House Appropriations Committee approved legislation that would reduce Internal Revenue Service funding for fiscal 2025 by more than $2 billion and prohibit money from going to the agency's free online tax-filing program without congressional approval, sending it to the full House for consideration.
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June 14, 2024
ABA Tax Section Calls For Revision To Stock Buyback Regs
The U.S. Department of the Treasury and the IRS should narrow a rule in proposed regulations on the stock buyback tax regarding U.S. subsidiaries funding repurchases of their foreign parents' stock, the American Bar Association's Tax Section said in a letter released Friday.
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June 14, 2024
Weekly Internal Revenue Bulletin
The Internal Revenue Service's weekly bulletin, issued Friday, included delays for reporting certain intercompany payments that are exempt from the base erosion and anti-abuse tax.
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June 14, 2024
Full DC Circ. Won't Hear Foreign Disclosure Penalty Dispute
The D.C. Circuit declined to reconsider its ruling overturning a major U.S. Tax Court decision that had crimped the administrative collection arm of the Internal Revenue Service, letting stand a panel's restoration of the agency's power to more freely penalize undisclosed foreign corporations.
Expert Analysis
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How And Why Your Firm Should Implement Fixed-Fee Billing
Amid rising burnout in the legal industry and client efforts to curtail spending, pivoting to a fixed-fee billing model may improve client-attorney relationships and offer lawyers financial, logistical and stress relief — while still maintaining profit margins, say Kevin Henderson and Eric Pacifici at SMB Law Group.
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How Law Firms Can Use Account-Based Marketing Strategies
Amid several evolving legal industry trends, account-based marketing can help law firms uncover additional revenue-generating opportunities with existing clients, with key considerations ranging from data analytics to relationship building, say Jennifer Ramsey at stage LLC and consultant Gina Sponzilli.
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While Risks Exist, AI Could Transform IRS Enforcement
The Internal Revenue Service's recently announced use of artificial intelligence could revolutionize the agency's enforcement efforts, and transparency about its use and a forum for challenging AI findings could help mitigate fears that the technology will increase bias, say attorneys at Lewis Brisbois.
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Strategic Succession Planning At Law Firms Is Crucial
Senior partners' reluctance to retire, the rise of the nonequity partner tier and generational differences in expectations are all contributing to an increasing number of departures from BigLaw, making it imperative for firms to encourage retirement among senior ranks and provide clearer leadership pathways to junior attorneys, says Laura Leopard at Leopard Solutions.
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Maximizing Law Firm Profitability In Uncertain Times
As threats of an economic downturn loom, firms can boost profits by embracing the power of bottom-line management and creating an ecosystem where strategic financial oversight and robust timekeeping practices meet evolved client relations, says Shireen Hilal at Maior Strategic Consulting.
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Enforcement Of International Tax Reporting Is Heating Up
Since the U.S. Supreme Court’s February decision in Bittner v. U.S. changed how penalties for failure to report offshore accounts are calculated, recent developments suggest the government is preparing to step up enforcement and vigorously pursue the collection of resulting penalties, say Daniel Silva and Agustin Ceballos at Buchalter.
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How Gov't Agencies Will Fare In The Event Of A Shutdown
With a federal shutdown potentially set to begin at the end of this month, it may be useful to consider the approximate timelines that agencies such as the Federal Trade Commission and IRS have announced for curtailing operations, and potential strategies for mitigating challenges that may arise while agency functions are limited, say attorneys at Cleary.
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IRS Notice Clarifies R&E Amortization, But Questions Remain
The IRS and Treasury Department’s recent notice clarifying the treatment of specified research and experimental expenditures under Section 174 provides taxpayers and practitioners with substantive guidance, but it misses the mark in delineating which expenditures are amortizable, say attorneys at Eversheds Sutherland.
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Preparing Your Legal Department For Pillar 2 Compliance
Multinational entities should familiarize themselves with Pillar Two of the Organization for Economic Cooperation and Development’s BEPs 2.0 project and prepare their internal legal tracking systems for related reporting requirements that may go into effect as early as January, says Daniel Robyn at Ernst & Young.
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What Large Language Models Mean For Document Review
Courts often subject parties using technology assisted review to greater scrutiny than parties conducting linear, manual document review, so parties using large language models for document review should expect even more attention, along with a corresponding need for quality control and validation, say attorneys at Sidley.
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Participating In Living History Makes Me A Better Lawyer
My role as a baron in a living history group, and my work as volunteer corporate counsel for a book series fan association, has provided me several opportunities to practice in unexpected areas of law — opening doors to experiences that have nurtured invaluable personal and professional skills, says Matthew Parker at the Nebraska Department of Health and Human Services.
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Private Equity Owners Can Remedy Law Firms' Agency Issues
Nonlawyer, private-equity ownership of law firms can benefit shareholders and others vulnerable to governance issues such as disparate interests, and can in turn help resolve agency problems, says Michael Di Gennaro at The Law Practice Exchange.
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Kentucky Tax Talk: Taking Up The Dormant Commerce Clause
Attorneys at Frost Brown examine whether the U.S. Supreme Court is likely to review Foresight Coal Sales v. Kent Chandler to consider whether a Kentucky utility rate law discriminates against interstate commerce, and how the decision may affect dormant commerce clause jurisprudence.