Talking Tax

The re-election of Donald Trump and Republican sweep in Congress makes an extension of the 2017 GOP tax cuts more likely, but there will be hurdles.

Republicans want to use a fast-track process to move legislation—but that maneuvering comes with various rules and procedures.

Meanwhile, senators in the party elected John Thune (R-S.D.), a long-time member of the Finance Committee, to become majority leader in January, succeeding Sen. Mitch McConnell (R-Ky.) Thune's experience on the Finance panel when the law known as the Tax Cuts and Jobs Act was crafted could help smooth the process.

On this episode of Talking Tax, Bloomberg Tax Deputy Team Leader Kim Dixon and reporter Zach C. Cohen discuss the new GOP Senate leader and how the fast-track process known as reconciliation could play out when Republicans take power in Washington next year.

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The IRS is winning more cases in the US Tax Court over companies' valuation of intangible assets, such as patents and trademarks, through transfer pricing.

The wins have caught the attention of companies and practitioners as they mull the growing risks of transfer pricing, which governs transactions between related companies that are part of the same multinational group.

Disputes between the IRS and companies such as Coca-Cola and 3M have showcased the agency's newfound ability to audit their positions and win in Tax Court when challenged. Both cases are being appealed.

In addition, a new IRS policy to assess more penalties when documentation is lacking could make companies' transfer pricing positions much riskier than in the past, practitioners say, and taxpayers may have to start factoring that in.

In this week’s Talking Tax podcast, Bloomberg Tax reporter Caleb Harshberger spoke with Grant Thornton LLP Transfer Pricing Technical Leader Steve Wrappe and Greenberg Traurig LLP shareholder Sharon Katz-Pearlman about how the IRS has changed its approach and what additional funding from the 2022 Inflation Reduction Act means for taxpayers moving forward.

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The nation is unpacking what comes next with Donald Trump's second presidency and with a Senate that flipped from Democratic to Republican. One of the biggest questions that remains unanswered is how this impacts upcoming talks over myriad provisions in the GOP's signature 2017 tax law that expire at the end of 2025.

Idaho Republican Sen. Mike Crapo—no stranger to tax policy and negotiations—becomes chair of the Senate Finance Committee and will have a major hand in what happens with those expiring provisions that were part of the legislation known as the Tax Cuts and Jobs Act. Crapo is seen as a behind-the-scenes operator but his new role puts him at the center of talks to decide what to keep and what to jettison from a tax package that could have a price tag in the trillions of dollars.

A second Trump presidency also has implications for the IRS. Republicans have threatened to claw back supplemental IRS modernization funding, and have criticized the agency's focus on the Direct File program, offering free filing to certain taxpayers who qualify.

In this week's Talking Tax podcast, Bloomberg Tax reporters Erin Slowey and Chris Cioffi discuss what changes at the Senate Finance Committee, Trump's presidency, and new players in the landscape could mean for tax policy this year and into the next Congress. They spoke with Bloomberg Tax Deputy Team Lead for Federal Tax Kim Dixon.

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California regulators are prepared to walk away from strict licensing rules that require accountants to earn the equivalent of five years of college to qualify.

The California Board of Accountancy has proposed reforms that would grant the certified public accountant license to candidates with a traditional bachelor’s degree plus two years of work experience in addition to passing the CPA exam. The proposal would unwind current rules that call for 150 hours of college credits to qualify—a requirement that is seen as a barrier to entering the profession.

Instead, the board's draft legislation would strip the specific number of college credits from its rulebook to focus on the degree earned or the candidate’s coursework. State lawmakers would have to approve any changes.

Bloomberg Tax senior reporter Amanda Iacone spoke with Dominic Franzella, the executive officer of the state accountancy board, about how California's proposal matches up against related reforms the American Institute of CPAs introduced in September and whether the state’s plans could help address the shrinking pipeline of future accountants.

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Artificial intelligence is becoming a bigger part of tax practice and policy every day. The Big Four are spending billions of dollars on AI models, and even mid-tier accounting firms seem willing to at least tread into generative AI transformation, albeit slowly.

These investments raise questions about how corporate in-house tax departments are evaluating AI integration. In this special edition of Talking Tax, Bloomberg Tax Insights editor-at-large Rebecca Baker chatted with three different in-house tax leaders to hear their views on the emergence of AI in the profession, and in their lives.

While they all agree AI must be part of the conversation now, they have different takes on how it should be used—or if it should even be used at all.

Kurt Lamp, vice president of global tax at Amazon, is the most bullish on pulling AI tools into the corporate tax function, noting the ability to extract data and automate tasks. Jessica Reif-Caplan, legal principal in tax and business development at Edward Jones, takes a longer view on understanding functionality before moving to simplify. Then Sandhya Edupuganty, vice president of tax at Sabre Corporation, grapples with what can be gained from using AI and also what can be lost.

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The fate of the 2017 GOP tax overhaul is top of mind for corporations in the weeks leading up to the election.

Many of the law's provisions are expiring in 2025, setting Congress up to negotiate another major tax law. Corporations are closely watching what happens to bonus depreciation, interest expense deductions, and research and development expensing, S&P Global Rating Managing Director Shripad Joshi said. Plus, both presidential candidates have campaigned on changing the corporate tax, which the 2017 law permanently lowered to 21%.

Without knowing who will control the White House and Congress next year, it's difficult for corporations to plan ahead. Right now, they're reviewing tax proposals that may be considered and modeling how different scenarios could impact them. That means figuring out where their tax weaknesses lie and parsing out which changes could hurt or help cash flow the most.

On this episode of Talking Tax, Bloomberg Tax reporter Erin Schilling talks with Joshi about how corporations are dealing with this uncertainty and which tax policy changes will affect them the most.

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After more than two years, the Treasury Department has proposed rules to implement the new minimum tax on companies’ book income. Now comes the hard part.

The regulations, which Treasury issued last month, would govern how the corporate alternative minimum tax is applied and calculated. CAMT, enacted in 2022, requires big companies to pay at least 15% in taxes on the income they report on their financial statements—a crackdown on companies that have been able to pay little or nothing in the past by taking advantage of tax breaks and tax-planning strategies.

The proposed regulations run to more than 600 pages, and set up a highly complex regime for companies that fall under CAMT. Tax professionals and companies continue to pore over the rules, to see what kind of effects they’ll have.

Bloomberg Tax senior reporter Michael Rapoport spoke with Monisha Santamaria, a principal in KPMG LLP’s Washington National Tax practice about the complexity of the CAMT regulations; some notable aspects of the rules; how CAMT will affect more than just the 100 or so companies that Treasury says will have to pay it; and the chance for companies to persuade Treasury to revise its plans.

The European Court of Justice's ruling against Apple Inc. over a $14.4 billion Irish tax bill stunned members of the international tax community, who said it throws the high court's precedent on tax state aid cases into disarray.

The EU high court ruled last month that the company's tax positions in Ireland, which were agreed to by Irish authorities in 1991 and 2007, amounted to illegal state aid. EU law stipulates that member states shouldn't give companies preferential treatment—state aid—over other businesses. Unlawful state aid could come in the form of preferential tax benefits.

The decision was particularly perplexing to tax observers because it didn't rely on rulings in similar, previous high-profile cases involving Fiat Chrysler or Amazon, where the ECJ sided with the companies rather than the European Commission.

This week, Bloomberg Tax reporter Lauren Vella chats with University of Virginia professor Ruth Mason and Stephen Daly, reader in tax law at King’s College in London, who say that there is a possibility companies with structures similar to Apple aren't safe from EU probes into their tax positions. They also discuss what effect the decision could have on the court's reputation and the European Commission's power to investigate tax matters.

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The Multistate Tax Commission dates to the 1960s, yet the intergovernmental tax agency and its mission on behalf of state revenue departments are often not well understood. The map of tax laws and regulations across the 50 states would be much more complicated and inconsistent without the efforts of committed attorneys, auditors, and administrators working on behalf of the commission.

On this episode of Talking Tax, Bloomberg Tax senior reporter Michael J. Bologna discusses the MTC's goals and achievements with former general counsel Nancy Prosser, who retired Sept. 24. Prosser talks about the agency’s essential mission to promote uniform and consistent tax policies across the states, and assist taxpayers in achieving full compliance. She also stresses the MTC’s efforts to advocate for state and local sovereignty in the development of tax policy.

Prosser retired after four years as general counsel and a 16-year career in tax administration with the Texas Comptroller for Public Accounts, including two years as the Texas tax agency’s general counsel. In the interview, Prosser also talks about her career in state tax administration and her hopes for improved state tax uniformity going forward.

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The GOP's 2017 tax law—the biggest change in the US tax code in three decades—left a mammoth task for the IRS and Treasury Department.

It resulted in the Treasury and a severely underfunded IRS creating the blueprint for taxpayers and tax practitioners trying to follow the law, releasing over 200 pieces of formal guidance and more than 300 pieces of informal guidance.

Many of these provisions are set to expire next year and face an uncertain fate as the November election approaches with control of the House and Senate in play.

Dave Kautter, a partner at RSM US LLP, spoke with Bloomberg Tax reporter Erin Slowey on his time as the Department of Treasury's assistant secretary for tax policy and acting IRS commissioner during that major tax code overhaul. He also spoke about the agencies' role in policy making and how they can prepare for changes in 2025—if at all.

Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.