Tuesday, November 21, 2023

IRS Official Say That They Expect To Issue Offshore Profit Rules In 2024

The Internal Revenue Service expects to issue long-awaited proposed regulations on how to treat offshore profits that already have been taxed in the U.S. during the first half of next year, an agency lawyer said Tuesday.

Paul McLaughlin, special counsel for the IRS Office of Associate Chief Counsel, International, said the agency plans to publish those proposed rules sometime in the first half of 2024. McLaughlin spoke during a tax conference hosted by the American Bar Association in Philadelphia.

According to Law360,  while the rules won't be exhaustive, the rules for repatriating previously taxed earnings and profits, or PTEP, foreign income immediately taxed in the U.S., will address several important issues, including how to account for PTEP at both the U.S. shareholder and foreign corporation level, he said.

The rules will also address how to account for currency loss or gain when calculating PTEP and various other issues dealing with controlled foreign corporations owned by partnerships, McLaughlin said.

Officials have been indicating since at least 2020 that the PTEP regulations would be published as rulemakers have grappled with a bevy of complicated issues related to interactions between tax laws.

The general regulations would follow anti-abuse rules that Treasury has already released for Internal Revenue Code Section 245A, a measure enacted under the 2017 Tax Cuts and Jobs Act that lets companies bring home certain foreign-sourced earnings tax-free with a 100% dividends-received deduction.

Jones said that the agency expects to issue rules on those this provision by the end of the year.

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