TEI’s standing committees continue their excellent advocacy work across the globe. Copies of TEI’s submissions can be found at www.tei.org/advocacy. To get involved in TEI’s advocacy efforts, please reach out to our committee chairs or any member of TEI’s legal staff.
Liaison Meetings With Canada Revenue Agency and Department of Finance
On December 8–9, delegations of TEI’s Canadian Income Tax Committee and Canadian Commodity Tax Committee members virtually participated in TEI’s annual liaison meetings with representatives of the Canada Revenue Agency (CRA) and Department of Finance. The 2020 meetings featured robust agendas covering a range of tax law, policy, and administration issues important to many TEI members.
This year’s income tax agendas naturally focused on a number of issues related to the government’s fiscal responses to the COVID-19 crisis, including the implementation of the Canada Emergency Response Benefit and the Canada Emergency Wage Subsidy (CEWS). The CRA meeting particularly addressed the government’s initiative to reduce employers’ income tax compliance and reporting burdens with respect to their employees who are working from home during the COVID-19 pandemic. The Department of Finance meeting also featured an in-depth policy discussion of several TEI proposals for building on the tax measures that were included in the government’s COVID-19 Economic Response Plan to restart the Canadian economy as it recovers from the COVID-19 pandemic. Other agenda items included the taxation of cross-border cash pooling arrangements, the prohibited investment rules for retirement compensation arrangements, and the (premature) collection of disputed tax amounts from large corporations, among many others.
This year’s commodity tax agenda addressed issues related to CRA’s handling of various items during the COVID-19 pandemic, including the use of electronic signatures, email communications, data transfers, credits and refunds, large case audits, and statutes of limitation. TEI’s members also received an update from CRA regarding My Business Account initiatives and features, updates on CRA’s appeals and objections status, and addressed questions regarding amalgamations, Section 167, purchase orders, wash transactions, the Beaudet case, and commodity tax filings. The Canadian Commodity Tax Committee discussed various legislative initiatives with the Department of Finance, including the recently issued Fall Economic Statement, nonresident registration requirements, emissions performance credits and offsets, pension plan rebate time limits, and Finance’s intentions for the joint venture election.
TEI Files Comments on OECD Pillar One and Pillar Two Blueprints
On December 13, TEI filed comments with the Organisation for Economic Co-operation and Development (OECD) regarding its latest documents addressing the tax challenges of the digitalization of the economy: the Pillar One and Pillar Two Blueprints. TEI’s comments addressed many of the specific technical questions the OECD posed in its consultation document, including administrative and technical issues related to Amounts A and B under Pillar One as well as the GloBE proposal under Pillar Two. TEI’s general comments focused on the need for the various unilateral tax measures aimed at the digitalization of the economy to be withdrawn upon an OECD political agreement as well as on the need for relief from double taxation and a binding mechanism for resolving disputes.
Request for European Commission’s Intervention to Help Businesses Survive COVID-19 Disruptions
On November 2, TEI submitted a letter to the European Commission requesting VAT-related intervention to assist businesses in surviving COVID-19 disruptions. The letter explains that COVID-19 disruptions have required businesses to alter their supply chains significantly—changes that have upset carefully structured operations and resulted in increased compliance costs from declaration and payment of import VAT. The letter urges the Commission to recommend that member states adapt their VAT legislation in eight different areas and adopt proposals to amend VAT Directive articles 11 and 306 slightly, as a matter of urgency.
US Federal Tax
Comments Concerning the IRS’ Proposed Elimination of Revenue Procedure 94-69
On October 16, TEI submitted comments to the Large Business & International Division of the Internal Revenue Service urging the division to retain Revenue Procedure 94-69 and extend it to all taxpayers subject to the Large Coordinated Case Program. The comment letter provides extensive discussion supporting TEI’s view that Revenue Procedure 94-69 is a critical procedure that simplifies audits, promotes transparency and collaboration between taxpayers and Exam teams, and provides a mechanism for resolving issues at the lowest possible level in examinations. Furthermore, the comment letter argues that the reasons the IRS offered in support of eliminating the procedure reflected an overly simplistic view of the procedure and the tax compliance burdens and other pressures unique to large case taxpayers.
US State and Local Tax
TEI Files Amicus Brief With South Carolina Court of Appeals
On January 7, TEI filed an amicus brief with the South Carolina Court of Appeals in Amazon Services, LLC v. South Carolina Department of Revenue. The case involves South Carolina’s attempt to hold Amazon Services liable for sales tax on 2016 transactions between third-party retailers and their South Carolina customers, because those sales took place on Amazon Service’s online platform. The South Carolina legislature amended its statutes in 2019 to expressly impose such responsibility on marketplace facilitators and made these amendments prospective only.
TEI’s brief argued that South Carolina’s pre-2019 statutes did not address the rights, responsibilities, or liabilities of third-party retailers and marketplace facilitators, nor did they inform marketplace facilitators of the Department of Revenue’s intent to hold marketplace facilitators responsible for tax on transactions taking place over their platforms. Such efforts by the Department would have enabled marketplace facilitators to mitigate 100 percent of their liability for these taxes by collecting them from consumers and to avoid double collection of tax on the same transaction. TEI argued that it would offend the principles of sound tax policy to allow taxing authorities to hold marketplace facilitators liable for the tax, when that taxing authority failed to undertake these fundamental tax administration responsibilities.
Pilar Mata is the director of operations at TEI.