04 October 2024

Report on recent US international tax developments — 4 October 2024

The 2024 US presidential race and congressional elections will have major implications for tax policy. On the international tax side of the equation, changes to several international measures are already scheduled to happen under the Tax Cuts and Jobs Act. Maintaining the current policy on these provisions is estimated to cost approximately $140b over 10 years, according to the Congressional Budget Office.

Both Democratic presidential candidate Vice President Kamala Harris and Republican candidate Former President Donald Trump recently elaborated on their tax plans in speeches. VP Harris in late September expressed support for the international tax proposals put forward by the Biden Administration in the context of paying for the New Way Forward to Build American Industrial Strength plan, which includes America Forward tax credits for emerging industries. "A New Way Forward for the Middle Class" said the plan to make the tax system fairer and promote fiscal responsibility will "reform the international tax system so that corporations can no longer get big rewards for shifting jobs and profits overseas."

The newly announced approach competes with Republican candidate Former President Trump's tax and tariff proposals, which he also recently restated. These include a 15% "Made in America" tax rate for companies that make products in America and, for those that make products elsewhere, "a very substantial tariff when you send your product into the United States." Tariffs were previously described to be 10%-20% or 60% for products from foreign adversaries, and Trump said 100% or 200% could apply to foreign automobiles.

The IRS plans to update its draft digital asset reporting instructions for Form 1099-DA, "Digital Asset Proceeds from Broker Transactions." According to an official, there are inconsistencies that will be addressed in the updates to the draft instructions. The updates will be part of a formal comment process expected to begin "fairly soon," following the release of the official draft form and instructions. The comment period will last for 30 days.

Form 1099-DA was created when IRC Section 6045 was expanded by the 2021 Infrastructure Investment and Jobs Act to include within the definition of broker an entity that regularly effectuates the transfer of digital assets for another person.

The recently proposed corporate alternative minimum tax (CAMT) regulations offer guidance for determining whether a corporation is an "applicable corporation" subject to the CAMT and computing an entity's adjusted financial statement income (AFSI). Among other things, the proposed regulations contain guidance on determining the CAMT foreign tax credit. EY has released a comprehensive overview of the proposed regulations, available here. Observations on domestic and international tax aspects of the regulations are included, as well as discussions on partnerships, hedging transactions and financially distressed companies.

The OECD this week released information regarding its Cryptocurrency Reporting Framework (CARF). CARF is meant to enable the automatic exchange of tax information on transactions in crypto assets using a standardized approach. The OECD issued the first release of frequently asked questions (FAQs) to provide guidance on the CARF, including on reporting obligations by crypto-asset service providers, reporting requirements for reportable retail payment transactions and due diligence procedures, among other areas.

More information regarding the OECD's work related to the CARF and the Common Reporting Standard (CRS) is available here.

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Contact Information

For additional information concerning this Alert, please contact:

Ernst & Young LLP (United States), International Tax and Transaction Services, Washington, DC

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

Document ID: 2024-1828