Our International Tax Group explores the final debt-equity regulations under Section 385, highlighting significant modifications to the rules proposed last April. While the regulations remain controversial, the final version brings a number of taxpayer-friendly changes, including a reduction in scope and general delay in application.
Alston & Bird’s full International Tax advisory can be found here: www.alston.com/advisories/section-385-regulations
On September 22, California Governor Jerry Brown signed AB 2258 into law, which revises California’s Unclaimed Property Law (UPL) to expressly recognize that certain electronic recurring transactions constitute “owner-generated activity” that would prevent accounts held by a banking or financial organization from being considered presumed abandoned. As described by the bill’s author, AB 2258 effectuates a “simple modernization of the statute,” which will “eliminate unnecessary escheatment notices to be sent from the bank to the account holder that require the account holder to affirm [...]Read more
On August 29, the Direct Marketing Association (DMA) submitted a certiorari petition to the U.S. Supreme Court asking the Court to review the Tenth Circuit Court of Appeals’ decision in Direct Marketing Association v. Brohl (Brohl II). The case already made one trip to the Supreme Court (Brohl I), in which the Court held that the Tax Injunction Act did not bar federal-court review of the case. On remand, the Tenth Circuit held that Colorado’s use tax reporting regime did not violate the Commerce Clause.
(To refresh: Colorado’s regime requires out-of-state sellers to report sales to Colorado [...]Read more
Our Federal Tax Group reveals how attacking tax regulations may be a growth industry and explains why taxpayers should become more involved in the writing process.
Alston & Bird’s full Federal Tax advisory can be found clicking here.
The impact of the burden of proof on state tax appeals cannot be overstated. Taxpayers often lose tax appeals on the basis that they failed to satisfy the seemingly elusive burden of proof. Apart from limited instances in the arena of alternative apportionment, taxpayers bear the burden of proof in nearly every state tax appeal. As the reasoning goes, taxpayers should bear the burden of proof because it is the taxpayers that possess the necessary information and, thus, are in the best position to establish the proper amount of state tax liability. But should this always be the case?
In [...]Read more
On August 16, 2016, the U.S. District Court for the District of Delaware granted Kelmar’s and Delaware’s motions to dismiss in Plains All American Pipeline, L.P., v. Cook, et al. The court determined that the Plaintiff (1) lacked standing to sue Kelmar, (2) had not demonstrated ripeness of declaratory relief against Delaware for any of its claims, except equal protection, and (3) failed to state a cause of action regarding its equal protection claim.
In 2014, Delaware, through its third-party auditor, Kelmar, initiated an unclaimed property audit of Plains All American [...]Read more
The Pennsylvania General Assembly passed HB 1605 on July 13, 2016, and it was approved by Governor Tom Wolf on the same day. Contained within this omnibus finance bill are two sections that significantly amend Pennsylvania's unclaimed property law: section 4, which revises the dormancy standard applicable to IRAs; and section 5, which imposes formal due diligence requirements on holders.
In particular, section 4 of HB 1605 revises section 1301.8 of Pennsylvania's unclaimed property law to provide that the dormancy period for a retirement account is triggered when the holder “has lost [...]Read more
On July 5, 2016, the Court of Appeals of North Carolina affirmed the 2015 decision by the superior court in The Kimberley Rice Kaestner 1992 Family Trust v. N.C. Dep't of Revenue, which held that North Carolina was constitutionally prohibited from taxing the income of the plaintiff trust. Essentially, the state asserted jurisdiction to tax the trust's income based solely on the fact that the beneficiaries of the trust were North Carolina residents (the trust had no other connection with the state). The superior court rejected this assertion, concluding that the state could not impose the tax [...]Read more
For decades, the determination of whether debt issued between related parties should properly be characterized as equity has provided grounds for frequent disputes between taxpayers and the Treasury Department and the IRS (together, “the government”). Congress attempted to address this issue through the enactment of IRC § 385(a) (as part of the Tax Reform Act of 1969), which authorizes the Treasury Department to prescribe regulations as necessary or appropriate to determine whether an interest in a corporation should be treated as debt or equity. However, the government had not done so – [...]Read more
Few laws, if any, have had a bigger impact on a state’s taxing authority than California’s Proposition 13 (Prop 13). Famously passed in 1978 amidst a housing market boom, Prop 13 was intended to protect taxpayers from dramatic rises in their annual property tax bills by limiting the ad valorem taxes on real property to 1 percent of the full cash value of the property at acquisition, with a 2 percent annual cap on assessment increases.
Perhaps the most friction-laden aspect of Prop 13 is the ‘‘change in ownership’’ requirement. Prop 13 permits local assessors to reassess tax based [...]Read more