The IRS and the Department of the Treasury have scheduled a public hearing this November on the proposed regulations regarding dual consolidated losses (DCL) and the treatment of certain disregarded payments — a proposal that has been met with resistance by some tax organizations. (89 FR 88686, 11/07/2024)
A notice published in the Federal Register states that the hearing will be held on November 22, 2024, at 10 a.m. ET at the IRS Building in Washington, D.C.
Background.
In August, the IRS and the Treasury issued proposed regs relating to issues arising under the DCL and certain disregarded payments that give rise to losses for foreign tax purposes.
These include rules regarding the effect of intercompany transactions, items arising from stock ownership when calculating a DCL, and the application of the DCL rules to certain foreign taxes.
The draft received pushback from tax organizations, with a point of contention being the elimination of the stock inclusion rule (see Tax Orgs Find Draft Dual Consolidated Loss Regs Problematic). The proposed regs clarify that items arising from the ownership of stock — such as gain recognized on the sale or exchange of stock and dividends as well as deductions with respect thereto — are not taken into account for purposes of computing income or a dual consolidated loss.
Reacting to this, the American Institute of Public Certified Accountants asked for the regs to be withdrawn, or for the IRS to at least allow for the “inclusion of stock attributable to foreign corporations organized in the same foreign country” as a dual resident corporation.
The U.S. Chamber of Commerce also argued that the removal of the stock inclusion rule “would be a significant misalignment with the policy behind the DCL rules” in instances where a separate unit and the corporate subsidiary are in the same tax jurisdiction.
Public hearing participation.
Individuals who wish to present oral comments at the public hearing must submit an outline of topics to be discussed and the time to be devoted to each topic by November 14, 2024. However, the event will be cancelled if the IRS does not receive any outlines by that date.
In addition, requests to attend the hearing must be received by 5 p.m. ET on November 19, 2024.
The notice contains other instructions for those who want to testify or attend the hearing, either in person or by telephone.
For more information about the dual consolidated loss rules, see Checkpoint’s Federal Tax Coordinator ¶ E-9200 et seq.
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