Daily Tax Update - August 21, 2014: Silicon Valley Tax Directors Call for Reform to Taxation of Intellectual Property

Silicon Valley Tax Directors Call for Reform to Taxation of Intellectual Property:  The Silicon Valley Tax Directors Group (SVTDG), comprised of 78 representatives from leading high technology companies, called for reform to the US taxation of intellectual property in a letter addressed to Senators Ron Wyden (D-OR) and Orrin Hatch (R-UT), the chairman and ranking member, respectively, of the Senate Finance Committee.  The SVTDG states in the letter that existing tax laws effectively preclude companies with intellectual property abroad from bringing their IP home to the US.  The SVTDG calls for the US to adopt an “IP box” regime, similar to so called “patent box” regimes adopted in several European countries, which provides a lower tax rate on income attributed to IP.  The SVTDG also calls for allowing US corporations to elect to treat a distribution of qualifying IP from a controlled foreign corporation as a dividend eligible for a 100% dividends received deduction, to allow the tax-free transfer of IP held abroad to the US.  The SVTDG believes these measures will promote research and development and job growth in the US, and will actually increase revenues collected by making it more likely that foreign source income attributable to IP will be taxed by the US.

New IRS Appeals Guidelines Focus on Settlement:  At the 2014 IRS Nationwide Tax Forum, Philip A. Oyofo and Matthew McLaughlin, two IRS Appeals team managers, described IRS Appeals policy changes that will take effect September 2 under Appeals Judicial Approach and Culture (AJAC) guidelines.  The Appeals officers said that under the new guidelines “the focus is going to be on settling cases” and that “Appeals won't raise new issues, period.”  The officers also said that, under the guidelines, Appeals will not conduct additional factual investigations but will attempt to settle cases on the basis of facts developed by compliance officers.

Miscellaneous Guidance Released:
Rev. Proc. 2014-49 provides temporary relief from certain requirements under Section 42, relating to the low-income housing credit, for certain individuals who are displaced from their principal residence as a result of a presidentially-declared major disaster and owners of affected housing projects.

Rev. Proc. 2014-50 provides similar temporary relief in the event of a major disaster from certain requirements under Section 142, relating to tax-exempt facility bonds, for issuers of such bonds and operators of affected housing projects.

In the case of recent major disasters, similar relief under Sections 42 and 142 has been granted on a case-by-case basis.

Rev. Rul. 2014-24 modifies the list of group trust retiree benefit plans eligible to participate in Rev. Rul. 81-100 group trusts to include trusts of certain retirement plans qualified only under the Puerto Rico Code and clarifies that assets held by certain separate accounts maintained by insurance companies may be invested in 81-100 group trusts.