Talking Tax

Countries around the world are talking about taxing the revenue of giant digital-business companies. In July, France became the first European country to enact a digital services tax—immediately drawing the ire of U.S. officials.The U.S., home of digital giants like Amazon.com Inc., wants France and other countries to wait for a global agreement on digital taxation, which could rewrite the rules that determine where and how multinationals in many industries are taxed. In the meantime, Washington has opened a trade investigation.President Donald Trump tweeted that taxing French wine might be a way to retaliate. But he has another option, buried in the tax code. The provision—Section 891, which has never been used—stems from another tax dispute between the U.S. and France, more than 80 years ago.Bloomberg Tax’s Isabel Gottlieb spoke with Itai Grinberg, professor of international tax at Georgetown University. Previously an attorney in the Treasury Department’s Office of International Tax Counsel and in private practice, Grinberg also consults with multilateral institutions on international tax issues.Listen and subscribe to Talking Tax from your mobile device: Via Apple Podcasts | Via Stitcher | Via Overcast | Via Spotify

The Supreme Court in June threw out North Carolina’s taxation of a family trust’s income because the trust didn’t have enough of a connection to the state.The decision, in the case of the Kimberley Rice Kaestner 1992 Family Trust, didn’t give trust and estate attorneys as much instruction as many wanted with respect to state taxation of trusts. Justice Sonia Sotomayor’s opinion was narrowly drawn.But lawyers still can draw some guidance from it as they advise wealthy clients how, and where, to structure trusts that will minimize tax burdens.Bloomberg Tax’s Aysha Bagchi spoke with attorney Bob Kleinknecht of Oakstone Law in Florida about how trusts work and what the Kaestner ruling may mean for estate planning. Kleinknecht has experience not only with Florida estate and trust practice but with New York and Massachusetts as well.Listen and subscribe to Talking Tax from your mobile device: Via Apple Podcasts | Via Stitcher | Via Overcast | Via Spotify

Effective auditing of companies' financial statements is important for investor confidence, but Chinese companies traded in the U.S. don't get U.S. oversight of their audits as other companies do. And that could be a risk for investors.The Public Company Accounting Oversight Board, the U.S. audit regulator created to restore confidence in financial reporting after accounting scandals of the early 2000s, isn't allowed to inspect the work of China-based accountants.That lack of access is a concern to the PCAOB, the Securities and Exchange Commission. and some members of Congress. They have introduced legislation to crack down on China if it doesn't let audit inspectors in.Bloomberg Tax's Amanda Iacone spoke with Paul Gillis, who teaches at Peking University’s school of management in Beijing, about the significance of the problem and what may lie ahead.Listen and subscribe to Talking Tax from your mobile device: Via Apple Podcasts | Via Stitcher | Via Overcast | Via Spotify

When Congress put a $10,000 cap on the amount of state and local taxes individuals can deduct from their federal income taxes, high-tax states tried to fight for their residents in a couple of different ways.One way—charitable funds that earned people state tax credits for donations—got shot down by the IRS.But states have tried another kind of workaround. Because the deduction cap applies only to individuals, not to businesses, some states have instituted new taxes on pass-through businesses, like LLCs and partnerships. These entities normally don’t pay taxes. Instead, their individual owners pay tax on the business income.Bloomberg Tax team lead Jeff Harrington explored the state workarounds with Cannon-Marie Green, the managing editor overseeing Bloomberg Tax’s editorial coverage of state corporate income tax and pass-throughs.Listen and subscribe to Talking Tax from your mobile device: Via Apple Podcasts | Via Stitcher | Via Overcast | Via Spotify

Michael Desmond became the Internal Revenue Service’s chief counsel earlier this year as the agency was well into implementing the complex 2017 tax code overhaul.In a wide-ranging conversation with senior editor Colleen Murphy June 27 at the Bloomberg Tax Leadership Forum in New York, Desmond expressed encouragement at the hiring of “energized attorneys” to implement the law.He recommended that companies pay attention to interrelationships among various provisions, especially in the international arena. He talked about non-tax overhaul priorities, too—including strengthening partnership audits and figuring out long-term streamlining of controversies over syndicated conservation easements.Listen to their conversation—plus a bit of Q&A with the forum audience—on a special episode of Talking Tax.

The U.S. Supreme Court’s 2018 South Dakota v. Wayfair decision upended a 26-year precedent that limited a state’s authority to tax goods being sold across state lines. A year later, states have amended their laws to target remote sellers and online sales platforms like Amazon.com Inc. Bloomberg Tax reporter Ryan Prete spoke with Diane Yetter, founder of the Sales Tax Institute and president of consulting firm Yetter Tax, to discuss the ruling’s legacy so far and possible future legal issues. She said legal challenges could begin with differing interpretations of the laws, and go as far as class-action lawsuits against sellers for not collecting the taxes appropriately.  Listen and subscribe to Talking Tax from your mobile device: Via Apple Podcasts | Via Stitcher | Via Overcast | Via Spotify

The 2017 tax law lowered the corporate tax rate to 21%. That has some companies taking a look at their corporate structure and asking: Is a C corp better? "We have the conversation a lot," said Elizabeth Stieff, a tax attorney with Venable LLC in Baltimore. Stieff said clients see this great 21% tax rate and they want to take advantage of it. But, as she explained to Bloomberg Tax's Amanda Iacone, it's only a great opportunity for specific businesses in specific circumstances.Listen and subscribe to Talking Tax from your mobile device: Via Apple Podcasts | Via Stitcher | Via Overcast| Via Spotify

The OECD released a blueprint for how to rewrite global tax rules. The group hopes to get international consensus around proposals to set a global minimum tax and reallocate more of companies’ taxable profits to countries where their consumers are located. The Organization for Economic Cooperation and Development wants to get 129 countries to agree to the plan by 2020.Martin Kreienbaum, director general of international taxation at Germany’s finance ministry, spoke with Bloomberg Tax reporter Siri Bulusu about the outlook for the OECD’s effort.Listen and subscribe to Talking Tax from your mobile device: Via Apple Podcasts | Via Stitcher | Via Overcast| Via Spotify

American workers are cashing in on their side hustle, picking up small jobs through Task Rabbit, driving for Lyft, or selling jewelry on Etsy. But they owe taxes on that work. And many of these self-employed workers are under-reporting their income to the IRS. It’s contributing to an estimated $450 billion tax gap.Annette Nellen, who directs the graduate tax program at San Jose State University, spoke with Bloomberg Tax reporter Amanda Iacone about how the gig economy is changing the tax landscape and the challenges facing both workers and preparers.

The retail industry is grappling with a new set of tariffs on about $200 billion of goods coming in from China. David French, senior vice president of government relations for the National Retail Federation, said the tariffs first costs businesses and then hit consumers.French spoke with Bloomberg Tax reporter Siri Bulusu about how businesses are preparing to absorb some of those costs into various points of their supply chain, and how the costs are eroding the benefits the retail sector gained following tax reform.Listen and subscribe to Talking Tax from your mobile device: Via Apple Podcasts | Via Stitcher | Via Overcast| Via Spotify