Key Takeaways
- OECD Carve Out
- Corporate AMT Guidance
- Tariffs
- Trump Account Rules
- Energy Credit Challenge
- Minimum Distribution Rules
- IRS Employee Onboarding Process
- In the Courts
- Tortilla Chips
OECD Carve Out
US Carve-Out From Global Tax Deal Creates Accounting Headaches – Ryan Hogg, Bloomberg ($):
The original 2024 minimum tax framework required companies to pay at least a 15% tax rate wherever they operate. The carve-out under the revised agreement has exempted US businesses from key provisions of the minimum tax, which will lower their tax liabilities.
The pace at which countries integrate the new rules into their domestic laws will vary, and the process is likely to take several years to complete. Meanwhile, US multinationals will need to furnish provisional income tax figures in their upcoming quarterly earnings.
Corporate AMT Guidance
Corporate AMT Cost Recovery Guidance Draws Mixed Reactions – Nathan J. Richman, Tax Notes ($):
Notice 2026-7, 2026-11 IRB 1, released by the IRS and Treasury on February 18, offers further interim guidance on the corporate AMT from the Inflation Reduction Act, promising a new round of proposed regulations.
Tariffs
Corporate America’s Growing Quest for Tariff Refunds – Andrew Ross Sorkin, Bernhard Warner, Sarah Kessler, and Michael J. de la Merced, New York Times:
We’re also examining the latest A.I.-related sell-off, partly driven by an essay that suggested that artificial intelligence would create enormous unemployment. Why this one piece had such an impact — despite saying something that has been expressed before — may speak to investors’ heightened anxiety.
FedEx Sues for Refund of Trump Tariffs Rejected by Supreme Court – Peter Eavis, New York Times:
The lawsuit, filed in the U.S. Court of International Trade, asks that Customs and Border Protection, the agency that collects tariffs, make the repayment to FedEx. The company is expected to be one of many that will sue for a refund.
FedEx did not state a dollar amount that it is seeking. Analysts say the emergency tariffs that the Supreme Court rejected, which President Trump began imposing a year ago, had raised as much as $175 billion for the U.S. government.
Trump Continues Tariff Tirade, Senate Dems Start Countermaneuver – Caitlin Mullaney, Tax Notes ($):
Trump, in a string of February 23 posts on Truth Social, claimed that the Court’s decision — which determined that the tariffs the president imposed through executive orders under the International Emergency Economic Powers Act (IEEPA) were illegal — “accidentally and unwittingly” gave him more “powers and strength” than he had before the ruling.
US Customs Stops Collecting Tariffs Starting Tuesday – Dylan Moroses, Law 360 ($):
The duties will stop being collected and the associated tariff codes for the IEEPA tariffs will be deactivated at that time, according to the notice sent via Customs' Cargo Systems Messaging Service. The U.S. Supreme Court determined Friday that the IEEPA cannot be used to impose tariffs in a 6-3 majority ruling.
Trump Faces Tough Legal Landscape to Oppose Tariff Refunds – Zoe Tillman, Bloomberg ($):
In a 6-3 decision last week, the justices declared President Donald Trump’s use of an economic emergency powers law illegal. The majority was silent on whether the companies that paid more than $170 billion in contested duties will get their money back, sending the issue to lower court to sort out. Justice Brett Kavanaugh warned in a dissent that a refund process was “likely to be a ‘mess.’”
Trump immediately signaled his administration might oppose payouts, saying, “I guess it has to get litigated for the next two years.”
Senate Dems Aim To Require Refunds Of Illegal Trump Tariffs – Dylan Moroses, Law 360 ($):
…
The refunds would be required 180 days from enactment of the bill, and the government would be required to report to Congress monthly until the refunds are paid in full, according to the bill text. The legislation also includes provisions to prioritize refunds for small businesses.
Related: Supreme Court Rules Against Reciprocal Tariffs: Eide Bailly Factsheet
Trump Account Rules
Employer Groups Press IRS for Clarity on Trump Account Rules – Brett Samuels, Bloomberg ($):
Organizations representing employers, insurers, and financial planners all weighed in during a public comment period that was scheduled to close Feb. 20 as the Treasury Department develops new regulations around the investment accounts. Those regulations are expected to be released in the coming months.
Energy Credit Challenge
States Back Challenge To IRS Nix Of Wind, Solar Safe Harbor – Asha Glover, Law 360 ($):
The states, which include California, New Jersey and Oregon, argued in an amicus brief in D.C. federal court Friday that IRS guidance stripping the safe harbor will raise electricity costs, kill jobs and undermine state renewable energy mandates. The safe harbor had allowed large-scale clean energy projects seeking to claim solar and wind tax credits to establish eligible construction start dates by incurring 5% of the building costs.
Minimum Distribution Rules
Anticipated Minimum Distribution Rules Get Applicability Date – Trevor Sikes, Tax Notes ($):
Announcement 2026-7, 2026-11 IRB, released February 23, acknowledges the public concerns about the implementation difficulties posed by the originally proposed applicability date for the anticipated finalized regulations for RMDs under section 401(a)(9).
IRS Previews Timing for Required Retirement Account Withdrawals – Brett Samuels, Bloomberg ($):
The agency in a Monday announcement clarified timing around changes to when savers must start drawing down retirement funds to avoid incurring tax penalties.
IRS Employee Onboarding Process
IRS Workers Received Laptops Late, TIGTA Says – Anna Scott Farrell, Law 360 ($):
Of the 19,000 new hires for fiscal year 2024, TIGTA estimates that 40% received laptops more than five workdays after starting jobs with the agency. The delay may have prevented workers from doing their jobs, participating in online training and completing onboarding, the IRS' watchdog said.
IRS Needs to Improve Employee Onboarding Process, Watchdog Says – Tyrah Burris, Tax Notes ($):
In a random sample of 76 IRS employees of 18,901 hired in fiscal 2024, the Treasury Inspector General for Tax Administration found that 27 employees received a laptop more than five workdays after their start date — 24 of them received a laptop up to 20 days late and one received a laptop 26 days late, according to a report released February 23.
LINK: TIGTA Report
In the Courts
Tax Court Sides With IRS in Otay Basis Adjustment Case – Kristen A. Parillo, Tax Notes ($). “A related-party partnership isn’t entitled to a $714 million deduction because it was attributable to an engineered basis adjustment and transactions that should be disregarded under the economic substance doctrine, the Tax Court held.”
Tax Court Mostly Rejects Brothers’ $743 Million Basis Adjustment – James Matheson, Bloomberg ($). “The IRS properly disallowed $713 million of a $743 million deduction that a related-party partnership claimed for a basis adjustment because it lacks economic substance, the US Tax Court said Monday.”
No Substance Found To Homebuilders' $713M Tax Deduction – Molly Moses, Law 360 ($). “The IRS was correct to disallow over $713 million of a San Diego partnership's positive basis adjustment in 2012, the U.S. Tax Court held Monday, finding a series of complex transactions were carried out to avoid tax rather than to minimize business risk.”
Related: Eide Bailly Passthrough Entity Consulting Services
Declined Conference Opportunity Dooms Penalty Review, Court Says – Mary Katherine Browne, Tax Notes ($). “Refusing to engage in conferences with the IRS Office of Appeals during and after an examination can preclude taxpayers from disputing the assessments in a subsequent collection due process proceeding, the Tax Court said.”
Tax Court Rejects Son-of-Boss Promoter's Penalty Dispute – Kat Lucero, Law 360 ($). “A tax shelter promoter behind Son-of-Boss arrangements cannot challenge certain Internal Revenue Service penalties for failing to report the questionable transactions, the U.S. Tax Court ruled Monday, finding he forfeited that right by not participating in the administrative appeals process.”
Justices Won't Review Conviction In $1B Renewables Fraud – Phillip Bantz, Law 360 ($). “The U.S. Supreme Court declined Monday to hear an appeal from the convicted leader of a fraudulent $1 billion renewable-energy scheme who contended that he was unlawfully ordered to forfeit a "gobsmacking" $181 million based on joint and several liability.”
What Day is it?
It’s National Tortilla Chip Day! I shall be celebrating by way of nachos.
Make a habit of sustained success.
