This article was originally published on Law360 on June 9, 2020, and includes commentary from tax partner and tax controversy group co-founder, Kat Gregor, on the implications of the European Union’s new tax transparency rules, including certain conditions that could trigger disclosure obligations in cross-border situations.

The European Union’s new tax transparency rules involve certain conditions that could trigger disclosure obligations for some surprising cross-border situations, including preexisting transfer pricing arrangements, practitioners said during a webinar on Tuesday.

Common arrangements could unexpectedly get flagged for potential tax avoidance under the latest amendment (2019 Law360 56-102) to the EU’s Directive on Administrative Cooperation, or DAC6, according to Kat Saunders Gregor, a partner at Ropes & Gray LLP.  Specifically, these arrangements could get pulled in under conditions that don’t look at whether the “main benefit” of an arrangement is to gain a tax advantage, she said during a webinar hosted by the American Bar Association’s Section of Taxation.

Instead of using the main benefit test, these conditions — referred to as hallmarks in the legislation — require reporting if the situation is simply flagged as a potential for tax evasion or abuse, without regard to whether it’s tax motivated, according to Gregor. For example, multinational corporate structures that use a single cash management function where there are extensive transfer pricing arrangements could expect to trigger DAC6’s disclosure rules, she said.

Under these broad rules, preexisting arrangements potentially are “going to create a reporting obligation on a going forward basis, even if these were transfer pricing agreements that have been in place for a long time,” Gregor said. Continue Reading EU Disclosure Rule May Flag Surprising Setups, Tax Pros Say

In a recent Bloomberg Law article, benefits and ERISA partner Josh Lichtenstein provides commentary on new U.S. Department of Labor guidance that  allows 401(k) plans to join pension plans in investing in private equity funds.

Please click here to read the full article, which includes additional insights from Josh.

On June 1, 2020, the U.S. Supreme Court ruled in Thole v. U.S. Bank N.A. that participants of defined benefit plans lack standing under Article III of the U.S. Constitution to sue fiduciaries for alleged failures to satisfy their duties under ERISA, if the participants cannot establish that they have experienced individual financial loss or the imminent risk thereof. The Court held in a 5-4 opinion that the plaintiffs did not have a stake sufficient to bring a lawsuit because they had received all of their vested monthly pension benefits to date and had not shown how the alleged mismanagement of the pension plan substantially increased the risk that the plan would be unable to pay their future entitlements. As a practical matter, this should make it harder for plan participants to bring suits of this nature in the future

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U.S. Tax Court proceedings will soon resume, however, they will do so entirely remotely until further notice as a result of the COVID-19 pandemic. On May 29, the Tax Court announced that via Press Release that all proceedings would be conducted remotely, and that proceedings would be available to the public via telephone dial-in. The Tax Court also issued Administrative Order 2020-02 governing remote court proceedings. These guidelines became effective immediately and do not contain a sunset date. They provide that trials will be conducted either via telephone or video, as specified within the notice setting a case for trial. Parties are responsible for ensuring—to the best of their abilities—that they and their witnesses are able to participate in the remote proceedings. The orders likewise adjusted pre-trial filing deadlines.

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Kat Gregor, tax partner and co-founder of the tax controversy group, was recently appointed to Law360’s 2020 Tax Editorial Advisory Board. The purpose of the board, according to the announcement, is “to provide feedback on Law360’s coverage and expert insight on how best to shape future coverage.”

To learn more about Kat and the other elected board members, please click here.

On May 12, 2020, the IRS released proposed regulations (REG-104591) affecting the deductibility of payments made to governments in settlement of alleged violations of law. The proposed regulations interpret Sections 162(f) and 6050X of the Internal Revenue Code of 1986 (the Code), as amended and introduced by the Tax Cuts and Jobs Act (TCJA), respectively. On June 11, 2020, the IRS released minor corrections to the proposed regulations. Sections 162(f) and 6050X changed the requirements for taxpayers to deduct amounts paid to the government pursuant to court-ordered judgments, settlement agreements, non-prosecution agreements, deferred prosecution agreements, and decisions by certain boards/commissions. At a high level, under Section 162(f), to be deductible, such payments must be restitution, remediation, or an amount paid to come into compliance with the laws, and must be identified as such in either the order or agreement (the “identification requirement”). In addition, taxpayers must maintain records substantiating the nature of their payments (the “establishment requirement”).

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