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Also: Reconciliation Update | Tax Holidays Are Bad Policy, Leahey Writes |
States Well-Positioned to Combat Inflation

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Daily Tax Report ®
Tuesday, August 9, 2022

Inside:    Reconciliation Update    On the Hill    Federal    State   
International    Insights    Developments    Companies & Law Firms


BOOK TAX WILL ADD COMPLEXITY FOR COMPANIES, TAX PROS SAY

The Senate-passed corporate minimum income tax—or book tax—is prompting
questions from tax professionals on implementation.

It also is stoking concerns about the impact of financial accounting rulemaking.

The tax and energy bill passed Sunday includes a 15% corporate minimum income
tax on companies with at least $1 billion in profits. This levy applied to a
company’s financial statement is expected to generate $313 billion to help with
the deficit reduction and energy investment as originally drafted, according to
the Joint Committee of Taxation.

“It’s gonna take an awful lot of resources at the IRS to sort through how
companies should report under it,” said Steve Rosenthal, a senior fellow in the
Urban-Brookings Tax Policy Center at the Urban Institute.

In addition, the book-income minimum tax doesn’t harmonize with a pending global
minimum tax that’s part of an international tax-overhaul pact that’s been agreed
to by nearly 140 countries.

Read More






RECONCILIATION UPDATE


SALT-EXPANSION DREAMS DIE AS BIDEN TAX BILL HEADS TO HOUSE (1)

The House Democrats who had threatened to block President Joe Biden’s tax and
climate plan unless it also expanded the deduction for state and local taxes are
now signaling they’ll back the legislation when it comes up for a vote later
this week. Read More


EMPLOYERS FEAR HIGHER DRUG PRICES WITHOUT MEDICARE PROTECTIONS

Bill Attached

Employers that offer health coverage for their workers fear that Medicare drug
price reduction provisions in the Inflation Reduction Act will lead to
drugmakers shifting bigger price increases onto commercial plans in order to
make up for lost revenue. Read More


WHAT’S IN THE TAX AND ENERGY DEAL FOR EMPLOYERS, WORKERS

Tacked on to the vast majority of climate-focused tax incentives that make up
the reconciliation deal brokered by Senate Democrats are bonuses that can be
unlocked if certain labor standards are met. Read More


BIDEN, DEMOCRATS GET A RARE CHANCE TO CROW HEADING INTO MIDTERMS

President Joe Biden and his party finally scored the win they’ve been waiting
for heading into the November congressional elections. Read More


CARBON CAPTURE BACKERS SCORE WINS IN SENATE-PASSED CLIMATE BILL

Backers of US carbon capture and storage projects scored big wins in the climate
and tax bill passed by the Senate, particularly a 10-year extension for projects
to break ground and still earn tax credits. Read More


VULNERABLE COMMUNITIES POISED FOR BIG SOLAR GAINS IN SENATE BILL

Low-income and other marginalized communities that have been largely abandoned
in the clean energy revolution could see far more community solar projects and
rooftop solar panels under the Senate-passed climate package. Read More


BIDEN GETS BIG ECONOMIC WIN AS INFLATION THREATENS LEGACY (1)

President Joe Biden raised the final pillar of his economic agenda with the
Senate’s passage of a breakthrough climate and tax package, sealing a legacy
that risks being undermined by an inflation surge he’s blamed for sparking. Read
More


ON THE HILL

For the latest news from Congress, read today’s edition of Hill Tax Briefing.

Read More






FEDERAL


ESTATE TAX PROPOSAL COULD LEAD TO DISPARITIES, LAWYERS SAY

Tax lawyers are zeroing in on how proposed estate-tax regulations treat certain
gifts where interests in the transferred assets are relinquished shortly before
death, saying this aspect of the guidance could result in individuals in similar
situations having their gifts be subject to different estate tax exemption
amounts. Read More


IRS CAN’T SUE AFTER NOT RAISING CLAIMS IN BANKRUPTCY PROCEEDINGS

Documents Attached

The IRS can’t sue two professional firms based on events from a bankruptcy case
because it could have raised its claims in the bankruptcy case, the Sixth
Circuit held. Read More


VISTA EQUITY TO BUY TAX SOFTWARE MAKER AVALARA FOR $8.4 BILLION

Buyout firm Vista Equity Partners agreed to acquire tax-management software
provider Avalara Inc. for $8.4 billion including debt. Read More

Follow us on Twitter and Facebook, and subscribe to our podcast, Talking Tax, on
Apple Podcasts, Spotify, Google Podcasts, Stitcher, Megaphone, or Audible.


TAX HOLIDAYS ARE BAD POLICY, AND IT’S TIME TO GET RID OF THEM

Illustration: Jonathan Hurtarte/Bloomberg Tax

You already know columnist Andrew Leahey thinks the federal gas tax is far too
low. And he isn’t a fan of suspending it—or any other gas tax—when prices are
high.

Going further, Leahey says tax holidays in general are a bad idea: Suspending
sales taxes, which has become common this time of year, is mostly political
theater that doesn’t do anything to solve the regressivity problem.

Read More




STATE


STATES WELL-POSITIONED TO COMBAT INFLATION, SLOW GROWTH: FITCH

After two years of surging surpluses, state budgets are well prepared to weather
the headwinds of rising inflation and slow economic growth, Fitch Ratings said
in a report released Monday. Read More


NYC HOTEL TAX REVENUE SAW STRONG 2Q RECOVERY, COMPTROLLER SAYS

New York City’s hotel industry is starting to come back from the dark days of
the pandemic when business and leisure travel ceased. Read More

For full state tax news coverage click here.


INTERNATIONAL


INDIA TO STOP CARBON CREDIT EXPORTS UNTIL CLIMATE GOALS ARE MET

India will ban firms to export carbon credits until the nation meets its climate
goals, power and renewable energy minister Raj Kumar Singh told lawmakers
debating changes to the country’s energy conservation law on Monday. Read More


CRYPTO BUSINESS LEAVING JAPAN DUE TO HIGH TAX, ENTREPRENEUR SAYS

Japan should reduce corporate taxes on crypto to prevent entrepreneurs leaving
the country, one of the nation’s most high-profile crypto businesspeople said.
Read More

For full international tax news coverage click here.


INSIGHTS


PERSPECTIVES FROM TAX PRACTITIONERS AND OTHER THOUGHT LEADERS


MINIMUM-TAXED CORPORATIONS MAY PASS BY OPPORTUNITY ZONES

By Alan S. Lederman of Gunster, Yoakley & Stewart, P.A.

The proposed Inflation Reduction Act’s corporate alternative minimum tax base is
financial accounting income that does not incorporate the Internal Revenue
Code’s favorable exemption and deferral tax incentives for investments in
qualified opportunity funds. Alan S. Lederman of Gunster, Yoakley & Stewart,
P.A. says this adverse treatment of QOFs arguably is inconsistent with the
CAMT’s treatment of similar socially oriented Code incentive programs that are
within the Code’s CAMT-creditable general business credit. Read More


DEVELOPMENTS


CASE: BLANKET ATTORNEY-CLIENT PRIVILEGE ASSERTION REJECTED IN SUMMONS
ENFORCEMENT (11TH CIR.) (IRC §7602)

Opinion Attached

Law firm alleging to promote illegal captive insurance schemes cannot assert a
blanket claim of attorney-client privilege against an IRS summons, the Eleventh
Circuit Court of Appeals held. The IRS ... Read More


CASE: RES JUDICATA PREVENTS IRS FROM SEEKING TAXES, PROFESSIONAL FEES AFTER
PREVIOUS LOSS IN BANKRUPTCY COURT

Opinion Attached

Res judicata prevents the IRS from relitigating a cause of action to recover
professional fees a debtor paid during the bankruptcy proceedings, the Sixth
Circuit Court of Appeals held. The ... Read More


IRS IRM PART 8: DESTROYING ORIGINAL PAPER CASE RELATED DOCUMENTS,
POST-DIGITIZATION

Document Attached

Revision to Internal Revenue Manual 8.6.1, 8.22.4 that would provide guidance on
destroying original paper case related documents, including those with jurat
(sworn/certified) statements, after the documents are electronically preserved
... Read More


IRS NEWS RELEASE: TRUCKERS MUST FILE HIGHWAY USE TAX RETURN BEFORE AUGUST 31
(IRC §4481)

Document Attached

Those who have registered, or are required to register, large trucks and buses
are reminded that it’s time to file Form 2290, Heavy Highway Vehicle Use Tax
Return, the ... Read More


IRS REV. PROC.: EPCRS COMMENTS REQUESTED (IRC §401)

Document Attached

Comments requested on Rev. Proc. 2021-30 that requests information to enable the
IRS to make determinations on the issuance of various types of closing
agreements and compliance statements allowing individual ... Read More


COMPANIES

Mentioned in this issue
AT&T Inc
Citrix Systems Inc
Fiat Chrysler Automobiles NV
Owens Corning
Owens-Illinois Inc
PricewaterhouseCoopers LLP


LAW FIRMS

Mentioned in this issue
Earthjustice
Gunster Yoakley & Stewart
Plunkett Cooney
Varnum LLP

1801 South Bell Street, Arlington, VA 22202
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