Talking Tax

The federal tax on a category of income called GILTI—global intangible low-taxed income—has state-level implications for multinational businesses.Congress created GILTI to stop companies from shifting profits abroad through intangible assets—royalties, patents, and the like. When a company’s total overseas income has been taxed abroad at less than a certain rate, the U.S. applies a tax.In the U.S., state governments often conform their own tax laws to the federal tax code. But with GILTI, states are all over the map. For most states it means a very modest increase in their corporate tax base, but for companies it can mean dealing with multiple approaches and calculations. And there’s talk of legal challenges.Talking Tax host Siri Bulusu talked about GILTI with Bruce Fort, counsel to the Multistate Tax Commission, who has an eagle’s-eye view of what the states are doing. They spoke at the American Bar Association tax section’s fall meeting in San Francisco.

It’s a major theme for a burgeoning number of investors: concern for sustainability and social values as drivers of financial decisions.That means boom time for ESG investing—driven by examination of businesses’ environmental, social, and governance positions.Companies are disclosing more and more about their environmental footprints, how they treat their employees, how their leadership operates, and more. The information, which is beginning to appear in mainstream financial reports like 10-Ks, can help stakeholders assess a company’s long-term resilience and value.Talking Tax host Amanda Iacone discussed the ESG disclosure landscape and the growth of ESG auditing with Kristen Sullivan, sustainability and key performance indicators services leader with Deloitte. She also chairs the Sustainability Assurance and Advisory Task Force at the American Institute of CPAs.Listen and subscribe to Talking Tax from your mobile device:Via Apple Podcasts | Via Stitcher | Via Overcast | Via Spotify

Businesses are watching India closely as the Modi government cuts taxes and takes other steps to woo investors into the enormous market. One place to watch is the Hague, where a longstanding dispute between India and Cairn Energy is playing out.Cairn Energy is fighting a big tax bill—$1.6 billion plus interest and penalties—that India delivered retroactively for a 2006 internal restructuring transaction. The company took India to binding arbitration at the International Court of Justice, under terms of the bilateral investment treaty. India's position is that the treaty doesn't govern tax issues.Whatever the outcome, India's response could signal the country's posture with respect to arbitration and, generally, to the issue of tax sovereignty.Talking Tax hosts Amanda Iacone and Siri Bulusu discuss the Cairn case, with a special insight from Mukesh Butani, managing partner at BMR Legal in New Delhi, and specialist in international tax and transfer pricing law.Listen and subscribe to Talking Tax from your mobile device: Via Apple Podcasts | Via Stitcher | Via Overcast | Via Spotify

Micro-captive insurance companies play a useful role for relatively small businesses that need to insure risks they can't buy coverage for elsewhere. The businesses self-insure, setting up companies that are captive to their owners.Because Congress allowed micro-captive owners a tax advantage, some companies have abused the structures in ways that induced the Internal Revenue Service to put them on its list for extra-close scrutiny. The IRS has won a few big cases against micro-captives, and hundreds more are docketed in the U.S. Tax Court.The IRS has offered to settle with some of these companies in an effort to deal with the issue in a comprehensive way. Host Amanda Iacone talked with Bloomberg Tax reporter Allyson Versprille about the nature of micro-captives and what the settlement offer might signal for the future of legitimate micro-captive structures.Listen and subscribe to Talking Tax from your mobile device: Via Apple Podcasts | Via Stitcher | Via Overcast | Via Spotify

Wads of cash. That’s how owners of recreational marijuana businesses haul in their taxes, because big banks are reluctant to work with the industry while marijuana is still illegal under federal law.U.S. states may pull in as much as $1.6 billion in taxes from recreational marijuana sales this year—that’s not including medical marijuana—so that’s a lot of wrinkled bills from the register. A number of states and cities have stepped up with ideas to make payment safer and more efficient.Nevada is developing a pilot digital currency system for paying taxes. Ohio already allows bitcoin tax payments by businesses. Washington state tax payments can be made through state-chartered banks and credit unions. An Arizona startup is testing an approach involving armored cars and blockchain-based tokens. And there’s more.Bloomberg Tax reporter Brenna Goth looked into these and other ways states are tackling the problem. She spoke with Talking Tax host Amanda Iacone.Listen and subscribe to Talking Tax from your mobile device: Via Apple Podcasts | Via Stitcher | Via Overcast | Via Spotify

“Relax a bit,” Pascal Saint-Amans advised countries that may fear losing a lot of revenue under a new global approach being developed to tax cross-border business—especially digital business.The OECD-led project toward agreement on a plan aims not to create big revenue winners or losers, Saint-Amans said in a Sept. 11 interview at the International Fiscal Association meeting in London. He’s the OECD’s top tax official, heading work on the plan that would give more taxing rights to countries where companies’ consumers are.Saint-Amans brought Bloomberg Tax’s Siri Bulusu up to date on the latest expectations for the project, which gained even more political urgency this summer when France enacted a 3% tax on some digital business revenue of big companies, including U.S. giants like Facebook Inc. and Alphabet Inc.'s Google. Other countries are eyeing such taxes of their own.Listen and subscribe to Talking Tax from your mobile device: Via Apple Podcasts | Via Stitcher | Via Overcast | Via Spotify

Many states and cities offer tax breaks and other incentives to lure businesses and jobs—often raising questions about the actual benefit of the expensive measures. California communities have a unique version, one that Bloomberg Tax’s Laura Mahoney shed light on this year.In extensive data research and reporting, Mahoney uncovered Cupertino’s payment of nearly $70 million to Apple through the years. It started when the company was in trouble in 1997, and it continues with monthly payments to the now-giant global enterprise. Defenders say agreements like this help the economy of job-hungry cities; critics call them an unwarranted tax giveaways. Other companies have similar arrangements—Best Buy, for example, has one with the city of Dinuba.The money comes from a special California mechanism that shares sales tax revenue with communities where companies are located or that are designated as points of sale. Bloomberg Tax team leader Jeff Harrington spoke with Mahoney about the issue and her reporting.Listen and subscribe to Talking Tax from your mobile device: Via Apple Podcasts | Via Stitcher | Via Overcast | Via Spotify

U.S. Tax Court Judge Mark Holmes is one of those judges who can make a person glad to be reading a legal opinion. His judgments are often marked by wit, clarity, and pointed references to literature that illuminate a plaintiff’s plight or a point of law.He once explored Buffalo wings and other cuisine in a decision about a tax dispute involving “material participation.”In this episode, Holmes reveals that he will write an “interesting and very long opinion” in probably his biggest pending case: the Michael Jackson estate’s battle with the Internal Revenue Service.Bloomberg Tax’s Siri Bulusu talked with Holmes about his writing, his serendipitous landing in the tax law arena, procedural challenges the IRS is facing, and the “parade of humanity” he enjoys dealing with at the court.Listen and subscribe to Talking Tax from your mobile device: Via Apple Podcasts | Via Stitcher | Via Overcast| Via Spotify

Some complicated tax issues face Congress when lawmakers return after Labor Day.Extenders—those expired or about-to-expire temporary tax breaks for specific groups—remain in play big-time in both House and Senate. The House Ways and Means Committee has passed an extenders package, and Sen. Chuck Grassley (R-Iowa) says he will make the issue a Finance Committee priority in September.Meanwhile, the outlook for passage of technical corrections to the 2017 tax law remains unclear. There’s the so-called retail glitch—an inadvertent blow to stores and restaurants that make renovations—and what’s known as the church parking tax problem.Amanda Iacone talked about the Capitol Hill tax picture with Bloomberg Tax reporters Stu Basu and Colin Wilhelm.Listen and subscribe to Talking Tax from your mobile device: Via Apple Podcasts | Via Stitcher | Via Overcast | Via Spotify

The National Philanthropic Trust calls donor-advised funds the most popular method of charitable giving—nearly a half-million accounts hold $110 billion in assets. Now a court fight between a wealthy family and a fund to which they donated stock may offer a look into how these funds work.Universities and community foundations run their own charitable funds, but big-name investment managers like JP Morgan, Vanguard, and Fidelity operate them, too. They often convert complex donations—art, stock, or cryptocurrency, for example—into cash that can be given to charities over a period of years, often with tax advantages.The Fairbairns sued Fidelity Charitable, saying the fund violated contract law by promising a sophisticated liquidation and then selling their donated stock too quickly. That caused the value of the stock to plunge, lowering the value of their $100 million donation and the tax deduction they had hoped to receive along with it.Ohio State University professor Brian Mittendorf has been researching donor-advised funds. He spoke with Bloomberg Tax reporter Aysha Bagchi about the Fairbairn case and the tax and policy ramifications of these funds.Listen and subscribe to Talking Tax from your mobile device: Via Apple Podcasts | Via Stitcher | Via Overcast | Via Spotify