U.S. Federal District Court Invalidates Foreign DRD Temporary Regulations
A federal district court in Colorado has ruled that the Section 245A temporary regulations are invalid because the IRS did not follow the Administrative Procedure Act’s notice and comment requirements when it issued them. (Liberty Global Inc. v US (DC CO 4/4/2022)). Under Section 245A, domestic corporations are eligible for a dividend-received deduction (DRD) for the portion of dividends paid to a U.S. shareholder from a controlled foreign corporation. (Section references are to the Internal Revenue Code of 1986, as amended.) While the district court found that the temporary regulations were invalid, the temporary regulations were later finalized. Since the final regulations did not have a retroactive effect, the court’s ruling does not affect the final regulations.
Treasury To Seek Parity on Tax Reporting of Digital Assets
Treasury Secretary Janet Yellen, in a speech outlining Treasury’s digital asset policy, said the department would put information reporting on digital asset transactions on par with other financial instruments, such as stocks and bonds. Yellen emphasized the importance of taxpayers having the information they need to accurately report transactions on digital assets to the IRS. Legislation passed in 2021 as part of the Infrastructure Investment and Jobs Act classified cryptocurrencies as specified securities and, starting in 2023, will require a Form 1099-B filing for cryptocurrency assets, similar to stocks and bonds. (See our prior coverage here and here.)
Pennsylvania DOR Issues Tax Newsletter
The Pennsylvania Department of Revenue (DOR) issued its tax newsletter for February and March, highlighting the department’s tax system modernization project, which involves transitioning all business taxes to the Pennsylvania Tax Hub system and requires business entities to register their accounts in myPATH later this year. In the newsletter, the DOR also encouraged taxpayers to use myPATH to file their 2021 state personal income tax returns, which are due April 18.
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