Talking Tax

House and Senate committees held several tax-focused events this week ahead of the April 17 tax filing deadline. Top Treasury Department, Internal Revenue Service, and Office of Information and Regulatory Affairs officials testified before lawmakers about the status of the 2018 IRS filing season and the process for reviewing and releasing tax regulations. OIRA and Treasury announced a deal that would allow the White House to review major tax rules before they are made public. The House Ways and Means Committee approved a package of legislation that would retool the IRS, and some of those bills are slated to get a vote on the House floor in the coming week. And, to top off a busy week, House Speaker Paul D. Ryan (R-Wis.), a key player in passing the 2017 tax act (Pub. L. No. 115-97), said he won't run for re-election. Reporters Allyson Versprille and Laura Davison spoke about all the moving pieces and what to expect next.

Lisa Zarlenga of Steptoe & Johnson, LLP, joins Talking Tax with host Andrea L. Ben-Yosef to discuss what tax advisors need to know about cryptocurreny. She discusses what cryptocurrency investors need to do as they file their returns, ICOs and airdrops and how they are taxed, and the impact of tax reform on cryptocurrency issues.

New guidance on a tax law change limiting interest deductibility tells taxpayers that the IRS is making progress in helping businesses deal with the change, but some of the more challenging issues have yet to be broached. Tony Nitti, a tax partner at WithumSmith+Brown PC in Aspen, Colo., joins Talking Tax host Allyson Versprille to discuss the guidance—Notice 2018-28—and what it means for businesses. The amended tax code Section 163(j) limits the business interest deduction to 30 percent of a company’s earnings before interest, taxes, depreciation, and amortization for four years starting in 2018. Beginning in 2022, the deduction will be limited to 30 percent of earnings before interest and taxes. The IRS's notice provides a handful of answers on how the limitation will work. It confirms, for example, that interest payments on debt held by members of a consolidated group—a group of corporations with a shared parent company that is treated as a single entity for tax purposes—would be allocated at the consolidated group level, rather than on a member-by-member basis. Government officials had been hinting at this clarification for the last several months. While the notice is a step in the right direction, the Internal Revenue Service and Treasury Department still have a lot of work ahead, Nitti says.

It's not every day the U.S. Supreme Court agrees to take on a tax case. The Supreme Court on March 21 decided a major tax case dealing with the obstruction of an IRS investigation when it ruled in Marinello v. United States that the Internal Revenue Service can only convict a taxpayer on obstruction charges when it can prove the taxpayer was aware of a pending tax-related proceeding, such as an investigation or audit, or that the taxpayer could "reasonably foresee that such a proceeding would commence." Another significant tax case, Wisconsin Central Ltd v. United States, currently being reviewed by the high court, involves the taxation of stock given to employees by a railroad company. The Supreme Court is scheduled to hear oral arguments on April 16. Bloomberg Tax's Carolina Vargas talked to practitioners to discuss the cases and their significance.

The House plans to vote this week on the omnibus spending bill that will likely include a tax change for agriculture cooperatives. In addition to the provision that rebalances the tax treatment of agriculture cooperatives and corporate grain buyers, some GOP lawmakers are also looking to include technical fixes to some drafting errors in the tax law. The negotiations were ongoing as of late March 16. Reporters Laura Davison, Allyson Versprille, and Kaustuv Basu spoke with Talking Tax host Matthew Beddingfield on March 19 about the upcoming bill and what Democrats can expect to get out of the legislation.

Professor Charlene Luke, University of Florida Research Foundation Professor at the Levin College of Law, joins Talking Tax host Andrea Ben-Yosef to discuss the federal tax implications of crowdfunding. Professor Luke describes the different types of crowdfunding, reviews current IRS guidance, discusses the tax provisions--including those in the 2017 tax act—that apply to crowdfunding, and ends with suggestions as to how the IRS can help in this area. For more information, please see her article “Crowdfunding: Federal Income Tax Considerations,” which was published in the TM Memorandum (Aug. 17, 2018). The article can be found at https://www.bna.com/crowdfunding-federal-income-m73014463754/?promocode=BTAX164AA.

The American Bar Association Section of Taxation meeting in San Diego this month was all about how IRS and Treasury officials view the new tax law. The tax reform bill becoming law is only the first step: the Internal Revenue Service and Treasury Department will be providing guidance on the statute's provisions for years to come. During the meeting, Bloomberg Tax reporters spoke with government officials about how they plan to prioritize regulations as they implement changes to complex areas of the 2017 tax act (Pub. L. No. 115-97), such as changes to international taxation, tax accounting, and transfer pricing. Reporters Laura Davison, Allyson Versprille, Alison Bennett, and Isabel Gottlieb spoke with Talking Tax host Matthew Beddingfield on Feb. 12 about how the IRS and Treasury plan to tackle the law's changes.

The new tax law lowers the corporate tax rate to 21 percent—a change that some lawmakers have suggested could prompt pass-through entities to convert to C corporations. Michael D'Addio, a principal in the New Haven, Conn., office of Marcum LLP who specializes in federal and state taxation, joins Talking Tax host Allyson Versprille to discuss the possibility of a mass conversion as a result of the different treatment of pass-throughs and C corporations. Under the new law, pass-through owners can deduct 20 percent of trade or business income. But for high-earning pass-through owners paying the top 37 percent individual tax rate, that averages out to a 29.6 percent tax rate. D'Addio explains some of the underlying issues that could factor into a pass-through's decision to convert—aside from the upfront tax rates—and why that may not be the best course of action for every taxpayer.

Congress now has a host of smaller tax issues to contend with after passing legislation overhauling many aspects of the Internal Revenue Code. The Republican-led House Ways and Means and Senate Finance committees are looking at ways to make corrections to, and address issues omitted from, the new tax law (Pub. L. No. 115-97). Tax writers will consider overhauling the Internal Revenue Service, streamlining tax-favored savings accounts for education and retirement, and passing legislation to extend some expired tax breaks. These goals will face headwinds now that tax isn't the No. 1 agenda item in Congress. Politics, negotiations over funding the government, and competing policy priorities could all waylay the tax writers' plans. Reporters Kaustuv Basu, Allyson Versprille, and Laura Davison spoke with Talking Tax host Matthew Beddingfield on Jan. 22 about what’s next for lawmakers in 2018.

The new tax law made extensive changes to the U.S. tax code, setting up a massive need for stakeholders to understand the law's complexities and possibly rethink their tax plans. Bloomberg Tax reporters Sony Kassam and Laura Davison and news editor Colleen Murphy spoke with a group of tax practitioners, members of the Bloomberg Tax advisory board, about the tax act's (Pub. L. No. 115-97) effects over the next year and beyond on federal, state, and international tax issues. This episode's discussion features Lisa M. Starczewski, a shareholder at Buchanan Ingersoll & Rooney PC in Philadelphia; William Alexander, of counsel at Skadden, Arps, Slate, Meagher & Flom LLP in Washington; John L. Harrington, a partner at Dentons in Washington; Richard S. Franklin, a member at Franklin Karibjanian & Law PLLC in Washington; and Joe Huddleston, executive director of the national indirect tax group at Ernst & Young LLP. This episode was recorded the morning of Jan. 9 and has been edited for length and clarity. For a complete transcript, please click here: http://src.bna.com/vG3.