IRS AND TREASURY ISSUE GUIDANCE
IRS and Treasury issue guidance. In our ongoing articles related to Tax Court, we are going to discuss an update from the IRS and Treasury Department related to Global Intangible low taxed income, or what is referred to as GILTI. Whenever tax law changes occur, such as the recently passed Tax Cuts and Jobs Act, passed by Congress and signed by President Trump, multiple areas of the tax code which were written into law, finally are determined correctly, as far as what the Congress intended them for. This often takes quite some time, and taxpayers can be caught in the crossfire, thinking the law meant one thing, filing a tax return based on that guidance, only to find out they are wrong, based on a later IRS opinion, or court ruling. The Tax Law was passed over a year ago, and this ruling was just made, which serves as a reminder that it is best to get a “Letter Ruling” from the IRS when an issue that is unclear arises in filing a tax return. That way, if the IRS goes back on the ruling, you have recourse in Tax Court, based on the erroneous guidance. IRS and Treasury issue guidance.
The proposed guidance concerned global intangible low income under Section 951A, the foreign tax credit, the treatment of domestic partnerships for purposes of determining the subpart F income of a partner, and the treatment of income of a controlled foreign corporation subject to a high rate of foreign tax under subsection 951A. The final regulations also provide guidance relating to the determination of a United States shareholder’s pro rata share of a controlled foreign corporation’s subpart F income and global intangible low taxed income included in the United States shareholders gross income, as well as certain reporting requirements relating to inclusions of subpart F income and global intangible low taxed income. The IRS also issued regulations relating to certain foreign tax credit aspects of the transition to an exemption system for income earned through foreign corporations.
If you asked for a letter ruling from the IRS, then had them change course on what they told you, and ended up with a tax debt, options other than Tax Court exist. Many options exist in the Internal Revenue Code for dealing with tax debts. Good Tax Resolution can help you determine every option for Tax Relief in the IRS Code, including, but not limited to the IRS Fresh Start Program.