Tax News & Views Corporate AMT Roundup with Benjamin Franklin ... and Popeye?

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Corporate AMT

Corporate AMT Hearing Focuses on Partnership Compliance Burdens – Chandra Wallace, Tax Notes ($):

Taxpayers and their advisers emphasized the burdens on smaller and multitiered partnerships to comply with partnership distributive share provisions in proposed regs implementing the corporate alternative minimum tax.

At a January 16 IRS hearing on the proposed regulations (REG-112129-23), testimony underlined a criticism raised by several tax professionals since the proposal was released in eptember 2024: that the government’s choice of a “bottom-up” approach to determining partnership distributive shares imposes a significant administrative burden on far more partnerships than will fall within the scope of the tax.

Trump’s Tax Cuts

What Did the Trump Tax Cuts Do? Nobody Really Knows. – Andrew Duehren, New York Times:

Seven years ago, when Republicans passed the most significant overhaul of the tax code in a generation, they were sure the law would supercharge investment, raise wages and shift the American economy into a higher gear.
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A pandemic and a surge in inflation convulsed the global economy not long after the law passed in 2017, scrambling the data that analysts would have typically relied on to draw conclusions about whether the tax cuts helped the economy grow the way Republicans had promised.

As a result, policymakers in Washington are now relying on only a partial understanding of the law’s past as they weigh committing roughly $5 trillion toward continuing it.

IRS Pick - Billy Long

Trump IRS Pick Has Ties to Group That Pushed Dubious Tax Credits – Erin Schilling and Chris Cioffi, Bloomberg ($):

A consulting group that IRS commissioner pick Billy Long worked with to promote the troubled employee retention credit has been promoting other tax credits that the Treasury Department says don’t exist, according to marketing documents and interviews with people who were pitched.

Long already faces scrutiny from Democrats for his work with Lifetime Advisors, a tax consulting firm based in Wisconsin, to promote the pandemic-era ERC, which led to so many questionable claims that the IRS temporarily paused processing new claims in 2023.

Treasury Pick - Scott Bessent

Trump's Treasury Pick Calls for Permanently Extending TCJA – Asha Glover, Law360 ($):

Congress must permanently extend the Tax Cuts and Jobs Act provisions set to expire this year to prevent the largest tax increase in history, Scott Bessent, President-elect Donald Trump's pick for Treasury secretary, told the Senate Finance Committee on Thursday.
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"We must make permanent the 2017 Tax Cuts and Jobs Act and implement new pro-growth policies to reduce the tax burden on American manufacturers, service workers and seniors," Bessent said. He said that he has spoken with several Finance Committee members and House leaders about how best to approach achieving those goals.

Trump’s Treasury Pick Defends Plans to Cut Taxes and Raise Tariffs – Alan Rappeport and Andrew Duehren, New York Times:

Scott Bessent, President-elect Donald J. Trump’s Treasury secretary pick, defended tax cuts and tariff increases on Thursday, rebutting accusations from Democrats at his confirmation hearing that Mr. Trump’s policies would enrich the wealthiest Americans and hurt working families.

The clashes over the shifting direction of economic policy in the United States represented a preview of legislative fights to come this year as Mr. Trump prepares to enact blanket tariffs on imports and Republicans in Congress push to extend the tax cuts that they passed in 2017.

Mr. Bessent outlined a sharp break with the Biden administration during testimony before the Senate Finance Committee. He signaled a more confrontational approach with China and an intention to abandon a global tax agreement that the current Treasury Secretary, Janet L. Yellen, reached with more than 100 nations.

Treasury Secretary Pick Scott Bessent Says Trump Could Bring ‘New Economic Golden Age’ – Brian Schwartz and Richard Rubin, Wall Street Journal:

Scott Bessent defended tariffs and argued for tax-cut extensions during his confirmation hearing as President-elect Donald Trump’s pick for Treasury secretary in the Senate Finance Committee.

No Democrats committed to support him on Thursday, and they expressed skepticism at some of his testimony. Republicans praised Bessent and in the GOP-controlled Senate, the investor is on track to be confirmed soon after Trump is inaugurated.

Trump has “a generational opportunity to unleash a new economic golden age that will create more jobs, wealth and prosperity for all Americans,” Bessent said.

Bessent Rebuffs Accusations of Improper Tax Returns – Alexander Rifaat and Cady Stanton, Tax Notes ($):

Scott Bessent, President-elect Trump’s pick to head Treasury, defended his use of a partnership structure that allowed him to avoid nearly $1 million in Medicare taxes and pledged to pay the IRS should the law be changed.

At his confirmation hearing before the Senate Finance Committee January 16, Bessent was asked by Sen. Sheldon Whitehouse, D-R.I., about revelations that he used the limited partner exception under section 1402(a)(13) to avoid paying Self-Employment Contributions Act taxes for the years 2021 to 2023. Bessent responded that the issue is in “continuous litigation” and that he would wait to take further action “until the case makes its way through the courts.”

While the exemption is popular among hedge fund managers such as Bessent, the interpretation of who the provisions apply to has been contentious, with the IRS taking a stricter view.

Bessent Commits to Keeping Direct File This Filing Season – Tyrah Burris, Benjamin Valdez, and Cady Stanton, Tax Notes ($). President-elect Trump’s pick to lead the Treasury Department, Scott Bessent, assured the Senate Finance Committee that Direct File will be an option for taxpayers who choose to use it for the upcoming tax filing season.

Loper Bright

Tax Division Appellate Chief Sees Loper Bright as Narrow Rule – Nathan J. Richman, Tax Notes ($):

The Justice Department Tax Division’s appellate section has been dealing with an influx of cases invoking new precedent on regulatory deference, but taxpayers are citing it without challenging regs, according to Francesca Ugolini, the section’s chief.

“This is definitely a very active area for us,” Ugolini said January 16 at a conference hosted by the District of Columbia Bar Taxation Community.

Energy Credits

IRS Updates Safe Harbor Guidance for Bonus Energy Tax Credit – Erin Schilling, Bloomberg ($):

The IRS Thursday released an updated safe harbor for the domestic content bonus credit.

Notice 2025-08 updates the May 2024 elective safe harbor for the credit. The safe harbor allows developers to use a default cost percentage calculation determined by the Department of Energy instead of getting that information from suppliers who are reluctant to share that sensitive business information with customers.

Safe Harbor for Domestic Content Bonus Credit Gets an Upgrade – Mary Katherine Browne, Tax Notes ($):

The government has updated its guidance on Department of Energy default cost determinations for the domestic content bonus credit and alternative percentages for projects with domestically produced solar wafers.

Notice 2025-8, 2025-8 IRB 1, issued January 16, updates the safe harbor established in Notice 2024-41, 2024-24 IRB 1615, that allows clean energy developers to rely on default costs provided by the DOE to determine eligibility for the domestic content credit bonus.

Treasury Updates Bonus Energy Tax Credit Safe Harbors – Anna Scott Farrell, Law 360 ($):

The U.S. Treasury Department provided updates Thursday to safe harbors that clean energy project developers can use to qualify for bonus tax credits for domestically sourcing steel and aluminum parts in response to new trade restrictions on solar products from China by President Joe Biden's administration.

Notice 2025-08 builds on safe harbors published in May that provided developers the option of relying on government-provided cost percentages to determine a project's eligibility for bonus credits for meeting the domestic content requirements rather than obtaining cost information from manufacturers.

IRS Explains Changing Elective Payment Accounting Periods – Jack McLoone, Law 360 ($):

The IRS provided procedures Thursday for certain entities — including Native American tribes and state governments — that aren't required to file federal income tax returns but have chosen to make elective payments and want to change their taxable years to match their accounting periods.

In-scope entities looking to change their accounting period should timely file a Form 990-T for the first effective year by the 15th day of the fifth month following the close of the short period, the Internal Revenue Service said in Revenue Procedure 2025-6. The form should indicate the change of accounting period and include a statement describing both the current and proposed periods, the agency said.

OECD Abusive Transactions List

OECD To Release List of Abusive Transactions Under Pillar 2 – Natalie Olivo, Law 360 ($):

The Organization for Economic Cooperation and Development is putting together a list of intercompany transactions that may raise red flags as attempts to undermine an international minimum tax agreement known as Pillar Two, an OECD official said Thursday.

The concerning transactions that will appear on this list include situations of "disappearing income" in the context of Pillar Two, according to Jeff Mitchell, a senior adviser at the Paris-based OECD. Negotiators at the OECD are working on the list as part of a guidance project regarding "integrity measures," he said, speaking at the D.C. Bar Tax Conference, held in Washington, D.C., and online.

OECD to Release Global Tax Rules on Abusive Transactions – Lauren Vella, Bloomberg ($):

The OECD is planning to release additional administrative guidance aimed at curbing related company transactions that seek to skirt exposure to the 15% global minimum tax.

The organization has been working to put together a list of transactions and arrangements that are “concerning,” Jeff Mitchell, a senior adviser at the Organization for Economic Cooperation and Development said Thursday at the 2025 DC Bar tax conference.

The list falls into three main categories, he said, including “disappearing income.”

American Express

AmEx Inks $230M Deal Over DOJ, Fed Small Biz Sales Claims – Sarah Jarvis, Law 360 ($). American Express has signed a nonprosecution agreement and said Thursday it will pay about $230 million to end investigations by the Department of Justice and the Federal Reserve into the financial services company's previous sales practices for some small business customers in the U.S.

Hot Assets

IRS Attorney Questions Rawat Decision on Hot Asset Gain – Kristen A. Parillo, Tax Notes ($). The D.C. Circuit’s holding that a foreign partner’s sale of a partnership interest with hot assets wasn’t subject to U.S. tax seems inconsistent with the broad scope of the hot asset rules, an IRS attorney said.

Cloud Regs

Cloud Regs’ Predominant Character Rule Shouldn’t Require New Data – Andrew Velarde, Tax Notes ($):

Final regs on digital transactions and cloud characterization should not require taxpayers to compile new data to meet the standards of the predominant character rule, according to officials.

The government released final (T.D. 10022) regs on the characterization of digital content and cloud transactions on January 10. Responding to taxpayer calls to reduce administrative burdens and increase flexibility, the regs eliminated a de minimis rule and replaced it with a predominant character rule for transactions with multiple elements. The change has been praised by practitioners.

Spinoff Private Letter Rulings

IRS Incorporating Proposed Spin Regs Into Letter Rulings – Caitlin Mullaney, Tax Notes ($):

The IRS said it plans to help taxpayers keep their letter ruling requests on the fast track even if they want to rely on the proposed spinoff regulations.

“Just because you’re relying on the proposed regs wouldn’t necessarily mean you’d fall out of fast track. In fact, we’d want to keep you in fast track,” said Mark Schneider, IRS associate chief counsel (corporate), at a January 16 conference hosted by the District of Columbia Bar Taxation Community.

IRS to Give Extra Time for Requests Related to Spin-off Rules – Rebecca Chen, Bloomberg ($):

Taxpayers who have asked the IRS for private letter rulings about transactions related to corporate spin-offs will get 21 days to modify those outstanding requests to take into account recently proposed rules.

IRS Associate Chief Counsel (Corporate) Mark Schneider said Thursday during D.C. Bar Tax Conference that taxpayers can update pending requests for guidance from the agency regarding spin-off transactions within 21 days from filing to take into consideration proposed corporation transaction regulations released on Monday.

GILTI Avoidance Memo

IRS Looks to Assuage Fears Over Reach of GILTI Avoidance Memo – Andrew Velarde, Tax Notes ($):

An IRS memorandum regarding the global intangible low-taxed income provision that curtails tax benefits arising from a check-the-box election may not be as far-reaching as some practitioners fear.

On January 3 the IRS released ILM 202501008, which focuses on the application of section 269 and acquisitions made to evade or avoid income tax. In the memo, section 269 is used to disallow benefits in a transaction through either a disallowance of a section 898(c)(2) election or through allocation of gap income to an upper-tier controlled foreign corporation.

Final Donor-Advised Fund Regs

Timing of Final Donor-Advised Fund Regs Remains a Guess – Fred Stokeld, Tax Notes ($). Changing priorities with a new administration and other considerations could affect when final regulations on donor-advised funds are released, according to the IRS.

DOJ Tax Division

DOJ Tax Chief Touts Winning Court Record on Appeals – Stephen K. Cooper, Law 360 ($):

The U.S. Department of Justice's Tax Division won an overwhelming majority of appeals in tax cases last year by prioritizing strong legal arguments in disputes that had the potential to significantly affect federal tax administration, the head of the division said Thursday.

Francesca Ugolini, chief of the DOJ's Tax Division, said in the last fiscal year, the government prevailed in 94% of appeals brought by taxpayers and had an unexpected success rate of 75% for its own appeals.

In the Courts

SCOTUSblog Publisher Tom Goldstein Indicted in Tax Case – Phillip Bantz, Law 360 ($):

Tom Goldstein, a publisher of SCOTUSblog and one of the most experienced U.S. Supreme Court lawyers in the country, was indicted Thursday in Maryland federal court on charges he schemed to evade paying taxes for years and used funds from his boutique law firm to cover gambling debts.

The 22-count indictment — which describes Goldstein as an "ultrahigh-stakes poker player" whose games involved "stakes totaling millions, and even tens of millions of dollars" — alleges that between 2016 and 2022 he carried out a scheme to "evade the assessment of taxes, file false tax returns and fail to pay his tax obligations when they were due."

Atty Gets 5-Year NJ Suspension After Tax Fraud Conviction – George Woolston, Law 360 ($). A Philadelphia-based personal injury attorney convicted for not paying income tax on more than $8 million in revenue he earned and for failing to pay almost $60,000 in payroll taxes received a five-year suspension from New Jersey's Supreme Court but will keep his law license in the state.

Lawyer's Failure to File Tax Returns Sinks Appeal for Compromise – John Woolley, Bloomberg ($). The IRS Office of Appeals rightly sustained a proposed levy against a tax-delinquent attorney because his failure to file returns made him ineligible for collection alternatives, the Third Circuit said Thursday.

Tax Court's 90-Day Deadline Is Not Fixed, 6th Circ. Told – Anna Scott Farrell, Law 360 ($). A woman who missed the 90-day deadline for challenging her liabilities in the U.S. Tax Court told the Sixth Circuit on Thursday that the Internal Revenue Service has wrongly argued that case law proves the deadline is set in stone.

Taxpayer Appeals Ruling on Business Shared with Late Ex-Spouse – Tristan Navera, Bloomberg ($). A woman is appealing a Tax Court ruling that she was an active member of a real estate business with her late ex-husband, and must bear some of the tax burdens for it.

Tax Court Denies Late Pass for Identity Theft – Anna Scott Farrell, Law 360 ($). A California couple cannot challenge an Internal Revenue Service decision to levy their state tax refund because they missed the deadline for filing a petition by four years, the U.S. Tax Court said Thursday, rejecting their request for an extension for dealing with identity theft.

Tax Court Rejects Explanation for Unreported Wages – Anna Scott Farrell, Law 360 ($). A woman owes taxes on nearly $19,000 of unreported income she said she reported on a gift tax return, the U.S. Tax Court ruled Thursday, rejecting her argument that wages reported as gifts would not incur taxes.

What Day is it?

Today is Benjamin Franklin Day. It is also Popeye Day. I hope the two aren’t related.

Tax News & Views Corporate AMT Roundup with Benjamin Franklin ... and Popeye?

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