The Latest in Tax News: August 12 - August 18 Edition

Textbook Tax presents its weekly tax news update. A quick read discussing various tax news, tax stories, and tax events trending in the United States during the week. The following tax topics cover the week of August 12, 2019 through August 18, 2019. The tax topics presented represent my favorites in tax news for the week. Please comment any tax news stories you found interesting for the recent week. Additionally, please email me or connect with me on social media for weekly tax news updates sent straight to you!

Related Posts -- Prior Weeks' Tax News
August 5 - August 11
July 29 - August 4
July 22 - July 28

Tax News for August 2019

This week in tax news focuses on the fate of the solar energy subsidy, the French digital services tax, Amazon.com Inc et al v Commissioner of Internal Revenue, and Chrisleys tax evasion.

Period: August 12 - August 18

Tax Topic: The fate of the solar energy tax deduction

Why is it a tax story?

Tax policy greatly influences industry growth and sustainability. In 2007, the U.S. congress passed a bill enacting a solar energy tax deduction. The bill allowed individual and corporate taxpayers to deduct 30% of the cost of new solar panel installation. The policy boosted the solar panel industry, increasing both residential and commercial solar energy output in the U.S. The bill increased solar energy output by 10,000%, created hundred thousands of jobs, and boosted $140 billion in solar energy investment. Seen as a success, Congress extended the tax subsidy into 2019. The tax credit will phase out at the end of 2019, and its fate is currently unknown. Here are the facts.

Tax story summary:

• The solar tax deduction phase out period is three years
• The residential solar tax deduction will 100% phase out
• The commercial solar tax deduction will lower to 10%
• Proposed legislation aims to keep the deduction rate at 30% for another five years, but the fate of the proposed bill is unknown
• An alternative tax subsidy is a production tax credit that instead provides tax incentives based on energy production output (rather than investment)

Should Congress extend the solar tax subsidy? What changes would you make?

Tax Topic: French digital tax challengers

Why is it a tax story?

Back in July, the French Senate passed a digital tax. The digital tax places a 3% tax on digital revenues earned in France. Large U.S. technology companies believe the French digital tax unfairly targets the industry and is an unreasonable levy. A U.S. hearing will take place Monday (August 19) to discuss the French digital tax. Here are the facts.

Tax Story Summary:

• The 3% digital tax applies to companies with more than 25 million euros in French revenue and 750 million euros worldwide
• Google, Amazon, and Facebook will all testify at the U.S. hearing discussing the French digital services tax
• The big tech companies complain the tax unfairly targets the digital services industry, will create disputes based on revenue location generation, and sets a dangerous precedent in international tax policies
• Additionally, the companies noted that the cost of the tax will flow down the supply chain, ultimately affecting the customer the most through higher prices
• The U.S. Trade Representative's Office already described the digital tax as unreasonable

How will the U.S. and its tech companies respond to the French digital tax?

Tax Topic: Amazon defeats the IRS appeal

Why is it a tax story?

The IRS appealed a 2017 tax ruling in favor of Amazon. The tax dispute related to transactions involving the transfer of intangible assets from the U.S. to Europe. Amazon and the IRS disagreed on the definition of intangible assets and the tax treatment of such transactions. The dispute equaled $1.5 billion, representing a significant potential tax liability for Amazon. Here are the facts.

Tax Story Summary:

• The court case dates back to a 2005 and 2006 transfer of intangible assets from the U.S. to a Luxembourg subsidiary
• The case related to a $1.5 billion tax treatment dispute 
• In 2017, the U.S. Tax Court ruled in favor of Amazon
• The U.S. Tax Court denied a broader definition of intangible assets presented by the IRS
• The 9th U.S. Circuit Court of Appeal upheld the 2017 ruling
• For reference, the case is: Amazon.com Inc et al v Commissioner of Internal Revenue, 9th U.S. Circuit Court of Appeals, No. 17-72922

Do you agree with the ruling on the case?

Tax Topic: "Chrisley Knows Best" stars indicted on tax evasion charges

Why is it a tax story?

Always report all your income. Todd and Julie Chrisley learned the hard way. The reality stars from "Chrisley Knows Best" were indicted on tax evasion charges in Atlanta earlier this week. The couple denies the allocations. Here are the facts.

Tax Story Summary:

• Among other things, the Chrisleys set up a company called 7C's Productions to receive the income received from the reality show, but they failed to report the income on their tax returns 
• The federal grand jury in Atlanta indicted Todd and Julie Chrisley on 12-counts
• The 12-count indictment includes tax evasion, conspiracy to commit fraud, bank fraud, and wire fraud
• The reality stars deny the wrongdoing, claiming a former employee stole from them and reported false documents
• Peter Tarantino, the accountant, was also charged in the indictment

What will happen to the stars of Chrisley Knows Best?

That is all for the most recent tax news, tax stories, and tax events.

Please share any and all comments below!