The agency learned of "few sympathetic cases" in which companies were excessively taxed under the Tax Cuts and Jobs Act's transition levy on overseas income, said Peter Blessing, the IRS associate chief counsel, international, at the American Bar Association
’s Section of Taxation midyear meeting in Boca Raton, Florida.
The agency is considering double-taxation relief for companies that saw their earnings taxed first as dividends in the previous system, and again by the TCJA's 15.5% or 8% one-time deemed repatriation tax.
To ensure that companies didn't try to game the transition tax, the TCJA measured income on two dates, Nov. 2, 2017, when the legislation was introduced in the
U.S. House of Representatives, and Dec. 22, 2017, when President Donald Trump signed the bill into law. The tax is imposed on whichever amount was higher.
But some companies may have had their foreign subsidiaries issue dividends for "business reasons," the IRS said, creating an unfair imposition of both taxes in a Jan. 17
news release announcing the relief.
James S. Wang, attorney-adviser with Treasury's Office of Tax Policy,
said last week that the IRS would consider relief on a case-by-case basis.
The IRS statement was meant to encourage companies in similar situations to approach the agency for consideration, Blessing said Friday.
"It wasn't meant to be any kind of broad-based program at all," he said.
IRS officials have said that companies would need to prove that they were indeed double-taxed, after taking into account foreign tax credits, before receiving the relief. Companies would also need to show that the transactions were entered into for legitimate business reasons and not to obtain a tax benefit.
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