The year ahead will be full of tax uncertainties in the U.S. and internationally, ranging from digital taxes and carbon taxes to possible tax hikes under the Biden administration.
A new report from Bloomberg Tax Accounting delves into these issues with a series of articles from Bloomberg’s team of tax experts. Topics include moves in states to enable e-commerce taxation, what’s next for Europe’s tax agenda, how COVID-19 relief measures could trigger tax-filing mistakes, cases to watch at the Supreme Court, and the tax consequences of a remote workforce.
The company’s “2021 Outlook on Tax” report comes at an uncertain time, in the midst of the pandemic when the Biden administration is implementing the tax provisions of the coronavirus stimulus package that Congress passed in December, while planning its own stimulus measures. At the same time, the U.S. is reengaging with its allies abroad on negotiating outstanding matters from last year including moves in some European countries to impose digital services taxes on U.S.-based multinationals like Google and Facebook, which were fiercely opposed by the Trump administration. At the same time, the Biden administration may be more open to levying carbon taxes as a way to control the growing climate crisis. The Supreme Court will also be weighing in on a number of tax cases.
“Our 2021 Outlook on Tax features an unrivaled combination of coverage from Bloomberg Tax’s team of expert reporters along with actionable insights offered by leading tax practitioners from across the globe,” said Lisa Fitzpatrick, president of Bloomberg Tax Accounting, in a statement Tuesday. “From topics as varied as cases to watch at the Supreme Court to the tax consequences of a remote workforce to increasing tax scrutiny in transfer pricing, Bloomberg Tax offers the most complete solution for tax professionals so they are ready for anything that comes their way in 2021.”
One Supreme Court case could have implications for taxpayers and tax professionals. The high court is expected to rule by June in the case of CIC Services v. IRS, on the matter of tax enforcement.
“The consulting firm wants a court to consider its challenge against a penalty-backed reporting requirement, but it has been twice blocked by the Anti-Injunction Act, which generally prohibits lawsuits aimed at restraining tax assessment or collection,” said the report. “The justices questioned the IRS in Dec. 1 oral arguments, with some suggesting that the firm may have no way to get judicial review without risking criminal exposure. A win for CIC Services would allow taxpayers to challenge other third-party reporting requirements.”
“While the ruling may have limited applicability, it will address an important concern with how the IRS labels transactions subject to burdensome reporting requirements without warning, and without notice to and comment from taxpayers that are impacted by the IRS designations,” said Charles Ruchelman, a member at Caplin Drysdale specializing in tax controversy, as quoted in the report.
The report also looks at IRS enforcement trends, what’s next for Europe’s tax agenda, international tax avoidance rules and related cases, tax scrutiny in transfer pricing, and employers’ new state and local tax obligations.
Accountants are also facing challenges on the financial reporting front, thanks to a bevy of new rules. The downloadable report also looks at recent accounting standards for leases and loans, such as the Current Expected Credit Loss, or CECL, standard, as well as how they are affecting investors and how technology providers are responding.