Transfer Pricing Report

Headquarters Relos • Pillar One Problems • Free File Review

Nov. 16, 2019, 3:03 PM

This is a weekend roundup of Bloomberg Tax Insights, which are written by practitioners featuring expert analysis on current issues in tax practice and policy. The articles featured here represent just a handful of the many Insights published each week. For a full archive of articles, browse by jurisdiction at Daily Tax Report, Daily Tax Report: State, and Daily Tax Report: International.

We look at the Organization for Economic Cooperation and Development’s Pillar One, the IRS’s Free File program, camping out for property tax exemptions, and more.

  • Brandon Pizzola, Bob Carroll, and James Mackie of Ernst & Young on the continuing migration of corporate headquarters
  • Lorraine Eden and Oliver Treidler on the OECD’s Pillar One apparent abandonment of the arm’s-length principle
  • Joyce Beebe of Rice University on the good and the bad in Pillar One
  • Courtney Kay-Decker on not throwing the Free File baby out with the bath water
  • Robert Willens on camping and the Florida homestead exemption
Medtronic Inc. moved its principal executive office from Minneapolis to Dublin when it acquired Covidien Plc.
Photographer: Aidan Crawley/Bloomberg

The headquarters of the world’s largest companies by revenue continue to shift away from the U.S. Brandon Pizzola, Bob Carroll, and James Mackie of EY’s Quantitative Economics and Statistics group analyze the latest statistics. Read: The Changing Headquarters Landscape for Fortune Global 500 Companies

Lorraine Eden of Texas A&M and Oliver Treidler of TP&C offer six policy recommendations designed to move the global economy onto the BEPS 2 path, a path appropriate for 21st century digital multinationals that will benefit both developed and developing countries. This is Part II of a two-part analysis of the Pillar One proposals. In Part I, the authors provided a summary and analysis of the proposals. In Part II, the authors examine their implications and provide some recommendations. Read: Taxing the Digital Economy—Pillar One Is Not BEPS 2 (Part II)

Joyce Beebe of Rice University’s Baker Institute for Public Policy also analyses the “Unified Approach” and identifies some positive and negative aspects. Read: Will OECD’s ‘Unified Approach’ Find Consensus Among 130 Countries?

The IRS’s Free File program has had its problems. For example, critics say some participating companies have steered taxpayers away from the program’s free options. Courtney Kay-Decker, a former director of the Iowa Department of Revenue now with Lane & Waterman LLP, says the program provides a beneficial public service and needs updated goals and a reevaluation of the rules. Read: Free File—Mend It, Don’t End It

The construction of a Florida couple’s new home may have taken longer than they anticipated, but pitching a tent and spending a few nights there didn’t qualify them for the state’s homestead property tax exemption. Robert Willens tells how a Florida appellate court found that the couple needed a permanent residence to maintain to qualify for the exemption. Read: Camping Doesn’t Count as Occupancy for Florida Homestead Exemption

From the Archive

Bloomberg Tax contributors have had much to say about the OECD’s project, and not all of that discussion has expressed admiration.

Can international consensus be reached on the tax challenges of the digital economy? Ross Robertson and Arjun Bhatia, of BDO LLP, discussed the recent OECD proposal for a unified approach.

The OECD’s revised approach to the allocation of taxing rights and profits provides detail on how and to what extent profits should be allocated to market jurisdictions, and lays out a system under which three allocations—referred to as Amounts A, B, and C—may be made. Mark Martin, Thomas Bettge, Steve Blough, and Manal Corwin of KPMG LLP described the proposal and considered the work that remains to be done, with a focus on the need for improved dispute resolution mechanisms.

Beyond Tax

What’s happening outside the world of tax?

A company facing a potential material dispute with the government should review its relevant disclosures with certain principles in mind. Baker Botts partner Jessica Pulliam examines the recent Mylan SEC settlement, offers pointers on these principles, and says the SEC has been actively reviewing and commenting on companies’ litigation-related disclosures. Read: SEC Mylan Settlement Shines Light on Disclosure of Litigation Contingencies

Coming up with a legal and technical framework for how personal data should be handled is essential. Cybereason’s Sam Curry and Joseph Moreno of Cadwalader Wickersham & Taft say this new framework should be based on the fundamental premise there is no unowned privacy data in the world. Read: Laws Protect My Physical Property, So Why Not My Electronic Data?

Former Justice Department compliance counsel Hui Chen challenges the compliance community to aim for data-driven and actionable compliance standards for the small and medium-sized organizations that make up so much of the global supply chain—and economy. Read: Small Businesses and Their Compliance Burdens

Exclusive Content for Bloomberg Tax Subscribers

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Jerome M. Hesch of the Florida International University School of Law and Boston University Law School, and Stephen M. Breitstone of Meltzer, Lippe, Goldstein & Breitstone LLP in part one of a two-part article provide an overview of how CRTs are treated for income tax purposes. In part two the authors will demonstrate how the CRT can obtain income tax deferral of a taxable gain on a cash sale of an asset, with a caution about its limitations and its risks.

Bloomberg Tax Insights articles are written by experienced practitioners, academics, and policy experts discussing developments and current issues in taxation. To contribute please contact Erin McManus at emcmanus@bloombergtax.com.

To contact the reporter on this story: Erin McManus in Washington at emcmanus@bloombergtax.com

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