Public Policy and Legislative

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“Implicit support” comes charging out of the gates as an early candidate for Word or Phrase of the Year for 2024. 

Before year’s end, the IRS Office of Chief Counsel dropped a new generic legal advice memorandum (“GLAM”), AM 2023-008, titled “Effect of Group Membership on Financial Transactions under Section 482 and Treas. Reg. § 1.482-2(a).” The GLAM visits some familiar territory, including the “realistic alternatives” principle, this time in the intracompany lending context.  Continue Reading Happy New Year.  Here’s a GLAM on Implicit Support.

Mayer Brown announced today that Sonal Majmudar, former international tax counsel with the Internal Revenue Service (IRS), joined its Tax practice as a partner. Sonal will be resident in the firm’s Washington DC office. Her arrival bolsters Mayer Brown’s market-leading, global tax offerings, particularly with regard to transfer pricing controversies and high-stakes international disputes.

This week, the FASB issued an amendment to a previously proposed Accounting Standards Update that would, if approved, “enhance the transparency” of public companies’ reporting of income taxes paid. FASB Accounting Standards Update (ASU) No. 2023-ED100.  In doing so, FASB seems to make a baby step toward embracing CbC reporting for book purposes.Continue Reading Transfer-parency Pricing: New FASB Proposal

As companies prepare for the 2023 SEC filing season, they should also be ready for the inevitable press attention on the effective tax rates of high profile multinationals.  In a Client Alert last year, we predicted a recurrence of press focus on whether companies are paying their fair share of tax.  Since that time, numerous articles have appeared in the general and financial press, Senator Wyden has continued his attack on the tax positions on major pharmaceutical companies and activist shareholders have been initiating proxy battles to force enhanced public tax reporting.

Regardless of whether a company decides to publicly respond, every company should be ready for press about its global tax position.  The need for preparation is obvious, but preparation will take on added significance as companies gear up for mandatory public disclosure of their country-by-country reporting in Europe.  In this blog post, we revisit our recommendations to help companies prepare.Continue Reading Preparing for Bad Press (Redux): Tax Transparency Update

On September 28, 2022, the OECD published the Bilateral Advance Pricing Arrangement (“BAPA”) Manual. The manual proposes best practices for jurisdictions to streamline, expedite and improve BAPA processes based on member surveys. Most notably, the BAPA manual encourages jurisdictions to conclude BAPAs within 30 months and to work to further reduce completion times to 24 months or less.Continue Reading Prepare for Warp Speed: New Goal to Conclude APAs is 24–30 Months

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On September 13, Treasury proposed new regulations relating to taxpayers’ rights to access the IRS Independent Office of Appeals (“Appeals”). Appeals was designed to resolve disputes with the IRS in a fair and impartial manner. Taxpayers secured the right to take certain disputes to Appeals following the Taxpayer First Act of 2019. However, the proposed regulations seek to limit when taxpayers can go to Appeals, and the types of issues that can be raised.

The proposed regulations identify 24 types of issues that will not trigger Appeals rights. The most notable issues include regulatory validity challenges, challenges to IRS notices or revenue procedures, and certain tax treaty questions. In addition to issuing proposed regulations, the IRS has also already updated the Internal Revenue Manual to reflect the limitation on Appeals’ jurisdiction to determine issues based solely on validity challenges to regulations or IRS notices or revenue procedures.Continue Reading Not So Independent?: New Proposed Rules Constrain IRS’s Independent Office of Appeals

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At a recent conference, individuals from the U.S. Treasury were very explicit in their desire to receive comments on the Progress Report on Amount A of Pillar One, which was released by the OECD on July 11, 2022.  Comments are due on August 19, 2022.  The next public consultation is September 12, 2022.

The Progress Report represents the current state of progress on Amount A.  While many issues have been agreed to and the debate has been narrowed for others, work remains to be done by the Inclusive Framework to reach a final agreement on how exactly Amount A will be effectuated. Continue Reading Report on the Progress Report on Amount A of Pillar One – Comments Very Much Wanted

On May 27, 2022, the OECD released two public consultation documents related to the tax certainty aspects of Amount A.  The first, entitled Pillar One – A Tax Certainty Framework for Amount A (the Amount A Draft), proposes new mechanisms for multinational enterprises (MNEs) to obtain certainty on different aspects of Amount A.  The second, entitled Pillar One – Tax certainty for issues related to Amount A (the Related Issues Draft), proposes a mandatory binding dispute resolution mechanism for issues related to Amount A, including transfer pricing and the attribution of profits to permanent establishments (PEs).  Given the potential for Amount A to result in uncertainty, disputes and double taxation, these proposed mechanisms will be of critical importance to in-scope and potentially in-scope MNEs.  Such MNEs should further note that both the Amount A Draft and the Related Issues Draft provide a short two-week public comment period that closes on June 10, 2022. Continue Reading OECD Releases Public Consultation Documents on Tax Certainty Aspects of Amount A: Comments Due June 10, 2022

In April, the IRS released a practice unit on country-by-country (or “CbC”) reporting. The purpose of the document is twofold: (i) describe the background of CbC reporting and (ii) provide guidance to IRS personnel on the use of CbC reports “in the IRS high-level transfer pricing risk assessment process.” Although the practice unit repeatedly stresses that the IRS will not audit CbC reports, there is potentially less to this claim than meets the eye.
Continue Reading Less than Meets the Eye: The IRS Practice Unit on CbC Reports