Tax Notes Today consulted Kostelanetz & Fink counsel Robert M. Russell for expert analysis of the IRS Large Business & International Division's latest compliance campaign.
Mr. Russell was quoted in the article regarding the IRS' announcement of its new campaign, and what it may mean for taxpayers: '“This seems to me that [the IRS] is saying ‘We’ve spent time and we’ve looked at what we think the pressure points are, and we’ve trained our people. Now this is fair warning. We’re going to start looking at it for exam,’” Robert M. Russell of Kostelanetz & Fink LLP said.
Russell said that while the new campaign announcement is not a surprise, given the “incredibly short timeline” taxpayers had to calculate their section 965 tax, he hopes the IRS will keep in mind the state of affairs when amounts were being calculated when it assesses penalties.
“In conversations with the IRS in the moment when these were being filed, we didn’t even have forms. They basically gave you a blank sheet of paper and said, 'Write your [section] 965 numbers here,'" Russell said. "My hope is that will be part of the consideration when the audit is going on.”
The article went on to quote Mr. Russell's analysis of what the new campaign may mean for enforcement of the 2017 Tax Cuts and Jobs Act's global intangible low-tax income (GILTI) provisions:
"Russell predicted that both the GILTI provision and, to a lesser extent, the foreign-derived intangible income provision could be part of those “other material issues” contemplated in the announcement.
“If you’re knee-deep in the [section] 965 calculation, you understand CFCs [and] you know how they account for their earnings. I don’t think it’s a stretch to say, ‘Look, while we’re at it, let’s take a look at what you did on GILTI,’” Russell said."
Mr. Russell has extensive experience in international tax controversy and U.S. tax policy, having served in various positions with the IRS, the Department of the Treasury's Office of Tax Policy, and the U.S. Senate's Joint Committee on Taxation, in addition to his private practice.
Read the full article here.