Daily Tax Update - July 29, 2015: Reps. Boustany and Neal Release Patent Box Proposal

Reps. Boustany and Neal Release Patent Box Proposal:  Reps. Charles W. Boustany, Jr. (R-LA) and Richard E. Neal (D-MA) released a discussion draft today of The Innovation Promotion Act of 2015.  The draft legislation would allow for a corporation to deduct 71% of the lesser of innovation box profits derived from qualifying intellectual property or the corporation’s taxable income.  A 71% deduction would translate into an effective tax rate of 10.15% on all innovation box profits.

Statute of Limitations Not Extended by Fraudulent Intent of Attorney/Promoter Acting as Unauthorized Agent of Taxpayer/Client:  In BASR Partnership v. United States, the United States Court of Appeals for the Federal Circuit held that the suspension of the three-year statute of limitation to assess tax in section 6501(c)(1) for fraud does not apply when the only intent to evade tax is held by an attorney/promoter of the taxpayer where the attorney/promoter’s actions were not authorized by the taxpayer/client.  The court stressed:  “Importantly, we need not decide whether the term “taxpayer,” as used in § 6501(c)(1), can be interpreted to encompass the actions of a taxpayer’s authorized agents.  The government does not allege—nor under the undisputed facts could it allege—that Mayer acted as an authorized agent of BASR or the Pettinatis in connection with the filing of the tax returns at issue here.”