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    Tax Changes Central to Clinton Agenda, Lawmakers and Aides Say

    Democratic presidential nominee Hillary Clinton's agenda to raise the living standards of middle-income Americans begins with changes to the federal income tax code and includes efforts to create jobs by rebuilding the nation's infrastructure, according to House and Senate taxwriters and Clinton campaign advisers speaking July 27 at policy briefings during the Democratic National Convention in Philadelphia.

    MTC Counsel Discusses State Tax Implications of IRS Debt-Equity Rules

    States should be able to apply the substantive provisions of the IRS's proposed debt-equity rules in cases when the IRS has not made an adjustment due to the federal consolidated group exception, Multistate Tax Commission Counsel Bruce Fort said at a July 26 Uniformity Committee public session in Kansas City, Missouri.
    Put another way, Fort said, the proposed IRC section 385 regs (REG-108060-15) should be self-executing in separate-entity states and in combined filing states for transactions between federally consolidated members that are not filing on the same state return.

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    EU Consults on Plan to Allow Lower VAT Rates for Electronic Publishing

    The European Commission has opened a consultation seeking input of stakeholders in the electronic publishing industry on its proposal to allow member states to offer them the same favorable VAT treatment the states may currently offer to print publications.
    The commission's action plan on VAT would allow member states the option of applying the VAT rate for printed publications to electronic publications, according to a consultation document released July 25.

    Debt-Equity Challenges Must Get Associate Office Review

    In a sign that the IRS is preparing for finalization of the controversial debt or equity regulations, the agency posted July 25 a revised version of a chief counsel notice from June 30 making clear that any case in Exam or litigation raising an issue under section 385 must be coordinated with the Associate Chief Counsel offices.
    The notice posted last month (CC-2016-009) listed section 385(c) as one of 74 specific issues requiring associate office review, but on July 25 the IRS removed subsection (c) from the listing.

    New York ALJ Says Company Should Have Filed Combined Return, Not Added Back Royalty Payments

    A subsidiary of Whole Foods Inc. should have determined whether it was required to file a combined New York return with a related holding company before it added back royalty payments to its federal taxable income, an administrative law judge recently held.
    Administrative Law Judge Joseph Pinto Jr. of the New York State Division of Tax Appeals said in the July 14 opinion that a 2007 amendment to the state's tax code required the taxpayer to file a combined return with a related limited partnership that operated as an intangible holding company.

    Court Dismisses Suit Challenging IRS Transition Rules for Offshore Disclosure Program

    A U.S. federal court on July 25 dismissed a lawsuit brought by three women who claimed that the IRS unfairly denied them the right to participate in a streamlined process for disclosing previously unreported offshore accounts instead of the more onerous 2012 offshore voluntary disclosure program that they originally entered into.
    The plaintiffs claimed that because they are being forced to observe the IRS's transition rules for moving into the 2014 streamlined filing compliance procedures (SFCP), they are exposed to much higher financial burdens, including a requirement to pay tax and interest on up to five additional years of income.

    Officials Open to Clarifying Political Subdivision Regs

    Officials on June 6 appeared willing to clarify provisions in controversial proposed regulations that would redefine the meaning of political subdivision in issuing tax-exempt bonds.
    At a hearing at IRS headquarters in Washington, Spence Hanemann, branch 5 attorney, IRS Office of Associate Chief Counsel (Financial Institutions and Products), acknowledged concerns expressed in more than 100 comments on REG-129067-15 (Doc 2016-3660), which came out in February and has been criticized by representatives of the public finance community who fear it will cause uncertainty and disruption in the financial markets. The proposed regs say that to qualify as a political subdivision, an entity must be governmentally controlled, with control defined as ongoing rights or power to direct significant actions of the entity. (Prior coverage (Doc 2016-3702).)
    A political subdivision must also serve a governmental purpose and provide a significant public benefit, with no more than incidental benefit to private persons. The proposed regs retain the requirement that a political subdivision be able to exercise at least one sovereign power -- eminent domain, police power, or taxing power.

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