Overview
IRS Issues Interim Guidance on Section 4960: Notice 2019-09, issued today, provides interim guidance on the provisions of section 4960, which was added by the 2017 Tax Cuts and Jobs Act. Section 4960 provides that remuneration in excess of $1 million and excess parachute payments paid by an applicable tax-exempt organization to a covered employee are subject to a 21% excise tax. This notice provides interim guidance defining (1) applicable tax-exempt organization, (2) excess remuneration, (3) covered employee, and (4) excess parachute payment. The interim guidance is intended to assist taxpayers in applying section 4960 regulations that are being developed. The Treasury Department and the IRS intend to issue proposed regulations that will incorporate the guidance provided in the notice. Any future guidance under section 4960 will be prospective and will not apply to taxable years beginning before the issuance of that guidance. Taxpayers may base their positions upon a good faith, reasonable interpretation of the statute, including consideration of the legislative history. The positions reflected in the notice are regarded as constituting a good faith, reasonable interpretation of the statute. Whether a taxpayer’s position that is inconsistent with the notice constitutes a good faith, reasonable interpretation of the statute generally will be determined based upon all of the relevant facts and circumstances. However, the notice describes certain positions that the Treasury Department and the IRS have concluded are not consistent with a good faith, reasonable interpretation of the statutory language. The Treasury Department and the IRS intend to embody these positions as part of the forthcoming proposed regulations.
EU Rules to Limit Corporate Tax Avoidance Take Effect January 1: Starting January 1, 2019, all EU member nations will apply new anti-abuse measures that target the main forms of tax avoidance practiced by large multinational corporations. The new rules, which were initially proposed in 2016, include:
- A tax on profits moved to low-tax countries where the company does not have any genuine economic activity (controlled foreign company rules)
- Limits on the amount of net interest expenses that a company can deduct from its taxable income (interest limitation rules)
- A general anti-abuse rule to allow member nations to address tax avoidance schemes in cases where other anti-avoidance provisions cannot be applied
Euro Turns 20: The EU's common currency, the euro, celebrates its 20th birthday on January 1.
TIGTA Issues Report on Reducing Tax-Related Identity Theft: Today the Treasury Inspector General for Tax Administration (TIGTA) released its audit report titled Partnership with State and Industry Leaders Is a Key Focus in Further Reducing Tax-Related Identity Theft. TIGTA recommended that the IRS revise identity theft detection filters to eliminate specific dollar tolerances.