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A Word About Foreign Tax Credits- POLITICO






Update


FIRST LOOK: A bipartisan group of 10 House tax writers is urging the Treasury Department to be more open to business concerns about the final foreign tax credit regulations released late last year.

The 10 lawmakers told Treasury Secretary Janet Yellen they appreciate that foreign tax credits, in which businesses can get tax relief for income taxes paid to other countries, are a particular topic. dense. But they added that they feared the FTC’s final rules would result in double taxation of US companies and discourage “investment by US companies in emerging markets where we need to stay competitive with China.”

With that in mind, the tax writers asked Yellen to continue to discuss the matter with the business community and “to be particularly mindful of how these changes could negatively impact the competitiveness of U.S. businesses in the future.” foreign” in a letter sent Friday and obtained by Pro Tax.

The companies have already pointed to a range of potential issues with the FTC’s final rules, saying they could make life especially difficult for companies operating in countries with which the United States does not have a tax treaty. In Friday’s letter, the bipartisan group of tax writers also asked for more comprehensive guidance from the IRS to enforce FTC rules and for the Treasury to consider offering businesses safe harbors in certain situations.

Representatives. Brad Schneider (D-Ill.) and Kevin Hern (R-Okla.) led the letter to Yellen. Representatives. Jodey Arrington (R-Texas), Ron Estes (R-Kan.), Drew Ferguson (R-Ga.), Ron Kind (D-Wis.), Stephanie Murphy (D-Fla.), jimmy panetta (D-California) and Jackie Walorski (R-Ind.) also signed, as did Del. Stacey Plasket (OF.S. Virgin Islands).

MORE ON THIS IN A BIT, but first thank you for coming to the “are taxpayers invited to cool after parties?” version of the weekly tax. (Or the tax specialists too busy with other fun activities?)

Well, it’s a prediction that has come true: today marks 22 years since then-President Bill Clinton announced that civilians would have access to a Global Positioning System (GPS ) more specific, what CNN wrote would have a lasting impact on the “nascent car navigation market.” (Previously, the Pentagon jammed GPS signals used by civilians and only allowed the most accurate signals for military users.)

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NOW WHAT? The lawmakers’ letter stopped short of calling for what the business lobby was seeking on foreign tax credit regulation – a one-year deferral of the rules, which came into effect this year.

Businesses say it would give them more time to comply with complicated regulations that are only made trickier by all the moving parts happening on the international tax scene these days – notably, the global tax agreement that the he Biden administration helped cross the finish line last year, which could face implementation issues here in the United States and in a variety of other places.

But it’s also true that the extra time would allow for more lobbying to make the rules more business-friendly.

The National Foreign Trade Council, one of the first groups to ask for the one-year delay, said so in a letter about two months ago. This type of pause, the group wrote to Yellen, would allow for “any reasoned reconsideration” of the rules, particularly in how they interact with potential changes caused by the global agreement.

Leading Democrats have previously said business groups should have raised more concerns about the proposed settlement, though lobbyists say the final rules contained significant updates and the business community has filed complaints about the draft rules.

In any case, there were signs in previous months, the Treasury would engage with the business community on the rules, as outlets like Tax Notes have reported.

But the timing may be close to the do-or-die for companies looking to delay regulations, which have already been in place for a full four months.

WELL, THAT’S SOMETHING: Virtually all Democrats in Congress currently wanted to preserve the child tax credit expansion the party enacted in its 2021 pandemic relief bill, which authorized monthly payments of up to $300 per child. for eligible families.

But they didn’t, because of opposition from Senator Joe Manchin (DW.Va.). And according to a new book, Senate Minority Leader Mitch McConnell would have been only delighted about this result, as Joseph Zeballos-Roig of Insider reports.

McConnell had feared that if Americans got used to benefits like monthly child allowances, it would be very difficult for Republicans to withdraw them when they returned to power, as Jonathan Martin and Alexander Burns of New York write. Times in their new book. “It won’t pass.”

Democrats are still trying to salvage a slimmed-down version of President Joe Biden’s Build Back Better program, which would have extended the expanded CTC for another year under the version passed by the House last year. Manchin, who forced Democrats to drop the measure, was particularly skeptical of expanding the CLC, calling for work demands and even suggesting that parents would use their payments to buy drugs.

But it should be noted that McConnell’s view of the situation — that voters would get used to and want to keep welfare programs if Democrats could only keep them going for so long — was shared by many. Democrats, that’s why they tried to wrap a lot of initiatives in the short-term BBB.

LET’S SEE WHERE THIS LEADS: Ghana introduced a 1.5% tax on many electronic transactions on Sunday – and as the BBC reports, we are very interested in how it will work. Merchants fear the new electronic tax will force consumers to pay more via what is often a more reliable form of payment, and skeptics of the tax – which will hit any transaction of at least 100 cedi, or about $13 – say it will make life particularly difficult for people on low incomes. For its part, the government acknowledges that electronic direct debit is likely to lead to a decline in mobile transactions, with Ghana’s central bank suggesting this may have already begun. The bank found that customers had already started using more cash late last year in anticipation of the tax. But government officials also say they are confident that the mobile money industry will survive and thrive in Ghana.

AROUND THIS TIME AGAIN: Lawmakers in Hawaii are about to approve tax refunds for every household in the state, the Honolulu Civil Beat reported. The payments, which would go to taxpayers who filed state taxes in Hawaii for 2021, will cost the state about $250 million. Lawmakers have structured the rebates to be most helpful to low-income earners — filers making at least six figures will receive payments of $100, while those making less than that threshold will receive $300. Larger families would also receive larger payments. The State House and Senate, both led by Democrats, are expected to back the refunds in final votes this week, which would authorize the first such payments in 15 years. Lawmakers had been skeptical of the cuts, which were proposed by Democratic Gov. David Ige before joining the state surplus increase.

WSJ: “Conservation Tax-Break Deals Keep moving despite IRS crackdown.”

Bloomberg: “Leading Lawyers Attracted by the beaches and the 4% tax rate in Puerto Rico.

Also Bloomberg: “Musk’s move to Texas Can generate significant tax savings on the Tesla sale.

USA Today: “We kind of fought the taxman and finally found someone to answer the phone.”

The Guardian: British Chancellor and Business Secretary »disagree on windfall tax on oil and gas profits.”

Geocaching is a “global scavenger hunt, as National Geographic puts it, of people using GPS to search for hidden objects.

CORRECTION: An earlier version of this newsletter incorrectly stated the number of House members who signed the letter to Treasury Secretary Janet Yellen regarding foreign tax credit regulations. He was 10.