Talking Tax

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.

Gary D. Sprague of Baker McKenzie joins Talking Tax with host Dolores Gregory for a discussion of the EU’s efforts to tax the “digital economy.” Gary is a regular contributor to the TM International Journal. In a recent column, he raised concerns about an EU proposal to adopt special rules for taxing companies that engage in business online – one creating a ‘digital’ permanent establishment and the other imposing a special levy on specific transactions – both of which represent a retreat from the arm’s length standard. In this interview, Gary discusses the problems these proposals raise not just for e-commerce but for all companies that do business across borders.

The Internal Revenue Service and Treasury Department are gearing up to implement the new tax law, a significant undertaking that will be their focus for 2018. At the same time, lawmakers will likely face the need to change some parts of the law as drafting errors and unintended consequences emerge. Republicans in Congress have already said they plan a technical corrections bill to clean up aspects of the tax changes. They may have to work with Democrats if they want to do anything more sweeping. Reporters Kaustuv Basu, Allyson Versprille, and Laura Davison spoke with Talking Tax host Matthew Beddingfield on Jan. 2 about what's next for the regulators and lawmakers in the aftermath of the bill's passage.

Jim Calvin, of Deloitte LLP, joins Talking Tax with host Andrea L. Ben-Yosef to discuss bitcoin and how to view it from a tax perspective. Calvin explains how bitcoin works; addresses the most common questions he gets from clients about issues such as classification, wash sale and short sale rules, and how to determine which bitcoin has been sold; and discusses the new futures market in bitcoin from an investor and trader tax perspective.

The GOP's final tax bill includes significant changes in international tax policy. Jon Traub, managing principal for tax policy at Deloitte Tax LLP, and Chris Trump, a principal at Deloitte Tax who specializes in international taxation, join Talking Tax host Allyson Versprille to discuss the changes and how they will impact multinational companies. Traub is a former House Ways and Means Committee staff director and minority chief tax counsel. Before joining Deloitte Tax, Trump—no relation to President Donald Trump—worked in the Internal Revenue Service's Office of the Associate Chief Counsel (International). The conversation covers planning opportunities as well as challenges multinationals will face in complying with the new law. This episode was recorded the evening of Dec. 19.

Lawmakers will need to hash out final details on the individual side of the tax code if they want to meet their end-of-the-year deadline to pass tax reform legislation. Ernst & Young LLP's U.S. tax reform leader Justin Shafer co-hosts an episode of Talking Tax with Bloomberg Tax reporter Allyson Versprille. They are joined in discussing the individual aspects of the House and Senate tax bills by David Kirk and Elda Di Re, both partners in the Private Client Services practice within EY’s National Tax Department. Kirk and Di Re lay out the differences in the House and Senate bills, controversial proposals related to the state and local tax deduction and the alternative minimum tax, and the planning challenges that individual taxpayers face. This episode was recorded the morning of Dec. 8. The legislation is subject to change.

Congress is getting closer to enacting major tax legislation by the end of the year, but first the House and the Senate will have to reconcile key differences in their bills—a task that could prove difficult. John Gimigliano, principal in charge of the Federal Legislative and Regulatory Services group in KPMG LLP's Washington National Tax practice, joins Talking Tax host Allyson Versprille to discuss the disparities between the two proposals and the implications for the tax reform process. The resurgence of the alternative minimum tax in the Senate bill has been particularly controversial. Republicans swore they would do away with the tax, but the corporate and individual AMT resurfaced at the last minute as senators needed revenue Dec. 1 to convince GOP holdouts to vote for the bill. The podcast also features discussion of the approach taken in both bills on pass-throughs, effective dates, and the individual income brackets and tax rates. Not only are differences in these areas important in the context of passing tax legislation in the next few weeks, but they also make it difficult for businesses to plan, Gimigliano said. "I don't know if there's ever been a harder time to be a head of tax at a large company trying to plan for the future." This episode was recorded the morning of Dec. 5. The legislation is subject to change.