In this episode of Ropes & Gray’s podcast series Disputing Tax, Isabelle Farrar, an associate in the tax controversy group, is joined by Kat Gregor, a tax partner and tax controversy group co-founder, and Elizabeth Smith, counsel in the tax controversy group, to examine some potential areas of focus for IRS enforcement efforts in 2021.

**These legal developments are still in progress. We will update this Alert as the Plan makes its way through the legislative process.***

On Wednesday April 28, 2021, President Joseph R. Biden announced the American Families Plan, designed to expand access to education, child care, and health care, among other initiatives. The White House released a fact sheet outlining the plan, and Biden detailed the plan in an address to Congress.1 The American Families Plan would be funded by increasing tax enforcement on corporations and high-income taxpayers, enforcement of which would be supported by newly enhanced information reporting from financial institutions. The initiatives would also be funded by raising taxes on high-income taxpayers, including (i) increasing the top income tax rate to 39.6% from 37%, (ii) increasing the capital gains rate to 39.6% from 20% for those earning $1 million or more, (iii) eliminating a step-up in basis for gains in excess of $1 million, (iv) eliminating the carried interest loophole, (v) eliminating the special real estate tax break on gains greater than $500,000, (vi) extending the limitation that restricts excess business losses, (vii) and ensuring those making over $400,000 pay the same consistent 3.8% Medicare tax. These proposals are summarized in this Alert.

President Biden has also recently proposed investing $80 billion in the Internal Revenue Service (IRS) for enforcement funding and giving IRS the authority to regulate paid tax preparers.2 The plan did not address expansion of the state and local tax (SALT) deduction, which is currently capped at $10,000. The American Families Plan follows the $2.3 trillion American Jobs Plan and Made in America Tax Plan released at the end of March and is the second part of President Biden’s Build Back Better agenda. (See Ropes & Gray April 6, 2021 Alert.) Continue Reading American Family Plan—Summary of Certain Key Tax Components

IFA USA New England Spring Symposium: Lessons from the Coca-Cola Co. U.S. Tax Court Decision. Elizabeth Smith is a panelist during the IFA USA New England Symposium on May 20, 2021. The one day symposium will focus on “Lessons from the Coca-Cola Co. U.S. Tax Court Decision,” during which Elizabeth will examine the the litigation strategy and the implications of the decision.

President Biden’s Tax Plan: Beyond the First 100 Days. Elizabeth Smith and tax partner David Saltzman will participate in a Boston Bar Association (BBA) webinar titled “President Biden’s Tax Plan: Beyond the First 100 Days” on May 19, 2021. The webinar will discuss the substantive aspects of the tax changes in the Rescue Plan, proposed tax changes that we are likely to see enacted in both parts of the Recovery Plan, and the various legislative obstacles to major tax reform that President Biden will face beyond the first 100 days. In addition to changes at the federal level, the webinar will also address how these changes will affect taxpayers in states that may or may not conform to the Internal Revenue Code and how those aspects of the Rescue Plan and the Recovery Plan that are likely to result in increased IRS enforcement and tax controversy.

Tax Open Forum Discussion: what next for Pillar One?: Kat Gregor spoke on an IBA webinar on March 30, 2021, which focused on taking a look at Pillar one within the OECD/G-20 Inclusive Framework. The webinar discussed where we are on Pillar One; talked through some of the roadblocks and considered what the potential solutions might look like.

 ABA/IBA/IFA Virtual 21st Annual U.S. and Europe Tax Practice Trends Conference: Kat Gregor was co-chair of the co-organized ABA/IBA/IFA Virtual 21st Annual U.S. and Europe Tax Practice Trends Conference, taking place March 22-25, 2021. The conference focused on practical tax practice trends for multinational corporations and their international advisors as well as provide insight into how government tax officials might view the international tax landscape in light of international developments that affect corporate taxpayers. Kat led a panel looking at recent global transfer pricing developments.  Tax associate Franziska Hertel also spoke on “Responding to a Mess(ier) Crypto Tax Landscape” panel.

71st Virtual Midyear Conference: Kat Gregor was a panelist on “Preserving Privilege in the Virtual World” during the virtual 71st TEI Midyear Meeting on March 23, 2021.

International Tax Disputes, Joint Webinar with A&L Goodbody.  Kat Gregor  jointly hosted a webinar on international tax disputes with tax partners Amelia O’Beirne and Paul Fahy from A&L Goodbody on March 3, 2021. The webinar discussed the Irish and U.S. tax disputes landscapes with a particular focus on transfer pricing related disputes and competent authority procedures.

Kat Gregor, tax partner and co-founder of the tax controversy group, was recently appointed to Law360’s 2021 Tax Authority International Editorial Advisory Board. In addition, Elizabeth Smith, tax controversy counsel, was recently appointed to Law360’s 2021 Tax Authority State & Local Editorial Advisory Board. The purpose of these boards, according to the announcements, 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, and to learn more about Elizabeth and the other elected board members, please click here.

In an International Bar Association (IBA) article, tax partner and tax controversy group co-founder Kat Gregor provides insight on the U.S. implications of the Organisation for Economic Cooperation and Development’s public consultation on its proposals to address the tax challenges of digitalization, blueprints for which were published in October 2020. Please click here to read the article.

In a previous Disputing Tax posting, we highlighted the IBA Taxes Committee comments to the Pillar One proposal, for which Kat and tax controversy counsel Elizabeth Smith participated as part of an IBA working group.

 

 

In this third episode in a series of Ropes & Gray podcasts addressing emerging issues for fiduciaries of 401(k) and 403(b) plans to consider as part of their litigation risk management strategy, litigation & enforcement partner Amy Roy and benefits consultant Aneisha Worrell discuss some key takeaways from Anderson v. Intel Corp. Investment Policy Committee, the first case to date to address the prudence question under ERISA of including private equity and hedge fund investments on a defined contribution plan menu.

Following a ruling by the U.S. Supreme Court, former President Donald Trump will have to face an investigation in New York. María González Calvet, litigation & enforcement partner and former United States federal prosecutor, details the scope of this decision in which Trump, as a U.S. citizen, must provide his tax returns to New York state prosecutors. Trump has for years waged a fierce legal battle through his attorneys to avoid scrutiny of his financial information.

To watch the interview,  click here.

Connecticut has passed a bill that provides tax relief for 2020 only for employees working remotely who would have potentially had their wages taxed by two states (H.B. 6516) The bill provides particular relief to Connecticut residents who are required to pay income taxes for the 2020 tax year to other states that use some version of the “convenience of the employer” rule, for example, providing relief to Connecticut residents who telecommuted to Massachusetts and New York-based employers.

Please click here to read the full article.