Overview
IRS Provides Guidance on New Tax Benefit for Stock Options and Restricted Stock Units: Today, the IRS issued Notice 2018-97, offering guidance on a tax law change enacted by the Tax Cuts and Jobs Act that allows qualified employees of privately-held corporations to defer paying income tax, for up to five years, on the value of qualified stock options and restricted stock units granted to them by their employers. The notice offers initial guidance taxpayers can rely on until proposed regulations are issued and requests public comment on additional issues that should be addressed in those regulations.
Court of Appeals for the DC Circuit Issues Opinion in US-Swiss Treaty Case: Today, the Court of Appeals for the DC Circuit issued an opinion in Starr International Company v. United States. The plaintiff was a privately-held company that established residence in Switzerland in 2006 and sought to pay a reduced tax rate under the US-Swiss Treaty. Because it did not automatically qualify for treaty benefits, it relied on Article 22(6), a treaty provision allowing for discretionary tax relief. The IRS denied the request, concluding that obtaining treaty benefits was a principal purpose of the plaintiff’s move to Switzerland. The Court of Appeals reversed the decision of the District Court dismissing plaintiff’s tax refund claim as raising a nonjusticiable political question remanded for further proceedings. The Court of Appeals further held that because plaintiff can proceed with its tax refund claim, plaintiff does not have a cause of action under the Administrative Procedure Act.
EU Releases Briefing on Corporate Taxation of a Significant Digital Presence: Today, the European Parliament of the European Union (EU) released a briefing on the recent European Commission proposal that would allow taxation on the basis of digital rather than physical presence linked with the EU for certain digital activities.