Talking Tax

Tax-advantaged land deals known as syndicated conservation easements are under increasingly heavy scrutiny from the IRS and Congress. The transactions involve a tax break under tax code Section 170(h) that is designed to encourage property owners to give away the development rights for land or buildings for conservation purposes. Syndicated deals—which involve multiple parties who buy into a property, often based on promises of super-sized deductions worth several times more than their investment—are designated as tax schemes on the IRS's infamous Dirty Dozen list. The IRS has been fighting some of these deals in court, while legislation targeting the practice has progressed on Capitol Hill, albeit slowly. On the latest episode of Talking Tax, Tabetha Peavey, an attorney adviser for the Tax Law Center at New York University Law, and Rep. Mike Thompson (D-Calif.), who has introduced legislation targeting the deals, discuss syndicated easements. Peavey explains how the transactions work and what the IRS has don

The Biden administration and Democratic lawmakers are quickly running out of time to move a revamped tax, climate, and health care package before the midterm elections. Biden's broad "Build Back Better" agenda stalled in December when Sen. Joe Manchin (D-W.Va.), a pivotal vote in the evenly split chamber, announced he wouldn't support it. Senate Majority Leader Chuck Schumer (D-N.Y.) has been negotiating with Manchin about a narrower bill focused on clean energy incentives, health care, and tax hikes on corporations and the wealthy. There have been some recent signs of progress, with tentative agreements on prescription drugs and extending the solvency of Medicare. But there are still many issues to hash out and not much time to do it. On the latest episode of Talking Tax, Capitol Hill reporters Kaustuv Basu and Zach C. Cohen break down the state of the negotiations. They cover what's in, what's out, and what obstacles remain. Do you have feedback on this episode of Talking Tax? Give us a call and leave a voi

The electric vehicle market in the United States is reaching an inflection point as companies look to boost manufacturing at the same time that two more large automakers are on the verge of losing a critical consumer incentive. The $7,500 electric vehicle tax credit begins phasing out at 200,000 vehicles sold per manufacturer, a threshold General Motors Co. and Tesla Inc. hit years ago. Ford Motor Co. and Toyota Motor Corp. are quickly approaching that sales milestone, which has automakers and EV advocates looking to Congress to step in. Democrats remain interested in ways to expand the EV credit, but that effort is wrapped up in the Biden administration's stalled tax, climate, and social spending plan. Ellen Hughes-Cromwick, a senior resident fellow for climate and energy at the think tank Third Way, is the guest on the latest episode of Talking Tax. Hughes-Cromwick—who previously worked at the Commerce Department and Ford—discusses growth in the electric vehicle sector, breaks down the argument for expandin

A sweeping cryptocurrency bill unveiled earlier this month addresses many of the biggest open questions for the young and volatile asset class, from sanctions compliance to stablecoin oversight. When it comes to the taxation of digital assets, the proposal from Sens. Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) would give the industry much of what it has been asking for. The bill would establish that cryptocurrency rewards created through the processes known as "staking” and “mining" would be taxed when the rewards were sold, rather than when they were created. It also includes a de minimis tax exemption and a narrower definition of brokers for cryptocurrency reporting requirements established in last year's bipartisan infrastructure law. On this episode of Talking Tax, we discuss the implications of the Lummis-Gillibrand bill with Seth Wilks, director of government relations at software company TaxBit, and Omri Marian, a law professor at the University of California, Irvine, School of Law. Wilks d

More countries are turning to temporary windfall taxes targeting the huge profits being made by oil and gas companies as prices continue to climb. The UK, Italy, and Argentina, among other countries, have taken different approaches in designing these new taxes. The UK and Italy want to impose a 25% tax on the profits of energy companies to help people facing a cost-of-living crisis, while Argentina wants to impose a 15% tax. On this episode of Talking Tax, senior reporter Hamza Ali spoke with Rhiannon Kinghall Were, a partner and head of tax policy at law firm Macfarlanes. They discuss the different approaches countries can take when applying windfall taxes, and possible long-term consequences of applying these temporary levies. Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

One of the hottest issues in the corporate-tax world right now is about when multinational companies can use the taxes they pay in foreign countries to defray their US tax bills. The Treasury Department has made that process tougher. Last December, it tightened US foreign tax credit rules, narrowing the range of taxes that qualify for it. But many companies have complained that Treasury went too far—rendering some taxes ineligible for the credit even though they’ve been eligible for years, and thus requiring companies to pay taxes twice on the same income. Earlier this month, the chief financial officers of 28 major companies urged Treasury Secretary Janet Yellen to modify the rules. Treasury has acknowledged the companies’ complaints and says it plans steps to address some of them. But it has defended the basic thrust of the rules. Yellen told a Senate committee this week that “these regulations are very important to protect critical interests of the United States." On this episode of Talking Tax, we discuss

A 2015 law promised to streamline the Internal Revenue Service's method for auditing partnerships—a type of "pass-through" business where the partners report their share of the proceeds on their personal tax returns. The Bipartisan Budget Act of 2015 included provisions intended to make it easier for the IRS to scrutinize partnerships. But the law created new concerns and unintended consequences for those navigating the audit process, according to Rochelle Hodes, principal of the Washington National Tax office at Crowe LLP. "The simple has become complex," Hodes said on the latest episode of the Talking Tax podcast. She discusses the complexities of the BBA centralized partnership audit regime, who is eligible to opt out, and what partners undergoing an audit need to consider. Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

With cash cushions plump with federal pandemic relief dollars and a surge in tax revenues, state legislatures across the country have cut taxes aggressively this year. But several states went further, converting their tiered income tax structures to flat-rate systems. Arizona, Georgia, Iowa, and Mississippi have committed to the flat tax in recent weeks, and Oklahoma is likely to join the group soon. The shift away from graduated income tax structures, which tax higher incomes at higher rates, is a dramatic departure from decades of state tax policy. While the motivations in state capitols vary, flat tax proponents framed their proposals as efforts to limit outmigration and improve their state’s economic horsepower. But skeptics warned of long-term social and economic consequences. On this episode of Talking Tax, we hear two perspectives on this shift. Katherine Loughead, a senior policy analyst with the Tax Foundation, contends flat taxes are more transparent and easier to administer, and boost a state’s com

Automation tools increasingly used by seasoned tax professionals are helping to take some of the pain and manual labor out of routine compliance work. That futuristic tech goes beyond robotics process automation and can link together the many programs and platforms that accountants rely on everyday. Those building blocks can automate every step in the tax process from onboarding clients to tax return delivery, according to John McGowan, the CEO of Hubsync and former chief information officer for two Big Four tax practices. On this episode of Talking Tax, McGowan talks to Bloomberg Tax's Amanda Iacone about the challenges that firms face in adopting new ways of working and how it can not only help get work done faster but could make CPA firms more attractive to job candidates and clients alike. Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

Some or all of the interest paid on student loans can be deducted from your taxes. But despite the proliferation of these types of loans over the years, many taxpayers don't see a real benefit. That's because, unlike with home mortgage interest, the student loan interest deduction has significant limitations and has changed numerous times over the years. Bloomberg Tax columnist Kelly Phillips Erb says Congress needs to rethink how the tax code treats student loans—especially if President Biden forgives a huge swath of them, as he's discussed doing. Kelly also talks about the struggles of paying for higher education and about her family's decision whether to borrow money for her kids, even though she's still paying off her own student loans. Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

As part of its bid to join the OECD, Brazil is working on a major overhaul of its rules governing transfer pricing—the way a group’s related entities value transactions between themselves. Historically, Brazil’s transfer pricing rules have relied on a system of fixed margins. But officials have now committed to moving Brazil to the arm’s length standard, the basis of the Organization for Economic Cooperation and Development's guidelines, and many countries’ approaches to transfer pricing. Romero Tavares, a partner at PwC in Brazil, talks to Bloomberg Tax’s Isabel Gottlieb about what the changes mean for multinationals operating in Brazil, benefits and challenges companies will face under the new system, and what to expect as the government moves ahead with the project. Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

Have you noticed digital works of art with names like Cool Cats, CryptoPunks, and Bored Ape Yacht Club while surfing the web or posting a snarky tweet? They’re all examples of non-fungible tokens, or NFTs, unique digital assets serving as certificates of authenticity for digital products including works of art, music, and collectibles. NFTs are also a surging new industry, expected to reach global sales of $80 billion by 2025. Despite this booming market, state revenue agencies haven’t figured out how to tax or even characterize these digital assets. More than 30 states arguably have authority to collect sales tax on NFTs, but none of them have issued guidance on the subject. Bloomberg Tax took a deep dive into how states might choose to tax NFTs by speaking with two professionals steeped in digital economy tax issues. Wendy Walker, a solutions principal at the tax software company Sovos, talked about the evolution of blockchain technology and the tax treatment of products and services living on blockchains.

The IRS is struggling. As millions of Americans completed their annual tradition of filing taxes earlier this week, they again connected with a sprawling government agency besieged by issues that money alone can't solve. The IRS is still working through a backlog of unprocessed tax returns and can't keep up with a flood of phone calls from taxpayers looking for help. Bloomberg Tax took a deep dive into the IRS's longstanding structural deficiencies, from an over-reliance on paper documents and outdated technology to a less-than-stellar public perception. We asked current and former government officials, agency watchdogs, and tax professionals to offer their strategy for fixing the IRS. To round out the Fixing the IRS series, former IRS Commissioner John Koskinen and Carlos Lopez, founder of the Latino Tax Professionals Association, join the latest episode of our Talking Tax podcast. They discuss what the agency can do to get back on the right track. Do you have feedback on this episode of Talking Tax? Give u

The quick pace of consultations into complex new rules from the OECD is keeping tax practitioners busy. The Paris-based institution has already in 2022 launched several consultations into the “building blocks” of a new international tax system. Pillar One of the plan would reallocate a sliver of the profits of the largest and most profitable businesses to countries where they make sales. Pillar Two would establish a 15% global minimum tax. Tim Sarson Partner, U.K. head of tax policy at KPMG U.K., talks with Bloomberg Tax’s Hamza Ali about the emerging rules in the latest episode of Talking Tax. Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

The OECD's Inclusive Framework on Base Erosion and Profit Shifting is aiming to help developing countries implement a global agreement to change how multinational companies are taxed, according to the co-chair of its steering committee. The agreement, which more than 130 countries signed up to in October, has two pillars. Pillar One reallocates a portion of the largest multinationals’ profits to market jurisdictions, while Pillar Two creates a global minimum tax rate of 15%. The two pillars come with enormous complexities, meaning some countries will need help to keep up with the pace of implementation, says Marlene Nembhard-Parker, chief tax counsel for legislation, treaties, and international tax matters at Tax Administration Jamaica and co-chair of the Inclusive Framework Steering Group. Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

The OECD released a draft framework March 22 that would standardize how global tax authorities regulate and share tax information related to cryptocurrency assets. The draft—called the Crypto-Asset Reporting Framework, or “CARF”—includes model technical rules and a commentary written for wide adoption and data-sharing among tax administrations. Countries that adopt the Organization for Economic Cooperation and Development's standards would require individuals and entities that “provide services to exchange crypto-assets against other crypto-assets, or for fiat currencies” to identify their customers and report the aggregate values of the exchanges and transfers on an annual basis. Buchanan Ingersoll & Rooney PC international tax attorney Sahel Assar called the draft proposal a “tsunami” of regulation coming for cryptocurrency and related industries. Regulation, she says in our latest podcast, helps to legitimize the crypto industry. The OECD is gathering public comments on the draft through the end of April.

Recent court rulings striking down two Internal Revenue Service reporting requirements suggest the agency may need to change its procedures so that its rules will hold up in court. The U.S. Court of Appeals for the Sixth Circuit struck down a tax reporting requirement on March 3 in Mann Construction, Inc. v. United States. That decision was cited by the U.S. District Court for the Eastern District of Tennessee when it struck down a separate reporting requirement on March 21 in CIC Services, LLC v. IRS. The decisions come as the Treasury Department, and the IRS within it, face increasing scrutiny over whether their tax rulemaking procedures have met legal requirements. On the latest episode of Talking Tax, Melissa Wiley, Member in Caplin & Drysdale's D.C. office, and Kristin Hickman, law professor at the University of Minnesota, discuss what the decisions could signal about how courts will approach federal tax rulemaking procedures. They speak with Bloomberg Tax's Aysha Bagchi and Jeff Leon. Do you have feedb

Gasoline prices have reached record highs in recent weeks, spurring lawmakers across the country to look for ways to offer some relief. A popular target: the excise taxes the federal government and states collect to fund transportation programs. Some congressional Democrats have floated a suspension of the 18.3 cent-per-gallon federal gas tax, while many governors are pursuing state holidays that could provide some temporarily relief to drivers. Temporarily ditching the gas tax would offer some obvious political benefits for lawmakers running for re-election this year. But how much would it actually help consumers with the national average for regular gasoline up to well over $4 a gallon and gas prices nearing $6 a gallon in California? Lucy Dadayan and Howard Gleckman of the Urban-Brookings Tax Policy Center appear on the latest episode of our weekly Talking Tax podcast to talk about proposed gas tax holidays. Gleckman argues that suspending the federal excise tax could actually fuel further price increases,

The accounting profession offers career options that go beyond working for a CPA firm or corporate finance. George Azih found that his years of working in both arenas built the perfect launch pad to start his own business, and solve some complex financial accounting problems along the way. Azih is the founder and CEO of LeaseQuery, an Atlanta-based company that provides lease accounting software to businesses. In just a decade, Azih turned his startup into a business that Deloitte ranked among the 100 fastest-growing tech companies. On today’s episode of our weekly podcast, Talking Tax, Azih talks with reporter Amanda Iacone about why he got into accounting and his experience as a Black entrepreneur. He also talks about the value of diversity in accounting and of searching for your diversity blind spots. Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

Courts in Canada have been making high-profile rulings on a key area of corporate tax law in recent years and the federal government could be making even more changes. Transfer pricing—the rules governing how entities within the same corporate group must make transactions as if they were arm’s length—represents a sizable chunk of the money the Canada Revenue Agency collects in tackling aggressive tax avoidance by companies. A court submission by the agency in 2021 said adjustments from transfer pricing over the three previous years increased government revenue by C$11.84 billion ($9.3 billion). But judges have been dismissing the agency’s arguments when companies have decided to fight those adjustments in courts. Two decisions, one dealing with the uranium miner Cameco Corp. and a second with herbicide supplier Agracity Ltd., have grabbed tax practitioners’ attention because of how the courts interpreted Canada’s transfer pricing laws. The federal government has promised a reform of the underlining legislatio