Week In Insights: It’s a Busy Fall for Tax Professionals

It’s officially fall in the Northern Hemisphere. That means waiting anxiously for college football weekends, pumpkin patches, and leaf-peeping for much of the U.S. And, it’s a season of holidays—from Halloween to Thanksgiving. Busy feels like an understatement. But for tax professionals? It’s a different kind of anticipation: Fall means tax extensions for individual taxpayers, OECD negotiations, shifting congressional tax proposals, and the return of professional conferences. It’s a season that traditionally keeps us on our toes and signals the beginning of the long roll into planning and compliance.

Autumn foliage fills the trees of Prospect Park in the Brooklyn borough of New York City.

Photographer: Spencer Platt via Getty Images

It is my favorite time of year—for all of those reasons.

A lot is going on in the tax world right now, and we expect it to get even busier. Fortunately, our experts can keep you up to date with the latest federal, state, and international tax analysis—and give you a little time back in your day to sit back with an apple cider and enjoy the season.

The Exchange… It’s where great ideas intersect.

—Kelly Phillips Erb

Quick Numbers Trivia

Speaking of extensions, Astronaut Jack Swigert—who wasn’t initially supposed to be on Apollo 13—was how far into his mission on April 15, 1970, when he realized that he had not filed his taxes?
(Answer at the bottom.)

Our Roundup

This week, our experts touched on a wide range of topics, from business restructuring to taxable estates. For a look at what’s making news, here’s our roundup.

Transfer pricing will surely be center stage this fall as the OECD leads negotiations on a global tax plan. Our experts tackle transfer pricing across the globe:

• In Part 2 of a series from CMS, Angelika Thies, Xavier Daluzeau, and Julie Vergnes consider transfer pricing issues and reporting requirements arising from the restructuring of a multinational group, and outline how taxpayers need to prepare for scrutiny by the tax authorities. In Part 1, Stéphane Gelin discussed tax losses and how tax policy can help with recovery after a global crisis, including a look at measures in various European countries.
• In the final part of a series on transfer pricing in West and Central Africa, Anthony Assassa of BDO looks at three markets in the region with strong potential for implementing transfer pricing measures. In Part 1, he reviewed the history of transfer pricing in West and Central Africa and discussed whether a regional approach can be identified.

Also a hot topic—especially in the U.S. this fall? Congress’s efforts to make what could be significant changes to the tax code, making planning even more important for tax professionals. Our experts offered their takes on retirement and estate planning:

• If the congressional proposal to require retirement plans with aggregate benefits over $10 million to distribute at least 50% of the excess were broadened to also require Roth IRAs, the proposal would better implement the common-sense policy of encouraging retirement savings with tax incentives, writes Albert Feuer in Is This the Time to Harmonize the Required Minimum Distribution Rules?
• In Assets of an Out-of-State Trust Included in Resident’s Taxable Estate, Robert Willens looks at an Oregon Supreme Court decision that held a state resident must include the assets of an out-of-state trust in her taxable estate. The case, he says, seems to enlarge the scope of inclusion beyond the 2019 U.S. Supreme Court decision in Kaestner.
• With global wealth on the rise, it is more important than ever for high-net-worth individuals to implement structures to hold and manage their worldwide wealth so they can grow it, preserve it, protect it, and pass it on to their heirs in a tax-efficient manner according to their wishes. In The UAE—A Trust and Foundation Planning Powerhouse, Jimmy Sexton of the Esquire Group writes that the United Arab Emirates’ unique legal attributes make it well-positioned as a jurisdiction for trusts and private foundations.

The Washington Monument can be seen through colorful fall leaves in Washington, DC.

Photographer: Mark Wilson via Getty Images

The EU isn’t just focused on a global minimum tax rate this fall: It’s still reacting to VAT reform. In the final article in a series on the EU VAT e-commerce package, Roger Gothmann, Anna-Katharina Heidbüchel, and Moritz Lukas of Taxdoo discuss how E.U.'s Major VAT Reform Has Turned E-Commerce Upside Down: Part 3. This reform, they write, not only affects online sellers and end customers but also marketplaces, as the reform can also make them liable to pay tax under specific circumstances. If you missed the earlier parts of the series, you can catch up with Part 1 and Part 2.

In the U.K., they’re still reflecting on pending insolvency restrictions this fall. In U.K. Insolvency Restrictions Lifting—Hoping for Best, Preparing for Worst?, Faye Kelly, Joanne Wright, James Liddiment, and Rob Armstrong of Kroll look at the practical implications of enforcement and recovery as we creep toward the September 2021 deadline.

And in Canada, some tax professionals are hopeful for change. In Can We Hope to Put an End to Non-Charitable Private Foundations?, Brigitte Alepin of the University of Quebec in Outaouais says the minimum 3.5% of capital Canadian private foundations are required to disburse annually is too low and urges participation in Canadian government consultations on the issue.

Opinion and Commentary

There are no actual hawks in Congress on fiscal policy, writes Michael R. Bloomberg, only yellow-rumped warblers, which shed their bright colors as the seasons change. In Republicans, Don’t Renege on U.S.'s Bills, Bloomberg says Republicans seem to have rediscovered the faith in fiscal probity they lost during the reckless abandon of Donald Trump’s presidency, just as they rediscovered it during the Barack Obama years after losing it during the George W. Bush administration.

Call it the SALT effect. In How the SALT Debate Could Change American Politics, Karl Smith writes that the debate over state and local tax deductions is scrambling U.S. politics, and the fight could have a profound effect on the parties and the U.S. economy.

President Joe Biden’s transformative economic agenda is under threat from centrists in his own party. That’s the word from Noah Smith, who writes in A Better Economy Shouldn’t Take Two Global Crises that if the program is stymied, it won’t be the first time a Democratic rebellion has curtailed a president’s big dreams — it also happened to Franklin D. Roosevelt after his reelection in 1936.

John Thune of South Dakota, the second-ranking Senate Republican, says that “the debt limit needs to be increased.” He also says Republicans are not going to vote for it. He thinks the Democrats can and should do it on their own. This stance makes political sense but no other kind, writes Ramesh Ponnuru in U.S. Debt Limit Constrains Nothing But Honesty, which suggests that the debt limit should be repealed.

Columnists & Contributors

Congressional leaders have suggested an aggressive fall budget deadline—including potential changes to the current tax laws. With so many moving parts, it can be confusing. From process to proposals, here’s what you need to know about the current tax proposals in Congress.

Listen In

The House Ways and Means Committee passed a proposal last week to revamp the way U.S. multinationals pay taxes—but to a lesser extent than other Democratic plans on the table. On the most recent episode of Talking Tax, Bloomberg Tax senior reporter Michael Rapoport discusses the House plan with c. Hillier explains the details of the House proposal and discusses its chances in a narrowly divided Congress. He also talks about how the plan meshes with the pending global tax overhaul agreement among countries at the OECD.

A couple stops to take a picture of the autumn colors at Loch Faskally in Pitlochry, Scotland.

Photographer: Jeff J Mitchell via Getty Images

In 2008, pop star Britney Spears was put under a court-sanctioned conservatorship. That meant that other people (including her father) who had been named a conservator were allowed to make decisions about her career and her money. The story has attracted so much attention that it has its own New York Times documentary and its own hashtag on Twitter—the #freeBritney movement. On this episode of the Taxgirl podcast, attorney Alexandra “Sasha” Golden talks about conservatorships and why Britney Spears’ case has people so captivated.

Spotlight

Our Spotlight series highlights the careers and lives of tax professionals across the globe. This week’s spotlight is on Eric Santa Maria, a partner at the Miami CPA firm Verdeja De Armas Trujillo LLP, where he works closely with entrepreneurs and international tax clients. He started his public accounting career at PwC as an associate in the financial services department.

Quick Numbers Answer

The crew of the Apollo 13 lunar landing mission, from left to right, Commander James A. Lovell Jr, Command Module pilot John L. Swigert Jr, and Lunar Module pilot Fred W. Haise Jr.

Photographer: Space Frontiers via Getty Images

Approximately 24 hours, 18 minutes, and 10 seconds into his mission, Swigert asked Mission Control, “Uh oh; have you guys completed your income tax?” He followed it up with, “How do I apply for an extension?”

The crew noted that “the preliminary indications are that you can get a 60-day extension on your—filing your income tax if you’re out of the country.” Swigert responded, “That’s good news. I guess I qualify.”

You can read the official NASA transcript here.

Chime In

From hacks to best practices, I love hearing what my fellow tax professionals have to say about how they achieve success at the office. Last week, I asked: What continuing education or webinar topic did you find the most valuable in the past year?

Tech-related webinars grabbed attention this year, with virtual accountant Nayo Carter-Gray, EA, declaring, “Building Bots to increase your bottom line was quite interesting.”

Also hot? Information—the good kind—focusing on ERC, says EA Adam Markowitz.

And virtual currency proved to be valuable with one accountant noting on Twitter, “We were very surprised by how many of our clients started to dabble with virtual currencies during the pandemic.”

Here’s this week’s question: What is your favorite tax job interview question?

You can leave your answer on social media or email your answer to kerb@bloombergindustry.com (subject line “Chime In”). I’ll assemble some of the best responses and include them in a future edition of the newsletter.

Exclusive Content for Bloomberg Tax Subscribers

If it’s September, it must mean projected tax rates. Using chained consumer price index (C-CPI-U) data from the Bureau of Labor Statistics, Bloomberg Tax has projected 2022 inflation-adjusted amounts for key figures in the tax code. The IRS publishes the official inflation-adjusted amounts in late fall in a revenue procedure.
*Note: Your Bloomberg Tax login will be required to access the 2022 projected tax rates.

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