Talking Tax

State film tax credit programs are increasingly financing advertisements for some of the world’s largest consumer product companies, some of which subsequently sell the credits to other companies looking to reduce their state tax liabilities.

Twenty-eight states and Puerto Rico allow such incentives for production of commercials. Major companies, including McDonald’s Corp., Kellanova, and AbbVie Inc., receive these to promote products such as burgers, cereal, and prescription drugs. Tax credits are sometimes obtained by ad agencies or production companies, while in other cases the brands obtain them directly. And productions aren't always required to be filmed entirely within the jurisdiction offering the credit.

Some states allow recipients with minimal or no tax obligations to sell the credits for cash, enabling major corporations like Walmart Inc., Apple Inc., and Bank of America Corp. to buy them up and lower their state tax bills, despite having no involvement in the productions.

In this episode of Talking Tax, host David Schultz spoke with Bloomberg Tax reporter Angélica Serrano-Román about her recent deep dive into state film tax incentive programs, the companies receiving these benefits, and the buying and selling of credits.

Data obtained from Georgia, Illinois, New Jersey, and Puerto Rico, which provided insight for the Feb. 5 story, is now available on GitHub.

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More than 146 million individual tax returns are expected to be filed before the end of the 2024 tax filing season.

The IRS, with the help of the tens of billions of dollars in supplemental cash from the Democrats' 2022 tax-and-climate law, built up its call centers, expanded its online options, and is now offering more hours at its taxpayer assistance centers to help make a smoother tax filing season for taxpayers and tax professionals.

It also launched a controversial free agency-run filing tool for low- and moderate-income taxpayers filing simple returns, though access to the tool won't be more widely available to the general public until mid-March.

Bloomberg Tax reporter Erin Slowey spoke with Tom O'Saben, director of tax content and government relations at the National Association of Tax Professionals, about what's different this tax filing season, what's happening in Congress, and why taxpayers shouldn't rush to file once the season opens.

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For decades, states’ authorities to tax the earnings of multinational corporations have ended abruptly at the “water’s edge.” Frustration with this limitation, however, has grown in recent years as large, sophisticated businesses employ accounting techniques and asset transactions to shift their domestic earnings offshore.

Mandatory worldwide combined reporting—an apportionment method requiring the calculation of taxes based on global income attributable to a particular jurisdiction—is one possible solution gaining attention in state capitals. Lawmakers in Minnesota came close to enacting a worldwide system last year and the New Hampshire House debated, but failed to approve, the calculation method earlier this month. Legislators in other states have also discussed this tax calculation method.

On this episode of Talking Tax, Bloomberg Tax senior reporter Michael J. Bologna discusses worldwide combined reporting with two Democratic state lawmakers committed to reforms that would limit income shifting by multinationals. Minnesota Rep. Aisha Gomez is chair of the state's House Taxes Committee and Rep. Emilie Kornheiser is chair of the Vermont House Ways and Means Committee.

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Michael Plowgian, who in December left his role as deputy assistant secretary for international affairs at the Treasury Department, had an eventful stint at the department.

The former top OECD negotiator for the US started at Treasury in October 2021 as a counselor right around the time over 140 countries agreed to the global tax deal. Since then, Plowgian has been a part of large steps in the deal's progression—from tranches of Pillar Two rules to the release of a draft multilateral treaty text that would reallocate large multinational companies' residual profits to market jurisdictions.

The international tax pact consists of two parts: a reallocation of large multinational companies' residual profits, known as Pillar One, and a 15% global minimum tax, known as Pillar Two.

The work at the Organization for Economic Cooperation and Development, and therefore the Treasury, isn't done. Plowgian talked to Bloomberg Tax reporter Lauren Vella about what's next for the deal, how the multilateral treaty might fare in Congress, and what red lines the US won't cross in further negotiations with other countries.

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Leaders of the House and Senate tax-writing committees unveiled a bipartisan framework this week that pairs business breaks with an expansion of the child tax credit, but a path toward passage remains rocky.

Despite having the blessing of Senate Finance Chair Ron Wyden (D-Ore.) and Ways and Means Chair Jason Smith (R-Mo.), the panels' ranking members aren't yet sold. And while the framework has support from Senate Majority Leader Charles Schumer (D-N.Y.), it's not certain whether Speaker Mike Johnson (R-La.) will back the deal, too.

The agreement—paid for by ending the troubled employee retention tax credit program after a public notice—evenly splits roughly $80 billion between the business tax benefits and an enhanced child credit. It also includes the extension of a tax deduction for disaster victims and expansion of a low-income housing tax break for developers.

Reporter Chris Cioffi talks through what's in the deal and the political dynamics with Anna Taylor, deputy managing principal of Deloitte LLP's Tax Policy Group in Washington. Taylor spent nearly two decades working on the Hill, leaving her post as Schumer's tax and economic policy principal adviser to join the firm in 2023.

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In a Congress where lawmakers are divided on an overwhelming set of issues, helping to alleviate double taxation for businesses operating in both the US and Taiwan is one with rare bipartisan unity.

House Ways and Means Committee members voted in unison to send a bill to the House floor aimed at providing treaty-like benefits to the island democracy. Leaders of both the House and Senate tax-writing committees gave the bill their bipartisan blessing and say they're pushing for speedy passage.

A way to provide tax benefits to Taipei without angering China is seen as integral to the US goal of boosting semiconductor manufacturing and research in the US.

"This is about expanding and accelerating inbound investment into the United States in critical areas, particularly the semiconductor space in the context of the Chips and Science Act and what the Trump and Biden administrations have been doing since 2017 on the semiconductor front," said Rupert Hammond-Chambers, president of the US Taiwan Business Council.

Hammond-Chambers talks with Bloomberg Tax's Chris Cioffi about where the two countries go from here.

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Over the past six months, the OECD has released multiple documents with more details on parts of the international tax deal agreed to by over 140 countries in 2021.

But even with the additional clarity from the Organization for Economic Cooperation and Development, there are still fundamental questions about key parts of the deal—such as a simplified transfer pricing method, known as Amount B—that remain.

The tax agreement comprises two parts: a reallocation of large multinationals' residual profits, known as Pillar One, and a 15% global minimum tax, known as Pillar Two.

Alan McLean, chair of Business at OECD's tax committee, talked to Bloomberg Tax's Lauren Vella about how the deal's developments impact some of the world's largest multinational corporations, and what's most concerning to companies as the world moves forward with parts of the tax pact in 2024.

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The union that represents about 65,000 IRS employees is teaming up with the agency to help attract new talent amid a hiring spree.

The Democrats' tax-and-climate law gave the IRS tens of billions to dollars to modernize and go after taxpayers who haven't been paying what they owe. To do that, the IRS needs to build up its workforce, but it is competing with the more-lucrative private sector. That's where the National Treasury Employees Union is stepping in.

Bloomberg Tax reporter Erin Slowey spoke with NTEU National President Doreen Greenwald about what the union is doing to negotiate benefits and flexibilities that make it more attractive to come work at the IRS, and why it's important to have a fully funded agency. She also warned about what a possible shutdown in early 2024 would do to the current and prospective workforce.

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More of the supply chain that helps create semiconductor chips wants in on a lucrative new tax credit aimed at boosting US competitiveness against China.

As of now under IRS proposed rules, companies that manufacture materials or chemicals supplied to the manufacturing of semiconductors or equipment don't qualify for the 25% tax credit from the 2022 CHIPS Act.

Bloomberg Tax’s Erin Slowey speaks with Tymon Daniels, vice president of tax for Corning Inc., a US materials science company that is the parent company of Hemlock Semiconductor, about the congressional intent of who should be able to qualify and the importance of have the direct pay option— where the industry can get cash in lieu of the tax credit.

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African countries face several challenges in negotiating the global tax deal involving more than 140 countries at the Organization for Economic Cooperation and Development.

The agreement includes reallocation of the residual profits of large multinational companies to market jurisdictions, known as Pillar One, and a 15% global minimum tax, known as Pillar Two.

On this week’s episode of Talking Tax, Bloomberg Tax senior reporter Danish Mehboob speaks with Logan Wort, executive secretary at the African Tax Administration Forum, about why developing countries feel they don't have a seat at the table for these negotiations and why some would prefer to have the project play out at the United Nations rather than the OECD.

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