Summer Newsletter 2020

In response to the Coronavirus (COVID-19), the tax controversy group has put together a chart detailing tax controversy-related developments as they arise. Please refer to the following list of tax and tax controversy-related alerts and original articles for additional insight and guidance:

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

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

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.