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On March 9, 2023, the U.S. Department of the Treasury released the Greenbook (formally known as the General Explanations of the Administration’s Revenue Proposals), to explain the revenue proposals included in Administration’s budget.  One proposal in the Administration’s budget would increase the additional Medicare tax rate by 1.2 percentage points for high-income taxpayers.  

Self-employment earnings and wages are subject to employment taxes under either the Self-Employment Contributions Act (SECA) or the Federal Insurance Contributions Act (FICA). Both SECA and FICA taxes apply at a rate of 12.4 percent for social security tax on self-employment earnings and wages (capped at $160,200 in 2023) and at a rate of 2.9 percent for Medicare tax on all self-employment earnings and wages (not subject to a cap).  In the case of FICA taxes, the employee and employer each pay half of the taxes imposed on wages.Continue Reading Treasury Greenbook Includes Proposal to Raise the Additional Medicare Tax Rate for High-Income Taxpayers

On July 10, the IRS updated the Instructions for Form 8975 and Schedule A (Form 8975).  Form 8975 (Country-by-Country Report) is used by taxpayers that are the parent entity of a U.S. multinational enterprise (“U.S. MNE”) with annual revenue of $850 million or more.  Taxpayers must file Form 8975 to report information related to the taxpayer’s MNE’s constituent entities on a country-by-country basis, including (i) each entity’s tax jurisdiction; (ii) country of organization and main business activity; and (iii) financial and employee information for each tax jurisdiction in which the U.S. MNE does business (i.e., revenues, profits, income taxes paid, accumulated earnings, and tangible assets).
Continue Reading IRS Updates Country-by-Country Reporting Instructions

In our first post regarding the proposed section 1446(f) regulations, we addressed the rules regarding which party is the withholding agent for purposes of section 1446(f). Sections 864(c)(8) and 1446(f) were adopted as part of tax reform. Section 864(c)(8) was enacted to reverse the holding of the Tax Court in Grecian Magnesite Mining v. Commissioner, which was affirmed by the U.S. Court of Appeals for the DC Circuit. In our second post, we addressed the amount required to be withheld. In this post, we discuss the general reporting requirements for the transferor, the transferee, and the partnership. Further, we provide an overview of the new “backstop withholding” rules that will end the suspension of the partnership withholding requirement under section 1446(f)(4). The IRS suspended partnership withholding under section 1446(f)(4) under Notice 2018-29.
Continue Reading IRS Proposes Regulations under Section 1446(f) — Reporting Requirements and the “Backstop Withholding” Rules (Post 3 of 3)

In our first post on the proposed regulation under section 1446(f), we discussed which party is the withholding agent and outlined the various exceptions to withholding that could apply. Sections 864(c)(8) and 1446(f) were adopted as part of tax reform. Section 864(c)(8) was enacted to reverse the holding of the Tax Court in Grecian Magnesite Mining v. Commissioner, which was affirmed by the U.S. Court of Appeals for the DC Circuit. This post addresses the amount the transferee is required to withhold. Our third post on the proposed regulations under section 1446(f) addresses the withholding requirements and “backstop withholding” rules.
Continue Reading IRS Proposes Regulations under Section 1446(f) — Determining the Withholding Amount (Post 2 of 3)

This post is the first of three installments providing an overview of recent proposed regulations under section 1446(f) that address withholding on certain sales of partnership interests by foreign partners of a partnerships engaged in the conduct of a U.S. trade or business (a “U.S. trade or business”). Sections 864(c)(8) and 1446(f) were adopted as part of tax reform.  Section 864(c)(8) was enacted to reverse the holding of the Tax Court in Grecian Magnesite Mining v. Commissioner, which was affirmed by the U.S. Court of Appeals for the DC Circuit.  This post focuses on which party is required to withhold under section 1446(f). The second post focuses on determining the appropriate amount to withhold. Finally, the third post focuses on the withholding requirements and the “backstop withholding” rules.
Continue Reading IRS Proposes Regulations under Section 1446(f) — Which Party is Required to Withhold? (Post 1 of 3)

For the last several years, LB&I has maintained compliance campaigns to address and improve various areas of tax compliance.  On April 16, 2019, LB&I announced the addition of three new compliance campaigns, two of which involve reporting issues: the Offshore Private Banking Campaign and the Loose Filed Forms 5471…
Continue Reading Two New LB&I Compliance Campaigns Focus on Reporting