A recent Tax Notes article covers a Women of IFA Network International Fiscal Association USA (WIN-IFA) webinar that examined the details of the IRS’s latest compliance campaign on financial services entities engaged in a U.S. trade or business. The article includes insights from Kat Gregor, tax partner and tax controversy group co-founder. To read the full article including Kat’s insights, please click here.
Fraudulent tax refunds issued as a result of identity theft occur when an individual steals a victim’s personally identifiable information (PII), such as a Social Security number (SSN), and files a tax return claiming to be the victim. More than 89,000 Americans filed complaints with the Federal Trade Commission (FTC) reporting tax fraud linked to identity theft in 2020. Similarly, businesses may also fall victim to tax fraud, where an individual steals a business’s employer identification number (EIN) to file fraudulent returns. In both scenarios, the victims usually discover they have fallen victim to such fraud when their tax returns are rejected, or when the business receives notice about Forms W-2 they didn’t file with the Social Security Administration or notices for balances due to the Internal Revenue Service (IRS) that are not owed. Most frequently, neither businesses nor individuals will have any reliable information as to how their information has been exposed. The IRS has noted such tax fraud tends to increase during tax season and time of crisis, and cybercriminals have undeniably taken advantage of the COVID-19 pandemic to unleash an unprecedented number of tax fraud schemes to steal information from taxpayers.
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In this sixth episode of our Ropes & Gray podcast series addressing emerging issues for fiduciaries of 401(k) and 403(b) plans to consider as part of their litigation risk management strategy, Doug Hallward-Driemeier, chair of Ropes & Gray’s appellate and Supreme Court practice, and Josh Lichtenstein, a benefits partner and head of the ERISA fiduciary practice, discuss the Supreme Court’s decision to hear the Northwestern University retirement plan case next term, which will examine what the applicable pleading standard should be for bringing a claim of fiduciary imprudence in violation of ERISA in connection with the management of a defined contribution plan. The podcast also includes an update on the DOL’s cybersecurity guidance.
On Thursday, June 24, 2021, President Joseph R. Biden announced support for a $1.2 trillion Bipartisan Infrastructure Framework (“Infrastructure Framework”), created by a bipartisan coalition of 21 senators, including eleven Republicans, nine Democrats, and one independent. The White House released a fact sheet outlining the Infrastructure Framework. The Infrastructure Framework focuses on traditional infrastructure improvements, with the largest item for roads, bridges, and other major projects. The Infrastructure Framework does not contain any of the tax increases proposed by the American Jobs Plan or American Families Plan (see Ropes & Gray American Jobs Plan Alert and American Family Plan Alert). The Infrastructure Framework does rely on funding achieved by increased IRS enforcement to reduce the tax gap, along with other sources of funding.
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In this fifth episode of our Ropes & Gray podcast series addressing emerging issues for fiduciaries of 401(k) and 403(b) plans to consider as part of their litigation risk management strategy, David Kirchner and Jack Eckart, both from our benefits consulting group, discuss pooled employer plans (or PEPs). PEPs allow employers to join a group retirement plan that is administered by third-party service providers who will assume the majority of the administrative and investment fiduciary responsibilities (and risks) of managing a defined contribution retirement plan. While the marketplace is just beginning to take shape, PEPs may potentially be an attractive option for small and larger employers, as well as private equity sponsors that oversee plans of multiple companies across their portfolio.
In Bloomberg Tax, tax associates Isabelle Farrar, Alec Oveis, Phillip Popkin, and Joshua Thomas evaluate new IRS guidance regarding employee retention credits which are included in various legislative pandemic relief packages. The tax attorneys summarize the IRS notices, explaining guidance on how businesses can simultaneously take advantage of both Paycheck Protection Program (PPP) loans and the employee retention credit (ERC) program.
The Treasury Department issued three notices in March and April 2021 regarding employee retention credits.
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On June 10, 2021, the IRS’s Large Business and International Division (“LB&I”) announced a broad compliance campaign targeting “financial service entities engaged in a U.S. trade or business.” Through issue-based audits, the LB&I campaign will examine “whether foreign investors were subject to U.S. tax on effectively connected income from lending transactions engaged in through a U.S. trade or business.” The campaign’s description explains that there is a safe harbor rule under Section 864(b)(2) of the Internal Revenue Code (the “Code”) for foreign investors who only trade stocks and securities for their own accounts and are not engaged in a U.S. trade or business. That safe harbor is unavailable for dealers in stocks or securities, including entities engaged in a lending business, or to foreign investors in partnerships engaged in these activities.
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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.
Litigation & enforcement partner Dan Ward, benefits partner Josh Lichtenstein, and benefits consulting principal David Kirchner co-hosted a webinar on May 25 focused on the recent wave of retirement plan litigation focused on not-for-profits and how to mitigate risk for employers and plan sponsors. Plaintiffs’ firms are aggressively targeting 403(b)/401(k) retirement plan sponsors in a wave of lawsuits, alleging that record-keepers and mutual funds are overcharging fees to plan participants; a lack of prescribed process and documentation of the plans’ fund selection; and a lack of cybersecurity protection of plan participant accounts. Plan sponsors must understand and manage these risks to ensure they are taking the proper steps to follow good fiduciary governance practices. The webinar featured a discussion on the closely watched cases brought against 403(b)/401(k) plans and not-for-profit organizations. Panelists examined some of the background and unique issues that 403(b) plans face, the current litigation landscape and potential vulnerabilities for plan sponsors, and the steps plan sponsors should be considering to help mitigate and protect themselves against these potential risks. Attendees included nationwide general counsel and benefits executives from colleges and universities, health care institutions and other non-profit organizations. A link to the initial firm posting is here.
The U.S. Department of Treasury’s recent tax compliance proposals include measures that would ramp up reporting for large cryptocurrency transactions, likely streamlining tax enforcement around digital assets. Tax partner Kat Gregor discusses the proposals in a recent Law360 article. Please click here to read the full article.