Elizabeth Stevens Discusses Further Clarification on BEAT Rule with Bloomberg

Tax practitioners have identified fixes they think are needed to clarify mistaken cross-references and vagaries in the new tax law, saying changes need to be made as soon as possible to avoid widespread confusion during the next filing season.

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3. Base Erosion and Anti-Abuse Tax Aggregation Rule

Treasury has broad authority to write regulations implementing the base erosion and anti-abuse tax (BEAT) aggregation rule, which determines if companies with at least $500 million in annual gross receipts and base erosion payments that are at least 3 percent of their deductions are subject to the tax. But “it's not even 80 percent clear” what Congress intended in this rule, making it a strong candidate for further clarification, said Elizabeth J. Stevens, an associate at Caplin & Drysdale, Chartered.

The law is vague about which payments are included and how to aggregate income from various entities. [...] There are several ways to read the statute that don't seem right or consistent with congressional intent, Stevens said.

“It's not a model of clarity,” she said

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Excerpt taken from the article “Most Wanted: Tax Pros’ Technical Corrections Wish List” by Laura Davison for Bloomberg BNA.