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President Trump previously issued an emergency declaration “to provide relief from tax deadlines” in response to the Coronavirus Disease 2019 (COVID-19) pandemic, but without any details. Today the Treasury Department released the details in Treasury Notice 2020-17. The notice can be found here. Details are:

Continue Reading Administration Defers April 15 Tax Payments until July 15

Update: On Wednesday, March 18, the Senate voted (90-8) to approve the Families First Coronavirus Response Act without amendment, and the President signed it into law. Congress and the administration are now referring to the Act as “Phase 2” of its response to the coronavirus emergency. “Phase 1” included $8.3 billion of appropriations toward vaccine development and prevention efforts. Today, the Treasury released its framework for “Phase 3.” The current proposal for Phase 3 would deal with, among other things, direct payments to individual taxpayers, the creation of a small business interruption loan program, and appropriations toward the airline industry and other distressed sectors. Treasury’s Phase 3 framework can be found here. The Senate is expected to begin negotiations on Phase 3 immediately. Ropes & Gray will track these developments and provide additional alerts as information becomes available.

Introduction

On Friday night, March 13, 2020, the House of Representatives passed the Families First Coronavirus Response Act (the “Original Bill”) to bolster the federal government’s response to the coronavirus outbreak and address the severe impact of the coronavirus on Americans’ personal safety and financial security. On Monday evening, March 16, the House passed by unanimous consent a revised version of the bill (the “Revised Bill”).

Continue Reading H.R. 6201 – Families First Coronavirus Response Act, As Amended by House of Representatives March 16, 2020

***This legal development is still in progress. We will update this Alert as the Act makes its way through the legislative process.***

Introduction

On Friday night, March 13, 2020, the House of Representatives passed the Families First Coronavirus Response Act to bolster the federal government’s response to the coronavirus outbreak and address the severe impact of the coronavirus on Americans’ personal safety and financial security.

The bill, which is currently expected to pass the Senate and to be signed by President Trump this week, affects most private employers with fewer than 500 employees and is aimed at mitigating the impact of the coronavirus by providing financial support to those affected by the virus and the efforts to contain the virus’s spread. The new legislation guarantees free coronavirus testing, provides paid emergency leave, enhances the federal unemployment insurance assistance available to states, strengthens food security initiatives, and increases federal Medicaid funding to states. Critically to the employers covered by the law, the leave provisions expand protections under the federal Family and Medical Leave Act and provide for paid sick leave, which in combination will provide paid leave to employees who, among other things, are quarantined per a recommendation of a public official or health professional, who are caring for family members who are quarantined, or who have children that are unable to attend school or day care.

Continue Reading H.R. 6201 – Families First Coronavirus Response Act

 

A year or so ago, I recorded a short video about how tax is becoming an area of focus for investors which support an ESG (environmental, social and governance) agenda. I concluded that there was an opportunity for fund managers to attract investors by embracing this agenda.

Investors now frequently ask fund managers to align themselves with a particular set of principles, such as the tax code of conduct recently adopted by a group of Danish institutional investors. However, it is important for managers to look carefully at what they might be committing themselves to. The Danish code, for example, includes specific prohibition on certain investments in companies on the EU blacklist of non-cooperative jurisdictions, which has recently expanded to include the Cayman Islands.

 

Continue Reading Tax and ESG: Who Sets the Agenda?

In a recent Law360 article, tax controversy counsel Elizabeth Smith, health care partner Jennifer Romig, health care associate Whitney Wadman and tax and benefits law clerk Jenna Grove examine how digital health companies can diagnose sales tax rules.

As digital health technologies and sales tax regimes evolve, digital health companies must evaluate their sales tax collection obligations. Companies may face significant exposure for uncollected sales tax, as the payment obligation shifts to the seller if it fails to collect and remit the tax at the time of the sale.

The authors explain that taxing authorities are becoming increasingly aggressive during sales tax audits, emboldened by the U.S. Supreme Court’s South Dakota v. Wayfair Inc. ruling, in recent state court decisions regarding the taxation of the digital economy, and their own regulatory guidance.

Please click here to read the full article.

In a recent Tax Notes article, tax associate Franziska Hertel provides commentary on the October 2019 IRS guidance that discusses two cryptocurrency hard fork situations: one in which no new currency is transferred to the taxpayer, and one in which the taxpayer receives new coins in an airdrop. As indicated in the article, Franziska recently spoke at the annual International Fiscal Association U.S. branch meeting in Boston on this topic.

Please click here to read Franziska’s insights.

On February 26, 2020, the United States Supreme Court issued a decision in the closely watched Intel Corp. Investment Policy Committee et al. v. Sulyma case, making it more difficult for employers to seek early dismissal of class actions brought by participants in their retirement plans by narrowing the circumstances where a shorter three-year statute of limitations will apply instead of the standard six-year period. The decision may add further momentum to the ongoing wave of fiduciary breach class actions that have already resulted in hundreds of millions of dollars in settlements from plan sponsors. The decision is also noteworthy because it will allow the lower courts to assess the underlying question of whether Intel acted prudently when it decided to include alternative investments (such as hedge funds and private equity funds) in its plans.

Please click here to read the full alert.

  • International Tax Review: Leading Women in Tax Forum: Ropes & Gray is a sponsor of the ITR: Leading Women in Tax Forum on March 3 in New York, New York. Tax partner and tax controversy group co-founder Kat Gregor will speak on a panel on “Use of Dispute Resolution to Resolve Large, Complicated Corporate Tax Disputes,” and tax controversy counsel Elizabeth Smith will moderate this panel. The panel will cover a range of topics, including advanced pricing agreements and the potential advantages of international compliance assurance program, the role of tax treaties in dispute resolutions, correcting for past non-compliance, including through the IRS’ voluntary disclosure program and other amnesty programs.
  • 48th Annual Conference of the USA Branch of the International Fiscal Association: During the IFA USA Annual Conference on February 27-28 in Boston, Massachusetts, tax partner David Saltzman will chair a life science panel, which will explore the evolving U.S. and global tax policy ecosystem impacting innovation in the life science industry. Additionally, tax associate Franziska Hertel will chair a cryptocurrency panel, which will address current tax developments for cryptocurrencies, including valuation and domestic and international tax considerations.
  • The ASIL International Economic Law Interest Group Biennial Conference: Kat Gregor was a panelist on “Navigating the MLI: The New International Tax and Investment Landscape,” and tax controversy associate Ellen Gilley presented a paper entitled “Multilateralism in a Bilateral World: Challenges for Implementing the PPT,” during this conference on February 14-15 in Miami, Florida.
  • The Hague Conference on Private International Law (HCCH Conference): Ellen Gilley presented on the implications of digitization in The Hague, Netherlands on December 11, 2019. Ropes & Gray also sponsored this conference.
  • New England State and Local Tax Forum: Ropes & Gray was a sponsor of the 2019 New England State and Local Tax Forum on November 20, 2019 in Newton, Massachusetts.
  • IBA Conference: The New Era of Taxation: What You Need to Know in a Constantly Changing World: Kat Gregor co-chaired a panel of leading experts on “Hot Topics in US Inbound and Outbound Investments” on November 7, 2019 in Toronto, Canada. The panel discussed the ongoing shifts in the global tax system and addressed possible planning approaches to this new landscape for businesses investing in or from the United States.

 

On January 17, 2020, a federal district court in Washington ordered Microsoft Corporation (“Microsoft”) to produce many documents to the Internal Revenue Service (“IRS”) that Microsoft asserted were privileged. Microsoft had argued that most of the documents were protected by protected by the work product doctrine and the federally authorized tax practitioner privilege set forth in 26 U.S.C. § 7525 (“tax practitioner privilege”), and that a small number of documents were protected by the attorney-client privilege. For the majority of the documents, the court held that none of these protections applied. The court held the work product protection did not apply because there was no active litigation at the time and the primary purpose of the communications was business, not legal. The court held the tax practitioner privilege did not apply to Microsoft’s communications with KPMG LLP (“KPMG”) because the communications fell within the tax shelter exception to the tax practitioner privilege (in § 7525(b)). The court concluded that “a significant purpose, if not the sole purpose, of Microsoft’s transactions was to avoid or evade federal income tax.”

Please click here to read the full article.

The Cayman Islands has been placed on the EU list of non-cooperative tax jurisdictions as a result of a failure to introduce new laws relating to private funds within the necessary timescale. The Cayman Islands government has, however, already contacted EU officials to begin the process of being removed from the EU list, which is expected to be October 2020.

Please click here to read the full alert.