Daily Tax Update - September 4, 2014: DC Circuit Court Agrees to Rehear ACA Tax Subsidies Case

DC Circuit Court Agrees to Rehear ACA Tax Subsidies Case:  The DC Circuit Court agreed today to rehear Halbig v. Burwell, a case over tax subsidies in the Affordable Care Act.  In a 2-1 decision issued July 22, 2014, a panel of the DC Circuit found that the federal government lacks the authority to provide consumers tax subsidies in health insurance exchanges not run by the states.  That same day, a ruling by the US Court of Appeals for the 4th Circuit in King v. Burwell upheld the federal government’s ability to distribute subsidies.  The decision to rehear Halbig v. Burwell en banc makes it possible that the full DC Circuit will reverse the July 22 ruling, thus eliminating the split with the 4th Circuit and making it less likely that the US Supreme Court will review the issue.    

Oral arguments have been set for December 17, 2014. 

EU Court Rules Spain Can’t Charge Higher Inheritance Tax to Foreigners:  On September 3, the European Court of Justice ruled that Spanish legislation that charges higher inheritance taxes to foreigners and on foreign property than it charges Spanish residents is discriminatory.  Generally, regional Spanish laws waive high inheritance taxes where the donor and beneficiary are Spanish residents and when the property inherited is in Spain.  The national tax rate applies, frequently at a much higher rate, to non-Spanish residents.  The Court ruled that such legislation creates unlawful restrictions on capital flows across member state borders. 

Miscellaneous Guidance Released:
In Revenue Procedure 2014-53, the IRS provides the domestic asset/liability percentages and domestic investment yields needed by foreign life insurance companies and foreign property and liability insurance companies to compute their minimum effectively connected net investment income under Section 842(b) of the Internal Revenue Code for taxable years beginning after December 31, 2012.  The revenue procedure will be published in Internal Revenue Bulletin 2014-19 on Sept. 22.