Posts Tagged: "internal revenue service"

Don’t Get Caught In the Conflict: U.S. Versus Brazilian IP Transfer Pricing Rules

During a 2019 Tax Executives Institute conference in Washington, D.C., the Commissioner of the U.S. Internal Revenue Service (IRS), Charles Rettig, proclaimed, “[I am] not a commissioner who believes that the IRS loses because a judge rules against us in a transfer pricing case, . . . [I am] a commissioner who thinks the IRS loses if it doesn’t keep bringing [transfer pricing] cases.” (see Lydia O’Neal, Rettig Doubles Down on Transfer Pricing Cases, Bloomberg Tax: Daily Tax Report (Apr. 1, 2019). This declaration speaks volumes to Rettig’s intention of closing down in transfer pricing cases. Specifically, the IRS under Rettig, has targeted improper transfer pricing of intellectual property (IP) royalties remitted from foreign subsidiaries to U.S.-based parent companies (for instance, Coca Cola Co. v. Comm’r, 149 T.C. 446, 446 (U.S. T.C. 2017; Medtronic, Inc. v. Comm’r, 900 F.3d 610, 610, 8th Cir. 2018). This focus is particularly alarming for international companies with subsidiaries in Brazil because Brazil’s IP royalty remittance laws directly conflict with the United State’s transfer pricing policies.

Got IP? Get out. For investors thinking of selling, acting in the next few days is critical.

As of the date of this publication, the US House of Representatives and the Senate have passed the “Tax Cuts and Jobs Act” as reconciled by the conference committee. Now that the President has signed the Republican tax bill into law, IP owners may find the tax bill will impact sales of certain intellectual property… Given that the Committee Bill directly contradicts itself with respect to the tax treatment of the sale of patents by taxpayers whose personal efforts created such property, it is unclear how this Bill will be implemented. It is unclear how gains or losses on a sale of self-created assets by a taxpayer who created a patent will be treated.

Cybercrimes, Data Breaches Rise Against Big Firms

Cyber crimes and data breaches have become far too widespread in the recent times. Technological progress has taken the risk to new levels, with newer techniques to exploit vulnerable organizations, corporations and governments being discovered every day… A considerable number of organizational respondents to the survey, approximately 32%, reported being affected by cyber crime. Nearly 34% felt that they would be affected within the next 2 years. While 61% of the top executives feared cyber attacks, only 37% of organizations claimed to have a cyber incident response plan in place. Obviously, this represents a significant disconnect between the level of fear and the level of preparedness in the industry.

You’ve Lost Your Non-Profit Status

We are still in limbo. I got a post card from the IRS telling us that they have received of our materials and that they will be working on it but with 270,000 extra cases to process I am not expecting anything real soon. If you knew of the change and have been filing annual 990s, my hat is off to you. However, no news in this case is really bad news because if you haven’t been filing an annual 990 and you haven’t received the notice, the IRS probably doesn’t know where you are. So rather than assuming everything is OK it might be a good idea to make inquiries.