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:

On July 27, 2020, the Senate Republicans proposed the Health, Economic Assistance, Liability Protection and Schools Act (HEALS Act) in response to the House passing the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act). The HEALS Act is a combination of eight individually proposed bills from the Senate. Both the HEALS Act and

Mornings are different, all around the country — and world.

Due to travel limitations imposed in response to the COVID-19 crisis, instead of taking trains, buses and cars to commute to work, people are going to work at home. This new work location has created concerns for both businesses and individuals as to what authority

In two decisions issued on July 9, 2020, the Supreme Court addressed challenges to several subpoenas that sought the President’s financial records, including tax returns. In a case concerning a subpoena issued by a state district attorney’s office, the Court held that a sitting president is not categorically immune from issuance of a subpoena in

Update: On July 15, the Internal Revenue Service announced in news release IR-2020-158 that taxpayers who have experienced delays with the process of Form 7200, Advance Payment of Employer Credits Due To COVID-19 will receive letters. If the IRS rejected taxpayer’s Form 7200 or made a change to the requested amount of advance payment due to a computation error, the taxpayer will receive letter 6312 explaining the reason for rejection or list the new payment amount if the old amount was due to a computation error. The taxpayer will receive letter 6313 if the IRS needs written verification of the taxpayer’s current mailing address in order for the IRS to process the taxpayer’s Form 7200.

Update: On July 8, the Internal Revenue Service issued Notice 2020-54 as guidance for employers regarding the requirement to report amounts of qualified sick and family leave wages paid to employees under the Families First Coronavirus Response Act. Under Notice 2020-54, employers will be required to report payment to employees either on Box 14 of Form W-2, or in a separate statement. The notice also provides employers with language to use on Form W-2 or in the statement to employees. This reporting requirement is imposed to assist employees who are self-employed to properly claim their qualified sick and family leave equivalent credits.

On Friday, March 20, 2020, the Treasury Department, Internal Revenue Service, and the Department of Labor issued primary guidance on the Families First Coronavirus Response Act (the Act) (commonly referred to as Phase 2) in Notice IR-2020-57 (the Notice). Please see alert for discussion of two new important tax details provided in the Notice regarding the Act’s employer tax credits, and for additional discussion of the Act, generally. The two new important tax details are (1) that employers can be “paid” by retaining certain funds otherwise due to the government (including income tax withholding from ALL employees), and (2) that rebate requests will be processed by IRS within two weeks or less.
Continue Reading Published Guidance on Implementation of Families First Coronavirus Response Act

In this episode of Ropes & Gray’s podcast series, Disputing Tax, Pascal Mayer, a senior attorney in the employment, executive compensation & employee benefits group, is joined by Kat Gregor and Loretta Richard, partners in the tax, employment & benefits practice and co-founders of the tax controversy group, to discuss the payroll tax provisions

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), commonly referred to as Phase 3 of the federal government’s response to the coronavirus outbreak, was enacted on March 27, 2020. See Ropes & Gray Alerts on CARES Act, and certain key tax provisions of CARES Act. The CARES Act created opportunities for

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