Overview
Bloomberg Tax quoted Lisa Zarlenga in a September 1 article titled “Treasury’s Move in Dividend Deduction Rules May Spur Legal Fights.” The article discusses legal questions stemming from Treasury’s finalized rules that limit a deduction and a tax exception taxpayers can get on certain foreign dividends. Treasury defended its authority when it issued the final rules, arguing that they are necessary and appropriate and properly honor Congress’s intent for the deduction under tax code Section 245A, as well as for a tax exception under Section 954(c)(6). But critics say a court may end up tossing out the rules for going beyond the boundaries of the rule-writing authority Congress gave Treasury in the tax code.
Zarlenga, former tax legislative counsel at the Treasury Department, says the question of Treasury’s authority isn’t an easy one to answer. “A court might say, well, this was intended to prevent abuse and Treasury has the authority to do that, or a court could look at the plain language and say, well, Congress knew what it was doing” and so “we’re going to hold Congress to that.”
The full article can be read at Bloomberg Tax (subscription required).
