Taxation

One of the most innovative features of the energy tax credit provisions of the Inflation Reduction Act (the “IRA”), which became law on August 16, 2022, is a pair of provisions that allow taxpayers to sell energy tax credits to a third party for cash (Section 6418) or to elect to receive a cash payment of the tax credit directly from the federal government (Section 6417).¹ Since the IRA was enacted, taxpayers, tax-exempt organizations, governmental entities, and their advisors have been counting the days for the IRS to provide guidance on how to apply these monetization provisions, which are expected to be a game-changer in the U.S. market for investment into green energy technologies. 

The IRS released a major package of temporary and proposed regulations on these provisions on June 14, 2023.

The International Comparative Legal Guide - Securitisation 2023, now in its sixteenth edition, is a leading legal text spanning the global securitization market, providing insights into the US and EU CLO market, cross-border trade receivables, taxation, and other topical issues and jurisdictions. Chapman partners David Nirenberg and Steven Kopp, recognized authorities on the tax treatment of US securitization transactions, co-authored the chapter entitled, "U.S. Withholding on Asset-Backed and Structured Securities."

On February 13, 2023, the IRS released Notices 2023-17 and 2023-18, which provide guidance on energy incentive tax credit provisions that were amended by the Inflation Reduction Act of 2022 (the "IRA"). Taxpayers and their advisors have been eagerly awaiting guidance on many aspects of the IRA's changes. The guidance in Notices 2023-17 and 2023-18, however, does not cover many of the most pressing issues regarding the new tax credit rules, such as the details of how to obtain a refund of tax credits under the new “direct pay” provision and how to comply with the prevailing wage and apprenticeship requirements. The IRS has stated that it will issue additional guidance on the IRA's changes to existing tax credit provisions in the future.

Chapman attorney Paul Carman chaired a panel discussion at the 12th Annual London Finance and Capital Markets Conference.

The Inflation Reduction Act (the “IRA”), which became law in August 2022, provides one of the most significant packages of renewable energy incentives in recent history. Most of the renewable energy provisions take the form of extended and expanded tax credits, which apply to investments in solar, wind, geothermal and other nontraditional energy resources. One tax credit provision of the IRA that will be of interest to ordinary consumers are the changes to the tax credit for taxpayers who purchase an electric vehicle (the “EV tax credit”).

The Inflation Reduction Act (the "IRA") is being hailed as one of the most significant legislative actions in recent history intended to incentivize investment in renewable energy technologies. The IRA generally achieves this through the extension and broadening of existing tax credit provisions that apply to investments in clean energy technologies such as solar, wind and geothermal. Since the IRA became law in August 2022, taxpayers have been eagerly awaiting regulations and other guidance on how to apply the new provisions and how to claim the tax credits. On November 30, 2022, the IRS issued the first item of guidance on these provisions in the form of IRS Notice 2022-61 (the "Notice").

The Inflation Reduction Act (the “IRA”), which became law on August 16, 2022, includes only a handful of tax provisions. Though few in number, the new provisions are expected to have a major impact on taxpayers. The corporate minimum income tax and excise tax on stock buybacks are both entirely new tax regimes implemented under the IRA. In addition, the IRA has introduced major changes to the investment tax credit (the “ITC”) and the production tax credit (“PTC”), which are intended to encourage investment in renewable energy projects, such as solar and wind projects.

The IRS published final LIBOR transition regulations in the Federal Register on January 4, 2022. The regulations allow modifications of debt instruments and other contracts to replace LIBOR without triggering a reissuance or deemed exchange if certain conditions are met.

This article in the Journal of Taxation of Financial Products outlines tax-exempt municipal debt securitization transactions and associated tax issues. Chapman authors, David Nirenberg, Brent Feller, and Steven Kopp, provide an in-depth look at the primary tax issues for parties to both single-class and multiple-class tax-exempt bond securitization transactions.

Chapman attorney Juliet Huang will serve as Second Vice Chair of The Workshop: Hybrid 2021, hosted by the National Association of Bond Lawyers (NABL). Chapman attorneys Sarah Breitmeyer, Nancy Burke, Brent Feller, Katherine Gale, and Sharone Levy will be speaking at the event. 

Chapman attorneys Paul Carman and Rebecca Wallenfelsz spoke at a Chicago Lawyers' Committee for Civil Rights program.

In 2017, the Financial Conduct Authority, the U.K. authority that oversees the London interbank offered rate, announced that LIBOR may be phased out after the end of 2021. The announcement applied to all currency and term variants of LIBOR, including U.S. dollar denominated LIBOR.

Chapman attorney Paul Carman spoke at an "Opportunity Zone Workshop" hosted by the City of Victoria, TX. 

At today’s Earth Day Climate Summit, President Joe Biden announced to world leaders that the United States is committed to cutting its greenhouse gas emissions by 50% to 52% from 2005 levels by 2030.

Last week the Loan Syndications and Trading Association, the Loan Market Association, and the Asia Pacific Loan Market Association jointly published their first ever Social Loan Principles.

Chapman attorney David Cholst spoke at a National Association of Bond Lawyers U Now webinar.

The Securities and Exchange Commission this month announced that the Divisions of Corporation Finance, Examinations, and Enforcement are all undertaking climate or ESG-related initiatives. 

Chapman attorneys Brent Feller, Juliet Huang, and Hillary Phelps spoke at The Institute, hosted by the National Association of Bond Lawyers.

Environmental, Social and Governance investing in the United States has reportedly reached an estimated $250 billion in assets under management and is expected to see continued growth in 2021 and beyond. 

Chapman attorney Craig Cohen spoke at the 10th International Bar Association London Finance and Capital Markets Virtual Tax Conference.

Chapman attorneys Sarah Breitmeyer and David Cholst were named the Federal Tax Portfolio Authors of the Year by Bloomberg Tax & Accounting.

Chapman attorney Craig Cohen spoke at the American Bar Association's Virtual 2020 Fall Tax Meeting.

Chapman attorneys Sarah Breitmeyer and David Cholst spoke at the National Association of Bond Lawyers's The Workshop.

Chapman attorney Sarah Breitmeyer spoke at an Illinois Government Finance Officers Association Educational Webinar.

Chapman attorney Brent Feller spoke at the 2020 National Association of Local Housing Finance Agencies Virtual Conference. 

The CARES Act, which was designed to support individuals and businesses affected by the COVID-19 pandemic, was signed into law on March 27. This article summarizes various tax provisions in the CARES Act.

The CARES Act, which was enacted to support individuals and businesses affected by the COVID-19 pandemic, provides that borrowers experiencing financial hardship due to the national emergency declared by the President, may request and obtain forbearance on certain federally backed mortgage loans.

In 2017, the UK authority that oversees the London interbank offered rate, announced that LIBOR may be phased out after the end of 2021. The announcement applied to all currency and term variants of LIBOR, including US dollar denominated LIBOR.

On May 4, the IRS issued Revenue Procedure 2020‑19, which provides temporary relief to publicly‑offered regulated investment companies and publicly‑offered real estate investment trusts, with respect to stock distributions that are intended to qualify for the dividends-paid deduction.

On April 13, the IRS released Revenue Procedure 2020-26, which provides that forbearances and related modifications of certain mortgage loans will not be treated as replacing the unmodified loan with a newly issued loan for purposes of the REMIC and grantor trust qualification tests (and related REMIC-related taxes).

The Coronavirus Aid, Relief, and Economic Security Act to support individuals and businesses affected by COVID-19 pandemic was signed into law on March 27. This client alert summarizes the various tax provisions in the CARES Act.

The IRS has released a new Form 8038-CP, Return for Credit Payments to Issuers of Qualified Bonds, along with new instructions. Form 8038-CP is used by issuers to claim payments from the federal government representing all or a portion of interest payable on direct pay bonds

Chapman attorney Paul Carman spoke at the 9th Annual International Bar Association Tax Conference. 

Chapman attorneys Sarah Breitmeyer and Brent Feller spoke at the National Association of Bond Lawyers's The Institute. 

In December 2017, Congress added a provision to the tax code that allows some taxpayers to defer some capital gain and eliminate other gain if the taxpayer invests in an Opportunity Zone and certain conditions are met. 

Chapman attorney Paul Carman spoke at the 8th Annual International Bar Association Tax Conference. 

New treasury regulations proposed by the Internal Revenue Service on October 31 significantly diminish the sting of Section 956 for many US corporations that own stock in non-US corporations that have investments in US property.

The Internal Revenue Service recently provided excise tax relief for funds taxed as regulated investment companies that were required to increase their gross income because of the new Section 965 transition tax.

As an increasing number of jurisdictions have entered into intergovernmental agreements related to FATCA or agreed to mandate compliance with the OECD common reporting standard, exempt organizations are being asked to classify themselves in subscription agreements and forms provided to the investment vehicles.

On February 9, President Trump signed into law the Bipartisan Budget Act of 2018 which retroactively extended some temporary tax breaks and includes some additional provisions which were left out of the Tax Cuts and Jobs Act of 2017. 

Under 1991 US guidance, if a non-US partner sold its interest in a US partnership, the selling partner would look through to the business of the partnership and would be required to file a US tax return and pay US tax if the partnership would have had income effectively connected to a US trade or business on a deemed sale of its assets. But that guidance was reversed in a tax court case. Then the US position was reversed again in the Tax Cuts and Jobs Act.

For non-US individuals and corporations that invest in real estate within the US, the rules that subject their gains to US federal income tax generally are found under Section 897. The Foreign Investment in Real Property Tax Act rules have often been attacked as a disincentive for overseas investors to enter the US real estate market.

This article describes the impact of the Tax Cuts and Jobs Act on securitization transactions. The article addresses in detail the new limitation on the deduction for business interest expense as well as the requirement that the transferee of an equity interest in a partnership engaged in a US trade or business withhold 10% of the amount realized unless the transferor certifies that it is a US person. 

Although recent legislation commonly referred to as the Tax Cuts and Jobs Act retained Section 956 of the Internal Revenue Code (and its notorious deemed dividend issue), the enactment of other changes may reduce the impact of Section 956 on taxpayers.

On December 22, 2017, President Trump signed into law the most sweeping tax law changes in the last thirty years. Highlights of the new tax reform legislation as they impact individuals are summarized in this Client Alert.

Overlooked in the many discussions about the new tax laws are the consequences on trusts and estates and the high likelihood trusts and their beneficiaries will see larger income tax bills for the next seven years. This Client Alert focuses on how the tax changes will impact trusts and estates, identify some of the significant uncertainties and provide recommendations for fiduciaries.

On December 20, Congress passed the act commonly referred to as the Tax Cuts and Jobs Act of 2017. Although no provision of the Act was designed specifically to address securitization transactions, two new sets of rules are likely to have significant effects on at least some securitization transactions

On December 15, House and Senate conferees reached an agreement on the Tax Cut and Jobs Act and released the final version of the Bill, which is expected to be voted on this week in the House and Senate.

On August 11, the IRS issued Rev. Proc. 2017-45 which allows publicly offered real estate investment trusts and regulated investment companies to make stock distributions that will qualify for the dividends-paid deduction, if certain requirements are met, and therefore enable a RIC or REIT to meet its minimum annual dividend distribution tests. 

Both the House and Senate versions of the Tax Cuts and Jobs Act include a new provision that would impose an excise tax on the compensation paid by certain tax-exempt organizations if the compensation to a covered employee is more than $1 million.

Both the House and Senate versions of the Tax Cuts and Jobs Act include a new provision that would impose an excise tax on the compensation paid by certain exempt organizations, including certain state and local governmental entities, if the compensation to a covered employee is more than $1 million.

On November 2, Representative Brady released the “Tax Cuts and Jobs Act.” On November 9, the Senate Finance Committee released a “Description of the Chairman’s Mark of the ‘Tax Cuts and Jobs Act.’” This summary highlights four provisions in the proposed legislation that will be of particular interest to financial institutions.

On November 2, Representative Brady released the proposed text of the long-awaited federal income tax reform bill. The bill also includes a provision that appears aimed at subjecting public pension plans to unrelated business taxable income.

On November 2, Representative Kevin Brady released the proposed text of the long-awaited federal income tax reform bill. The bill also includes a provision that creates a limit on the deductibility of interest. If enacted, this provision could have potentially wide-reaching impacts on securitization transactions.

On November 2, Representative Brady released the proposed text of the long-awaited federal income tax reform bill. If enacted into law, the bill would eliminate all tax-exempt private activity bonds, tax credit bonds and all tax-exempt advance refunding bonds.

In an environment of growing global mobility of many families and heightened regulatory and compliance pressures, many U.S. estate planning advisors are encountering international issues for their clients with increasing frequency.

On May 1, Tax Notes published a flurry of revocations of private letter rulings that had been issued to regulated investment companies. In each of the revocations, at least one of the rulings requested in the original private letter ruling was that the income from a commodity linked note was qualified income for the purposes of Internal Revenue Code § 851.

The Tax Exempt and Government Entities Division of the Internal Revenue Service announced changes to the information document request process in tax-exempt bond and tax-advantaged bond examinations.

On January 17, 2017, the Internal Revenue Service released new safe harbor guidelines for determining whether a management contract results in private business use of property for purposes of the federal income tax rules relating to tax-exempt bonds.

On August 22, the Internal Revenue Service released new safe harbor guidelines for determining whether a management contract results in private business use of property for purposes of the federal income tax rules relating to tax-exempt bonds.

The Internal Revenue Service issued Notice 2016-10 to address foreign tax credits and regulated investment companies. The Internal Revenue Code does not provide guidance on the question of how a RIC should treat refunds of foreign tax when it has made an election to pass the foreign tax credit to its shareholders. Notice 2016-10 begins to address this question.

UCITS are a type of collective investment vehicle and they may be difficult to fit into existing tax and regulatory schemes. Although UCITS were developed to facilitate cross-border investments, the model U.S. and OECD treaties are only recently beginning to effectively address collective investment vehicles.

In December 2015, Congress passed the Protecting Americans from Tax Hikes Act of 2015, which extended certain federal renewable energy tax credits for projects that began construction prior to the dates set forth in the Path Act. In response to that extension, the IRS has issued additional guidance with respect to a renewable energy facility’s eligibility to receive these tax credits.

The Internal Revenue Service recently released proposed regulations concerning the definition of a “political subdivision” for purposes of tax-exempt financing.

On Oct. 27, 2015, the United States Treasury Department and the Internal Revenue Service published long-awaited final regulations that provide welcome guidance to 501(c)(3) health care organizations that are borrowers of qualified 501(c)(3) bonds.

Private schools that are exempt from federal income taxation must file an annual information return with the IRS concerning their racial nondiscrimination policies. Schools that file the annual information return, Form 990, Return of Organization Exempt from Income Tax may satisfy this annual filing requirement on Schedule E.

Form 5578 is a half-page form simply certifying that a private school has complied with the racial nondiscrimination guidelines set forth by the Internal Revenue Service. The failure of a private school to annually file this form may jeopardize the school's tax-exempt status under Section 501(c)(3).