Shortly after Bristol Myers Squibb filed to create an offshore subsidiary in Ireland, the IRS took notice. The large drug manufacturer’s actions would now allow them to attribute some of its patent rights and medications to the subsidiary, and therefore subject to a twelve and a half percent Irish corporate tax rate, which is far less than the current twenty one percent rate in the United States. Additionally, while Bristol Myers had maximized the write offs and deductions for their products in the United States, the Irish deductions would now offset the U.S. taxes.
With Democratic control over the House, Senate, and Presidency for the first time since 2011, President Biden has been ambitious in his efforts to reinvigorate the economy, signing into law a $1.9 trillion economic aid package with plans to increase access to affordable housing and a $3 trillion investment in infrastructure. To finance their legislative agenda, Democrats have several initiatives which would mostly raise taxes for the wealthiest Americans such as Elizabeth Warren’s proposed wealth tax or increasing the maximum income tax rate back to 39.6%, as it was while President Bush was in office.
Although the nation’s longest-ever government shutdown has ended, agencies forced to furlough employees and shutter temporarily are still facing the effects of the funding gap. On January 25th, President Trump agreed to sign a continuing resolution that will reopen and fund the federal government through February 15th. The government reboot means that the roughly 800,000 federal employees furloughed or forced to work without pay should expect to receive their back pay soon, but the thirty-five-day suspension of government functions comes with significant aftershock. While various regulatory agencies scramble to address their backlog of work, life for Americans who interact with these agencies has been hindered indefinitely.
The IRS has decided to shutdown its Offshore Voluntary Disclosure Program (OVDP) on September 28, 2018. The program offers amnesty from criminal prosecution and a set penalty structure for those who have previously failed to disclose foreign bank accounts and other foreign assets, including those held through undisclosed foreign entities. Failure to disclose could include failure to file the annual FinCEN Form 114,most commonly referred to as the foreign bank account report or “FBAR”, as well as the failure to report income from such accounts and assets on tax returns and the failure to provide various other foreign information forms and returns.
On December 20, 2017, Congress passed the Tax Cuts and Jobs Act (“TCJA”) designed to decrease the taxable rate for corporations and individuals, and significantly limited allowable deductions. Since this change to the Tax Code was one of the largest since the Reagan era, the Internal Revenue Service will need to publish many regulations and advisories in the coming months to better clarify provisions of the TCJA. This multi-part series will explore prominent IRS regulations and advisories as they relate to the TCJA, and what these regulations and advisories mean for both individual and corporate taxpayers.
On December 20, 2017, Congress passed the Tax Cuts and Jobs Act (“TCJA”) designed to decrease the taxable rate for corporations and individuals, and to limit allowable deductions. Since this change to the Tax Code was one of the largest since the Reagan era, the Internal Revenue Service will need to publish many regulations in the coming months to better clarify provisions of the TCJA. This multi-part series will explore prominent IRS regulations as they relate to the TCJA, and what these regulations mean for both individual and corporate taxpayers.
Beginning January, 2018, U.S. citizens with unpaid taxes may find their U.S. passport applications denied and their existing passports revoked. The I.R.S. announced that it will begin implementation of procedures to notify the State Department of taxpayers the I.R.S. certifies as owing a “seriously delinquent tax debt.” This may come as a rude awakening to many Americans, although both the press and television news issued warnings going back more than a year ago.
For the first time since 2013, on Saturday, January 20th, 2018, the U.S. government ran out of money when Congress failed to pass a spending bill to fund the federal government. Much of the federal government’s operations have ground to a halt due to the lack of funding. Because Congress is seemingly at an impasse over immigration policy, the shutdown may last several days, if not weeks. In light of Loyola’s upcoming symposium exploring what happens when regulation is not enforced, it is interesting to consider how, in a similar vein, the shutdown affects compliance.
The IRS suspended its Automatic Substitute for Return (ASFR) Program for lack of resources, Tax Analysts and others report. The ASFR program has long provided an avenue for the IRS to assess taxes on delinquent filers after requests to file returns were ignored by having its computer system automatically calculate the tax due based on Forms 1099 and other information reports that had been filed with the IRS. The IRS could then assess the taxes and attempt to collect based on these substitute returns. However, since deductions were ignored, the tax amounts tended to be inflated, sometimes incredibly so, and significant IRS time was required to respond to contested assessments and collection efforts that were sometimes highly unrealistic.
After failing to arrive at a consensus on healthcare reform, the Republican party recently passed a blueprint which marked their shift in focus to something less contentious: the American tax code. If the Republicans are successful, compliance with tax regulation in the United States may soon change. An aspect of the code likely to be reformed is how asset appreciation is taxed.