The National Taxpayer Advocate recently announced that the 4th International Conference on Taxpayer Rights will be held May 23 – 24, 2019, in Minneapolis, Minnesota. The purpose of conference is to connect government officials, scholars and practitioners from around the world to explore how taxpayer rights globally serve as the foundation for effective tax administration. The theme for the 2019 conference will be the role of taxpayer rights in the digital age and the implications of the expanding digital environment for transparency, certainty and privacy in tax administration. Presentations and paper proposals on range of topics are being sought, and the deadline to submit a proposal is December 1, 2018.

Prior conferences have been held in Amsterdam, The Netherlands, Vienna, Austria and Washington, DC Conference. Archived materials for the prior conferences can be found here.

We previously attended and participated in the Amsterdam and Vienna conferences. For our posts on these conferences, see below:

This post originally appeared on McDermott’s Inside SALT blog, which is dedicated to in-depth coverage of issues surrounding state and local tax.

In June 2018, just before the US Supreme Court ruling in Wayfair, Illinois enacted an economic nexus standard modeled after South Dakota’s law (see our prior coverage). The new Illinois standard takes effect on October 1, 2018. On September 11, the Illinois Department of Revenue (Department) issued an emergency rule (Regulation 150.803), together with other guidance found on its website, intended to assist remote retailers with compliance with the new law. Continue Reading Illinois Department of Revenue Issues Post-Wayfair Guidance Implementing October 1 Economic Nexus Law

Wrapping Up September – and Looking Forward to October

Top September Posts You Might Have Missed

IRS Proposes to Withdraw Debt-Equity Documentation Regulations

LB&I Announces Five New Campaigns

A Lot Is Going on at the Tax Court

Upcoming Tax Controversy Activities in October

Our lawyers will present on key tax topics during the month of October. We hope to see you.

October 29-30, 2018: Thomas Jones and Kristen Hazel will be presenting on various captive insurance tax topics at the Captive Insurance Tax Forum taking place in McDermott’s office in Chicago, IL.

October 31, 2018: Todd Welty and Lowell Yoder will be presenting on Administrative Guidance, Ethical Hazards and Tax Return Positions at the TEI Annual Conference in San Diego, CA.

On September 12, 2018, McDermott held the second Tax in the City® Seattle event this year and was pleased to welcome our partner Nina Siewert from our Frankfurt office to join US panelists Elizabeth Chao, Britt Haxton, Kristen Hazel, Sandra McGill and Diann Smith. The team’s key takeaways include:

  • Taxation of the Digital Economy – In March, the European Union proposed a 3 percent interim tax on digital services and a long-term expansion to the definition of a permanent establishment to include a “significant digital presence.” These proposals are unlikely to be passed during 2018. In the meantime, individual countries have passed or are considering unilateral measures to tax digital services.
  • Post-Wayfair – The Supreme Court’s Wayfair decision is good news for states, brick and mortar retailers and software compliance companies, and bad news for online retailers, start-ups and marketplace providers. Its impact on localities and foreign sellers remain to be seen.
  • Taxation of Multinationals: New Developments in US Tax Reform – Taxpayers should consider issues related to the new Base Erosion and Anti-Abuse Tax (BEAT), including whether royalties can be excluded from the BEAT, whether netting or a look-through concept should apply to BEAT; and how BEAT applies to cost-sharing agreements. The section 965 proposed regulations provide guidance about how basis adjustments apply to controlled foreign corporations (CFCs).
  • The Multilateral Instrument (MLI) – US taxpayers should be familiar with the MLI, which goes into effect in 2019. In order for the MLI to apply, both countries must sign the MLI and must opt into the same treaty provisions.

Continue Reading European Partner Joins Tax in the City® for Last Seattle Event of 2018

McDermott Will & Emery recently published Issue 2, 2018 of International News, which covers a range of legal developments of interest to those operating internationally.

This issue focuses on the new rules for noncorporate US shareholders in relation to GILTI, the nuances of cryptocurrencies and the tax treatment of such, and highlights the most recent news regarding health care private equity investments in India.

Read full issue.

Wrapping Up August – and Looking Forward to September

Top August Posts You Might Have Missed

Alta Wind: Federal Circuit Reverses Trial Court and Kicks Case Back to Answer Primary Issue

IRS Announces That CAP Will Continue

IRS Issues Long-Awaited Initial Guidance under Section 162(m)

 Upcoming Tax Controversy Activities in September

Our lawyers will present on key tax topics during the month of September. We hope to see you.

September 12, 2018: Elizabeth Chao, Britt Haxton, Kristen Hazel, Sandra McGill, Nina Siewert and Diann Smith are presenting on various state and local, US and international tax topics at the Tax in the City® event in Seattle, WA, including a presentation about Post-Wayfair. Please click here to register.

September 19, 2018: Linda Doyle, Kristen Hazel, Becky Martin and Jane May are presenting “Anatomy of a Whistleblower Case” at the inaugural Dallas Tax in the City® event in Dallas, TX. Please click here to register.

September 19, 2018: Laura Gavioli, Kristen Hazel, Alysse McLoughlin, Denise Mudigere and Marty Pugh are presenting are presenting on various state and local, US and international tax topics, including a presentation about Partnership Audit Rules and a presentation about Post-Wayfair, at the inaugural Dallas Tax in the City® event in Dallas, TX. Please click here to register.

September 19, 2018:  Steve Kranz and Eric Carstens are speaking at the Tax Executives Institute Seattle Chapter Meeting regarding the South Dakota v. Wayfair Supreme Court decision in Seattle, WA.

September 20, 2018: Mary Kay Martire is presenting “Audits and Beyond—Tips, Traps, and War Stories” at the Taxpayers’ Federation of Illinois’ Annual Conference in Rolling Meadows, IL.

September 20, 2018: Catherine Battin is presenting “So Wayfair Happened—What’s Next?” at the Taxpayers’ Federation of Illinois’ Annual Conference in Rolling Meadows, IL.

September 24, 2018: Tom Jones is presenting “Tax Law Developments Affecting Middle Market Captives” at the Self Insurance Institute of America in Austin, TX.

September 27, 2018: Andrew Roberson, Mark Thomas and Todd Welty are presenting on “Common Issues in Trusts and Estate Tax Controversies” at McDermott’s 2018 Trusts and Estates Controversy Forum in Chicago, IL.

Wrapping Up July – and Looking Forward to August

Top July Posts You Might Have Missed

IRS Releases Practice Unit on Examining Transaction Costs

Recent Developments in US Federal Income Tax Litigation

LB&I Announces Six New Campaigns

Upcoming Tax Controversy Activities in August

Our lawyers will present on key tax topics during the month of August. We hope to see you.

August 7, 2018: Thomas Jones is presenting on Captive Insurance Tax Issues at the Vermont Captive Insurance Association’s annual conference in South Burlington, Vermont.

August 23, 2018: Laura Gavioli is presenting “Recent IRS OVDP Developments: How Will It Impact the 2018 Landscape” for a Knowledge Group webcast.

On May 3 and 4, 2018, the 3rd International Conference on Taxpayer Rights was held in The Netherlands. Participants from every continent (except Antarctica) attended the conference, which focused on good governance and legal remedies. From a US perspective, there were significant discussions on the Taxpayer Bill of Rights (which we have previously written about here. Overall, the conference was tremendously insightful and helpful in understanding tax issues throughout the world and we are very appreciative for being allowed to participate in the panel discussion on Preventing Disputes 2: Taxpayer Rights in the Administrative Phase.

Videos of each panel discussion are now available on YouTube:

Day One:

Day Two:

 

The 4th International Conference on Taxpayer Rights will be held May 23-24, 2019, in Minneapolis, Minnesota. The focus will be on administrative positions and transparency, with issues such as how governments issue guidance, how taxpayers learn about guidance and how much weight is afforded to guidance. More information can be found here.

On June 27, Supreme Court Justice Anthony Kennedy announced his retirement, effective July 31, 2018. This announcement follows last week’s 5-4 decision in South Dakota v. Wayfair, authored by Justice Kennedy, which reversed the physical presence requirement originally established in National Bellas Hess and reaffirmed in Quill. Other important tax (and tax-related) cases have decided by the Supreme Court during Justice Kennedy’s tenure include: Commissioner v. Clark, 489 US 726 (1989); United States v. Goodyear, 493 US 132 (1989); Commissioner v. Soliman, 506 US 168 (1993); Commissioner v. Banks, 543 US 426 (2005); United States v. Home Concrete & Supply, LLC, 566 US 478 (2012); Obergefell v. Hodges, Sup. Ct. Dkt. No. 14-566 (2015); and Pereira v. Sessions, No. 17-459 (2018).

Justice Kennedy was appointed by President Ronald Reagan, and sworn in on February 18, 1988. He won unanimous confirmation. Although considered a conservative jurist, he was also the swing vote in favor of various social issues including same-sex marriage and the right to seek an abortion.

President Trump has already begun the search for Justice Kennedy’s replacement, but confirmation of the president’s nomination will not come without a serious fight. Indeed, whomever President Trump nominates, we can expect the same level of bipartisan animosity for the confirmation hearings as has marred his presidency thus far. Of course, any confirmation will require the Senate’s approval, and given the erosion of a conservative majority in the Senate, confirmation will be no small feat!

On June 21, 2018, the US Supreme Court issued its highly-anticipated decision in South Dakota v. Wayfair, Inc., et al., No. 17-494. The 5-4 opinion was authored by Justice Kennedy and concluded that the physical presence requirement established by the Court in its 1967 National Bellas Hess decision and reaffirmed in 1992 in Quill is “unsound and incorrect” and that “stare decisis can no longer support the Court’s prohibition of a valid exercise of the States’ sovereign power.” This opinion will have an immediate and significant impact on sales and use tax collection obligations across the country and is something every company and state must immediately and carefully evaluate within the context of existing state and local collection authority.

Summary of Opinions

The majority opinion was authored by Justice Kennedy and was joined by Justices Thomas, Ginsburg, Alito and Gorsuch. In reaching the conclusion that the physical presence rule is an incorrect interpretation of the dormant Commerce Clause, the opinion states that the Quill physical presence rule: (1) is flawed on its own terms because it is not a necessary interpretation of the Complete Auto nexus requirement, creates market distortions and imposes an arbitrary and formalistic standard as opposed to the case-by-case analysis favored by Commerce Clause precedents; (2) is artificial in its entirety and not just at its edges; and (3) is an extraordinary imposition by the Judiciary. The majority went on to conclude that stare decisis can no longer support the Court’s prohibition of a valid exercise of the States’ sovereign power, noting that “[i]t is inconsistent with this Court’s proper role to ask Congress to address a false constitutional premise of this Court’s own creation.” The majority noted that the South Dakota law “affords small merchants a reasonable degree of protection” and “other aspects of the Court’s [dormant] Commerce Clause doctrine can protect against any undue burden on interstate commerce.” The majority opinion specifically notes that “the potential for such issues to arise in some later case cannot justify an artificial, anachronistic rule that deprives States of vast revenues from major businesses.” Finally, the majority decision provides that in the absence of Quill and Bellas Hess, the first prong of Complete Auto simply asks whether the tax applies to an activity with substantial nexus with the taxing State and that here, “the nexus is clearly sufficient.” Specifically, the South Dakota law only applies to sellers that deliver more than $100,000 of goods or services into the State or engage in 200 or more separate transactions, which “could not have occurred unless the seller availed itself of the substantial privilege of carrying on business in South Dakota.” With respect to other principles in the Court’s dormant Commerce Clause doctrine that may invalid the South Dakota law, the majority held that “the Court need not resolve them here.” However, the majority opinion does note that South Dakota appears to have features built into its law that are “designed to prevent discrimination against or undue burdens upon interstate commerce” including: (1) a safe harbor for small sellers; (2) provisions that prevent a retroactive collection obligation; and (3) the fact that South Dakota is a member of the Streamlined Sales and Use Tax Agreement.

Continue Reading US Supreme Court Overrules Quill