AUGUST 10TH, 2017 | BLOOMBERG BNA KPMG SEEKS CERTAINTY ON DIRECTION OF TAX REGULATIONS REVIEW
The uncertainty over the fate of tax regulations being reviewed by Treasury may stifle taxpayers’ business and investment decisions, KPMG LLP said.
Some of the tax regulations under review reflect dramatic changes to previous policy, KPMG said Aug. 7 in a letter to the Internal Revenue Service. Transitioning to a few of the rules requires data collection and technological enhancements that can be costly for taxpayers, the firm said.
“The challenge with Notice 2017-38 is that taxpayers have already taken steps to comply with most of the eight sets of regulations identified in the Notice—at a significant expense,” said Jorge E. Castro, founder of Castro Strategies LLC and a former IRS official and congressional tax counsel. “And while the Administration's objective to reduce regulatory burden is worthwhile, taxpayers require more direction from Treasury and IRS on how to move forward with the regulations.”
Until taxpayers receive legal certainty, they have to be prepared for all scenarios and assume that the regulations may continue in some manner, he said in an email.
By Allyson Versprille
JULY 28TH, 2017 | TAX NOTES ‘BIG 6’ TOUT TAX REFORM UNITY, DROP BORDER TAX
The “Big Six” group of senior Republicans presented a united front July 27 with a joint statement of tax reform principles that jettisoned the controversial border-adjustable tax championed by House GOP leaders while declaring the congressional taxwriting committees ready to begin drafting a bill. Many observers hailed the framework as evidence that tax reform was gathering steam, but some remained skeptical.
In a statement, Mark A. Weinberger of the Business Roundtable praised the joint statement as an “important development toward passage of tax reform” and evidence of momentum toward enacting reform this year. He also said that the new framework’s principles lay the foundation for a “globally competitive U.S. corporate tax rate and a modern international tax system.”
And while some in the business community may not get the sense that reform is imminent from the statement, “I do think the statement serves the purpose of signaling to the public that they are working on a path forward and there is general agreement between the administration and congressional Republican leadership on the parameters for what tax reform should look like,” Jorge Castro of Castro Strategies LLC told Tax Analysts.
“There are still many hurdles to overcome in the coming months when it comes to tax reform — on a political, policy, and technical level — but the statement is surely a step in the right direction. It will also give members of Congress a rallying point for which to discuss with their constituents back home during the August recess,” said Castro, a former Finance Committee tax staffer.
By Jonathan Curry, Luca Gattoni-Celli, and Asha Glover
Full Article >>
JULY 10TH, 2017 | BLOOMBERG BNA DEBT-EQUITY, ESTATE TAX ISSUES AMONG RULES TREASURY WILL REVIEW
The Treasury Department identified eight regulatory projects, including controversial debt-equity and estate tax valuation rules, as possibly imposing an undue burden on taxpayers or exceeding the Internal Revenue Service's authority.
An agency notice (Notice 2017-38) issued July 7 stems from an April 21 executive order requiring Treasury to examine “significant” tax rules from the final year of President Barack Obama's term and recommend modification or repeal if they are too burdensome or complex.
While the IRS and Treasury still have ample work ahead of them, identifying a list of regulations for further examination is a significant step in responding to President Donald Trump's calls to reduce regulatory burden, said Jorge E. Castro, founder of Castro Strategies LLC and a former IRS official and congressional tax counsel.
In Notice 2017-38, the IRS and Treasury didn't offer recommendations about whether the eight identified rules should be repealed or modified. They may, however, want to move quickly in providing further details on the actions they plan to take, Castro told Bloomberg BNA.
“It's important for the administration to signal to the public that, just because they've highlighted these regulations, doesn't mean that they're going to be rescinded,” he said. Without further information from the government, taxpayers may assume that the regulations are sure to be revoked and stop complying with them, he said.
Castro said the IRS and Treasury have already taken impressive steps to address the president's concerns about regulatory burden but agreed that political calls need to be made in the final decisions about the identified rules.
By Allyson Versprille and Laura Davison
JULY 3RD, 2017 | TAX NOTES TOP SENATE TAX AIDE TAPPED FOR TREASURY POST
Christopher E. Campbell, a longtime aide to the Senate’s top taxwriter, has been tapped to be the next Treasury assistant secretary for financial institutions, the White House announced late June 27.
The White House’s choice for the role was praised by Jorge Castro of Castro Strategies LLC, a former IRS senior official and congressional tax counsel. “Chris is well respected in the Senate and House, and his relationships with senators, members, and staff will surely be an asset to President Trump and Secretary Mnuchin,” Castro said in an email to Tax Analysts. “His policy and legislative know-how will be a huge help to the administration, especially as they search for political victories.”
By Jonathan Curry
APRIL 3RD, 2017 | TAX NOTES IRS MAY HAVE ‘DODGED A BULLET’ WITH AHCA FAILURE
On a webcast sponsored by the American Law Institute Continuing Legal Education, Jorge E. Castro of Castro Strategies LLC noted that the dedication of significant administrative resources may still be required of the IRS with another, potentially larger legislative vehicle on the horizon: the House blueprint on tax reform. The enactment of that plan would require the development of substantive rule changes at the IRS, something that would be a “very heavy lift,” Castro said.
"Let's take, for example, the border adjustment tax -- first of its kind in the U.S. The IRS has never implemented it. They have never collected the tax. So you could imagine the IRS and Treasury staff would have to devote a lot of resources to developing and implementing those rules,” Castro said. He added that the development of transition guidance toward the novel approaches, such as the denial of interest expense, would also place an administrative burden on the agencies.
Retraining the IRS workforce, including examiners, to implement and enforce the sea change would also require substantial resources, Castro said. For example, the blueprint's contemplated move from a worldwide to a territorial tax system would put a lot of pressure on the Large Business and International Division -- a section that has already had two substantial reorganizations over the last several years -- to develop new practice units, he said.
The blueprint calls for a new "streamlined" IRS that would collapse its structure into three units: families and individuals, business, and small claims court.
Merging the Small Business/Self-Employed Division with LB&I could result in a loss of expertise at the IRS, Castro said. He added that several important questions were left unanswered in the blueprint, including the fate of the Office of Appeals and Tax-Exempt and Government Entities Division.
By Andrew Velarde
MARCH 30TH, 2017 | AMERICAN LAW INSTITUTE A LOOK AHEAD: THE IRS IN AN ERA OF TAX REFORM
Jorge Castro, Founder & Principal, Castro Strategies, LLC, presented on a webcast sponsored by the American Law Institute Continuing Legal Education. Entitled “A Look Ahead: The IRS in An Era of Tax Reform,” the webcast focused on possible changes to the existing structure of the IRS, enforcement actions, and regulations. Castro examined potential IRS reform measures impacting businesses, tax-exempt entities, and individuals in the context of current efforts by the Trump Administration and Congress to enact comprehensive tax reform.
MARCH 21ST, 2017 | 2017 ALLIANCE FOR CHARITABLE REFORM SUMMIT A NEW IRS AND THE TAX-EXEMPT SECTOR
Jorge Castro, Founder & Principal, Castro Strategies, LLC, moderated a panel entitled “A New IRS and the Tax-Exempt Sector” at the 2017 Alliance for Charitable Reform Summit. The panel examined the House Tax Reform Blueprint and the proposals to restructure the IRS. The panel discussed the impact of IRS reform measures on the tax-exempt sector, including key policy issues for the sector to consider in the current tax reform debate.
MARCH 15TH, 2017 | BLOOMBERG BNA SELF-INTEREST MAY RULE REORG COMMENTS: FORMER IRS OFFICIALS
A new executive order allowing public input into how federal agencies should be restructured could result in a flood of comments tilted in the direction of private companies’ self interests, former IRS officials warned.
The order signed March 13 by President Donald Trump directs Office of Management and Budget Director Mick Mulvaney to submit a plan to reorganize all executive branch departments and agencies. As part of the plan-making process, he will solicit comments from the public and consider when agency functions are better left to the private sector.
“There are certainly businesses that would have a private self-interest to comment on areas where they think they could do a better job than the government,” said Jorge Castro, founder of Castro Strategies LLC and a former Internal Revenue Service official and congressional tax counsel.
By Allyson Versprille
MARCH 6TH, 2017 | TAX NOTES HOUSE GOP LAWMAKERS UNSETTLED BY DRAFT ACA PLAN
In one non-healthcare-related tax provision, the Republican plan would repeal the economic substance doctrine, a hard-fought provision added to the ACA and the subject of much debate among tax lawyers for several years
“While the policy goal was to prevent tax abuse and provide clarity, there is an open policy question whether the legislative language codifying the doctrine achieves that goal — instead adding more confusion and ambiguity for taxpayers and practitioners,” said Jorge Castro of Castro Strategies LLC, a former IRS senior official and congressional tax counsel. The repeal would be effective for transactions entered into after December 31, 2016.
By David van den Berg , Stephen K. Cooper, Asha Glover, and Dylan F. Moroses
MARCH 3RD, 2017 | FEDERAL BAR ASSOCIATION 41ST ANNUAL TAX LAW CONFERENCE
Panel on Recent International Tax Developments: Jorge Castro, Founder & Principal, Castro Strategies, LLC, presented on the current tax reform efforts in Congress, particularly international proposals (including the border adjustment tax). The panel discussion focused on the relevance and applicability of recent Treasury-IRS regulations under proposals to reform the U.S. tax system.
FEBRUARY 7TH, 2017 | BLOOMBERG BNA IRS EXECUTION OF REGULATIONS EXECUTIVE ORDER REMAINS MURKY
The Office of Management and Budget's Office of Information and Regulatory Affairs on Feb. 2 issued a memorandum listing questions and answers regarding President Donald Trump's directive to eliminate two regulations for every new one issued.
“They are trying to give additional substance and context to the executive order, which will be required by agencies, including the IRS and Treasury Department,” said Jorge Castro, founder of Castro Strategies LLC and a former Internal Revenue Service official and congressional tax counsel. “That said, there are definitely more questions that are raised by the interim guidance,” he told Bloomberg BNA.
Castro said the executive order itself seems “well-intentioned” because all agencies, including the IRS, could do more to streamline and reduce burden, but the directive may have the “unintended consequence of slowing down regulatory projects that are ultimately good for taxpayers.”
The interim guidance says that agencies must issue two “deregulatory” actions for each new significant regulatory action that imposes cost. Deregulatory action is defined as that which produces verifiable savings, streamlines reporting and reduces recording keeping and disclosure requirements.
In terms of timing, the guidance says that “at a minimum, the agency should identify all of the associated regulatory actions to be repealed, along with cost saving estimates, no later than the date of issuance of the corresponding new significant regulatory action.” However, directly beneath that the OIRA says “to the extent feasible, regulatory actions should be eliminated before or on the same schedule as the new regulatory action they offset.”
Those statements seem contradictory, Castro said. The second statement “strikes me as more than mere identification,” even though it's qualified by the phrase “to the extent feasible,” Castro said. “This means finalization and execution, which is harder and lengthier,” he said.
“This could have the effect of significantly slowing down the regulatory process even further because the two offsetting regulations would presumably have to be eliminated at the same time the new regulation is issued,” he said. “That makes it more challenging.”
The cost-benefit analysis is also something the former officials are expecting more clarity on.
The guidance is clearly adding a new regime for determining the cost of a regulations project, Castro said. There are open questions on how the IRS will calculate “verifiable savings” or measure “opportunity costs"—both terms used in the interim guidance, he said. “Those are significant questions that take time to answer and develop,” Castro said.
Scope Still Uncertain
When the regulations executive order was issued in late January, several practitioners said it was unclear whether IRS revenue procedures and notices, which are typically published to the Internal Revenue Bulletin but not the Federal Register, fell under the directive's scope.
“I'm gathering that revenue procedures and revenue rulings (which are hardly ever issued anymore) are included in this directive, although the I.R.S. can seek special dispensation for these pronouncements, to be granted only on a case by case basis,” Willens said in his e-mail.
Castro wasn't as certain. “It's still an open question whether guidance relating to the Internal Revenue Bulletin is exempt,” he told Bloomberg BNA.
The interim guidance does say that regulations “related to agency organization, management, or personnel” are exempt, which seems to provide relief for rules related the Internal Revenue Manual.
IRM guidance “is considered to be guidance to IRS personnel, including field auditors, as to what they can and can't do on all procedural and administrative matters,” Castro said. “That's important, and taxpayers follow the IRM because it determines the parameters for the IRS. It establishes the audit standards and techniques that will be used.”
In the meantime, Castro said he expects the Office of Information and Regulatory Affairs to receive a lot of questions from the IRS. The office said in its memorandum that it plans to issue further guidance on Trump's executive order soon.
By Allyson Versprille
FEBRUARY 3RD, 2017 | U.S. CHAMBER OF COMMERCE THE SHIFTING PARADIGM OF RETIREMENT: WHAT IT MEANS FOR EMPLOYERS, WORKERS, AND RETIREES
Jorge Castro, Founder & Principal, Castro Strategies, LLC, moderated a panel entitled “The Challenging Dynamics of the American Workforce and Financial Wellness” during a retirement policy conference at the U.S. Chamber of Commerce. The event brought together business leaders to explore what saving for retirement means for employers, workers, and retirees in today's evolving landscape and discuss policy solutions.
JANUARY 31ST, 2017 | BLOOMBERG BNA NEW TRUMP EXECUTIVE ORDER MAY DELAY IRS WORK
President Donald Trump’s executive order requiring federal agencies to eliminate two rules for every new one might delay the IRS’s work on regulations, including much-needed rules on the new partnership audit regime, former officials told Bloomberg BNA.
The requirements under the new executive order could have the effect of “prolonging the timeline by which IRS and Treasury issue regulations, many of which could be beneficial for taxpayers,” said Jorge Castro, founder of Castro Strategies LLC and a former senior Internal Revenue Service official and congressional tax counsel.
“Not every regulation that the IRS and Treasury are working on is negative for taxpayers,” he said. For example, through the partnership audit rules currently being drafted, the IRS and the Treasury Department are working toward providing clarity “and relieving burdens of the partnership audit legislation that Congress passed, so a lot of those upcoming regulations could be positive to a lot of businesses,” he said.
The executive order requires agencies to conduct a cost analysis in which the cost of any new regulation must be canceled out by eliminating at least two others. This order imposes a significant additional test that officials have to complete before issuing new regulations, and no Treasury or IRS leader will take the process of identifying two pieces of legislation to eliminate lightly, Castro said.
By Allyson Versprille and Alison Bennett
DECEMBER 13TH, 2016 | BLOOMBERG BNA PENDING U.S. TAX OVERHAUL HERALDS CHANGED ROLE FOR IP
The unexpected Republican victories in November have elevated plans to overhaul the U.S. tax system from a distant prospect to an immediate near-certainty. No one is sure yet which of the various tax plans will be codified into law. But any overhaul may not just change the direction and destination of intangibles-based tax planning—it may alter the very nature of pricing online transactions in the increasingly all-encompassing digital world.
“The landscape is going to change, in a number of ways, particularly for IP-heavy industries, such as pharmaceuticals and the tech sector,” said Jorge Castro of Castro Strategies LLC, a former IRS official and congressional tax counsel.
The likelihood of such drastic changes to the tax system of the world’s largest economy leaves the $64,000 question: Just how will the rest of the world respond?
“We’re the U.S., so anything that we do will cause a reaction,” Ray Beeman of EY said. “I don’t think the world’s just going to stand still, if they see the U.S. with an incredibly competitive tax system.”
“I think they’re surely watching, and if all a sudden the U.S. becomes more favorable from a tax perspective on IP, other countries are going to want to look at that, to see if they’re going to have to make any changes,” said Castro. “It will surely take a few years, but I think the shift is definitely going to occur.”
By Alex M. Parker
DECEMBER 9TH, 2016 | BLOOMBERG BNA DOES BROADER TAX OVERHAUL SPELL DOOM FOR U.S. PATENT BOX?
Former Tax Counsel: ‘Still Part of the Mix.’
Not everyone believes the [patent box] idea is finished.
“Although it’s not in the blueprint, I still think it’s part of the mix,” said Jorge Castro of Castro Strategies LLC in Washington and a former Internal Revenue Service official and congressional tax counsel. “It still has bipartisan support. I still think there will be a significant amount of lobbying around the patent box.”
If the political momentum of the House Republican plan fades and lawmakers look toward a simpler tax plan, a patent box may be one of the ideas that becomes part of a compromise.
By Alex M. Parker and Aaron E. Lorenzo
NOVEMBER 14TH, 2016 | TAX NOTES OPTIMISM GROWS FOR REPATRIATION RELIEF IN TRUMP ADMINISTRATION
Jorge E. Castro of Castro Strategies LLC told Tax Analysts that companies within the high-tech and pharmaceutical industries would be primary beneficiaries from a repatriation holiday, given the large amount of offshore funds they hold through foreign operations.
Trump’s 10 percent repatriation rate could facilitate congressional negotiations, said Castro, a former senior adviser at the IRS and tax staffer to a Finance Committee member. ‘‘I think members of Congress, especially Democrats, will be willing to have a conversation,’’ Castro said, noting the importance of infrastructure spending to the Democrats’ agenda. ‘‘The last time Congress passed a repatriation holiday, back in 2004, it was a 5.25 percent rate, which was significantly lower.’’
Earlier this year, Pfizer failed to invert into Ireland in a scuttled deal with Allergan PLC, in part to access its considerable offshore earnings without facing a high repatriation tax bill. Those attempts were thwarted following regulatory action by the Obama administration. Earlier this month, Pfizer CEO Ian Read, a vocal critic of U.S. tax policy, said the company’s acquisitions and business development, as well as the industry’s investment as a whole, had been put on hold to await the results of the U.S. election.
‘‘The irony to all this is Trump has been pretty critical of inverted companies,’’ Castro said. ‘‘Does he hold the line similar to the Obama administration, or does he give them tax relief? That is going to be a big question.’’
By Andrew Velarde
OCTOBER 27TH, 2016 | THE CHRONICLE OF PHILANTHROPY FLUSH WITH $51 BILLION, DONOR-ADVISED FUNDS FACE QUESTIONS ABOUT PAYOUTS
Congress could intervene and force donor-advised funds to pay out at a higher rate. The last attempt to overhaul the tax code included a proposed tax on donor-advised-fund assets that aren’t given to charities within five years. The legislation, championed in 2014 by then-House Ways and Means Committee Chairman Dave Camp, failed to reach the House floor for a vote.
To ward off similar provisions, lobbyists representing commercial funds and community foundations fanned out across Capitol Hill. Their message: Donor-advised funds support charities close to home. Often, fund lobbyists would show a legislator a map of his or her Congressional district filled with colored dots, each representing a charity that received contributions from account holders, says Jorge Castro, who has represented the National Philanthropic Trust (No. 17), a national donor-advised fund sponsor.
"It’s not peanuts," he says of the cash flowing from accounts to nonprofits.
There hasn’t been another attempt to limit the funds since Mr. Camp left office at the beginning of 2015. In fact, the only legislative effort currently in play is designed to encourage the rush of assets into donor-advised funds. Bills pending in the Senate and the House would allow tax-free transfers from individual retirement accounts to donor-advised funds.
By Alex Daniels and Drew Lindsay
OCTOBER 24TH, 2016 | TAX NOTES WYDEN QUESTIONS IRS, TREASURY ABOUT SHELL COMPANY OVERSIGHT
The request for detailed information is in line with Wyden’s oversight authority, and responses from the agencies could lead to legislative action, according to Jorge Castro, who formerly served as a senior adviser at the IRS and tax staffer to a Senate Finance Committee member.
‘‘Senator Wyden is correctly exercising his oversight authority as the top Democrat on the Senate Finance Committee,’’ Castro, now with Castro Strategies LLC, told Tax Analysts. ‘‘Based on how the IRS and Treasury respond to his letter, the senator will likely assess whether legislative action is necessary.’’
Treasury has been taking steps to mitigate financial crimes, though it acknowledges that lawmakers should step in. Upon the release of the Panama Papers, Treasury Secretary Jacob Lew cited the Foreign Account Tax Compliance Act, which he called a joint effort by Treasury and Congress, as evidence of the United States’ global leadership in information sharing. And while tax evasion concerns are not unfamiliar territory for the Obama administration, the Panama Papers increased those concerns, Lew said in May.
By Asha Glover
SEPTEMBER 28TH, 2016 | U.S. CHAMBER OF COMMERCE EMPLOYEE BENEFITS COMMITTEE MEETING
Jorge Castro, Founder & Principal, Castro Strategies, LLC, presented at the bi-annual U.S. Chamber of Commerce Employee Benefits Committee meeting on the establishment of the new Retirement Security Council. Castro Strategies has helped lead the Chamber’s efforts to formulate the Council’s retirement and tax policy agenda for 2016-2017.
APRIL 5TH, 2016 | MarketWatch WHY TREASURY’S NEW INVERSION RULES COULD HIT THE PFIZER-ALLERGAN DEAL BUT NOT OTHERS
Jorge Castro, a former senior IRS official, called the new Treasury inversion rules a “game changer for companies looking to invert.” “The Treasury rules certainly pose obstacles for the pending Pfizer-Allergan deal,” he said in an email. “I suspect that both companies are re-considering their options and studying alternative structures that make business sense and maximize tax efficiency,” said Castro.
By Robert Schroeder
MARCH 4TH, 2016 | FEDERAL BAR ASSOCIATION 40TH ANNUAL TAX LAW CONFERENCE
Hot Topics Panel on Information Reporting - Cash Transactions, FBARs and FATCA, Third Party Disclosures, Return Due Dates, and New Partnership Audit Reporting: Jorge Castro, Founder & Principal, Castro Strategies, LLC, presented on the Foreign Account Tax Compliance Act (FATCA), Common Reporting Standard, and Transfer Pricing Documentation and Country-by-Country Reporting (OECD Base Erosion and Profit Shifting (BEPS) Project Action 13). Castro focused on key implementation issues impacting financial institutions and multinational companies.
FEBRUARY 10TH, 2016 | TAX NOTES OBAMA’S LAST BUDGET FOCUSES ON MEDICARE TAX, BUSINESS REFORM
Jorge Castro, a former senior IRS official and Congressional tax aide, said he expects the critics of the Cadillac tax will continue to push for full repeal. "That said, I do think the Administration deserves credit for putting forward this proposal and advancing the debate. Unless Congress repeals the tax or delays it again, policymakers will need to think outside the box and work collaboratively to make sure that the tax only targets those high-end plans that Congress intended,” said Castro, who now runs Castro Strategies LLC, a tax consulting firm in Washington.
By Kaustuv Basu, Amy S. Elliott, Kat Lucero, Matthew R. Madara, and David van den Berg.
FEBRUARY 5TH, 2016 | U.S. CHAMBER OF COMMERCE PRIVATE RETIREMENT BENEFITS IN THE 21ST CENTURY: ACHIEVING RETIREMENT SECURITY
Jorge Castro, Founder & Principal, Castro Strategies, LLC, moderated the “Views from Capitol Hill” panel during a U.S. Chamber of Commerce conference highlighting the release of its white paper titled, Private Retirement Benefits in the 21st Century: Achieving Retirement Security. The conference focused on ways to strengthen the current private retirement structure and address the demographic changes and retirement needs of an evolving workforce.
OCTOBER 23RD, 2015 | COUNCIL FOR ELECTRONIC REVENUE COMMUNICATION ADVANCEMENT FALL 2015 MEETING
Jorge Castro, Founder & Principal, Castro Strategies, LLC, presented at the Council for Electronic Revenue Communication Advancement (CERCA) Fall 2015 Meeting. CERCA was founded at the request of the Internal Revenue Service (IRS) in order to provide a forum and liaison point between the IRS and industry stakeholders, including tax software and preparation firms, technology integrators, and financial services companies. Castro discussed tax reform and key tax policy and Congressional issues impacting the upcoming tax filing season.
SEPTEMBER 9TH, 2015 | MarketWatch WHY JEB BUSH’S ATTACK ON ‘CARRIED INTEREST’ MATTERS
Jorge Castro, a former senior IRS official and congressional tax aide, said the politics of the issue have shifted significantly with Bush and Trump wanting to eliminate the preferential tax treatment for carried interest.
“As Congress continues to lay the groundwork on tax reform, I expect the issue of carried interest to be addressed and receive bipartisan support,” Castro, who now runs tax-consulting firm Castro Strategies, told MarketWatch in an email.
By Robert Schroeder
AUGUST 18TH, 2015 | COMPLIANCE WEEK UNPACKING THE REPORTING CHALLENGE IN PATENT BOXES
Unlike other legislative proposals, patent boxes have garnered “strong bipartisan, bicameral support,” says Jorge Castro, founder and principal with Castro Strategies, a tax consultancy. “This proposal has received a significant amount of attention from the tax-writing committees, making it an issue to watch this fall.”
By Karen Kroll
AUGUST 3RD, 2015 | TAX NOTES COMPLEX INNOVATION BOX PROPOSAL WELCOMED AND SCRUTINIZED
‘‘While several technical tax issues still need to be addressed, at its core this [innovation box legislative] proposal is about the U.S. remaining competitive in the global economy,’’ said Jorge Castro of Castro Strategies LLC and former senior IRS official. Citing the support for the proposal from the co-chairs of the international tax reform working group, Sens. Rob Portman, R-Ohio, and Charles E. Schumer, D-N.Y., Castro said, ‘‘You have a very strong bipartisan and bicameral coalition developing inside Congress.’’
Castro, who was an economic policy adviser to former Finance Committee member John D. Rockefeller IV, said a key policy challenge that remains for the taxwriting committees is ensuring that eligible profits benefiting from the discounted tax rate derive from qualifying IP. The legislation needs to encourage IP development in the United States while safeguarding against profit shifting, he said. ‘‘Action 5 of the OECD [base erosion and profit- shifting] project is developing rules around those issues, and it is an open question how much Congress will want to mirror those principles,’’ Castro said. Action 5 revolves around countering harmful tax practices more effectively and targets patent box regimes to ensure that tax preferences in a jurisdiction are unavailable in the absence of substantial activities.
Reuven S. Avi-Yonah of the University of Michigan Law School argued against enactment of the proposal. ‘‘Bottom line: This is an unjustified windfall for the multinationals and one that will be very hard for the IRS to administer,’’ he said, comparing it with the difficulties of administering section 199. Castro, however, said he sees enactment as a step toward more comprehensive reform. ‘‘If Congress is successful in enacting an innovation box for U.S. competitiveness reasons, it can’t forget that international and business tax reform is certainly still sorely needed. The innovation box is not enough, as it is only one piece to a more complex puzzle,’’ he said.
By Andrew Velarde and Stephen K. Cooper
JUNE 17TH, 2015 | NATIONAL AIR TRANSPORTATION ASSOCIATION 2015 AVIATION BUSINESS CONFERENCE
FEDERAL TAX REVIEW: The ownership and use of aircraft generate unique tax situations that seem to constantly evolve and change. Failing to stay abreast of our tax laws and policy changes can lead to serious economic consequences. Jorge Castro will present on the prospects of federal tax reform and the potential impact on the general aviation industry, as well as discuss the progress to clarify the regulatory application of commercial air transportation taxes by the Internal Revenue Service.
MAY 12TH, 2015 | HEALTH AFFAIRS AS EMPLOYERS TRY TO AVOID THE CADILLAC TAX, TREASURY AND THE IRS NEED TO ACT
When the Affordable Care Act was signed into law in 2010 reforming our health insurance system, it included a forty percent excise tax on employer-sponsored health plans valued over a limit specified in Section 4980I of the Internal Revenue Code. The tax, also known as the “Cadillac tax,” is scheduled to take effect in 2018. In this article, Jorge Castro describes the significant impact the tax will have in the marketplace, particularly on employers and the health insurance plans and benefits currently offered to employees. The article also outlines the legislative history behind the tax as Congress drafted the health reform legislation, as well as key issues for policymakers and regulators to consider.
By Jorge Castro
MAY 8TH, 2015 | AMERICAN CHAMBER OF COMMERCE OF PERU CURRENT TAX ISSUES IMPACTING LATIN AMERICA
Jorge Castro will present before American Chamber of Commerce of Peru (AmCham Peru) on current tax issues impacting multinational companies operating in Peru and Latin America, including the latest developments in the OECD Base Erosion and Profit Shifting project. AmCham Peru represents American, Peruvian, and foreign companies with the goal of promoting commerce between Peru and the United States.
MAY 4TH, 2015 | INTER-AMERICAN CENTER OF TAX ADMINISTRATIONS 49TH GENERAL ASSEMBLY: RISK MANAGEMENT AS A TOOL FOR IMPROVING COMPLIANCE
Jorge Castro was invited as a special guest to participate in the 49th General Assembly of the Inter-American Center of Tax Administrations (CIAT) in Lima, Peru. CIAT is an organization of tax commissioners from Latin America and around the world with the shared mission of increasing inter-governmental cooperation. The theme of the conference was how tax administrations can utilize risk management as a tool to improve tax compliance, including discussions on global tax policy trends and current developments. Tax authorities representing fifty countries from five continents participated in the conference.
APRIL 13TH, 2015 | TAX NOTES ENGAGEMENT AND EDUCATION KEY TO REFORM GROUPS
Jorge Castro, a former senior IRS official who now runs tax consulting firm Castro Strategies LLC, said Ways and Means and Finance Committee staffers have to be creative in how they advance tax reform and receive feedback from the public. "The only way to keep taxpayers and the business community involved in the process is to come up with new ways to evaluate issues," said Castro, who also worked for former Ways and Means member Stephanie Tubbs Jones and former Finance member John D. Rockefeller IV. "There is a bit of tax reform fatigue setting in; therefore, you want to keep the drumbeat up and keep taxpayers engaged in new and creative ways."
But Castro also suggested that the committees get input from the Obama Administration. "There are a lot of experts at the Treasury Department, particularly at the IRS, whose experience on these issues is unparalleled. It would be of value for the Ways and Means and Finance committees to engage them on a regular basis, get their perspective and expertise, and make sure that from a technical and administrative standpoint tax reform proposals are workable," he said. "The IRS can give them a window into taxpayer activities and how our tax laws are impacting taxpayers on the ground."
By Stephen K. Cooper
FEBRUARY 16TH, 2015 | TAX NOTES FINANCE COMMITTEE APPROVES 17 NONCONTROVERSIAL TAX BILLS
Jorge Castro, a former senior IRS official and principal of Castro Strategies LLC, noted that some of the issues addressed in the legislation had previously been considered by the committee as part of taxpayer bill of rights legislation, but that lawmakers' attention now could signal a broader, bipartisan effort to reform the tax code in a more transparent manner.
Of special interest are the proposals to enhance access to the U.S. Tax Court and to regulate enrolled agents and tax-exempt organizations, said Castro, who also served as an economic policy adviser to former Finance Committee member John D. Rockefeller IV. "They are noncontroversial and signal the Senate Finance Committee's commitment to improving the taxpayer experience when dealing with the IRS, which is not always a smooth process," Castro said.
By Luca Gattoni-Celli
FEBRUARY 9TH, 2015 | TAX NOTES BUDGET PROPOSES MINIMUM TAX, TRANSITION TAX ON FOREIGN EARNINGS
Jorge Castro, a former senior IRS official who now runs tax consulting firm Castro Strategies LLC, said the proposals will give the business community a lot to think about in the coming weeks. "The main question to ask is: Do the proposals move the White House closer to reaching a conceptual agreement with Congress on certain aspects of tax reform?" Castro said, adding that Ways and Means Committee Chair Paul Ryan, R-Wis., recently made it clear that he would like to find common ground. "I think that the budget proposals can serve as the beginning of a constructive dialogue between Congress and the administration, particularly on business and international tax reform," Castro said.
By Kristen A. Parillo and Andrew Velarde
OCTOBER 27TH, 2014 | MarketWatch SCUTTLED ‘INVERSION’ DEALS PILE UP IN THE WAKE OF TREASURY RULES
Burger King has said its deal wasn’t motivated by taxes. However, others have acknowledged the tax advantages of their proposed mergers with offshore companies. Some have unraveled; some have changed the terms; and others have been announced even after the Treasury came out with its regulations last month.
Jorge Castro, a former senior IRS official, told MarketWatch the Treasury regulations had “clearly had a chilling effect on the markets” and would continue to force companies to think twice before striking inversion deals. “Going forward, I just don’t see many companies looking to invert, especially compared to where we were in the summer,” said Castro, who now runs Castro Strategies, a tax consulting firm in Washington.
By Robert Schroeder
OCTOBER 27TH, 2014 | FEDERAL BAR ASSOCIATION FATCA: CURRENT DEVELOPMENTS AND OUTLOOK
TAX PRACTICE & PROCEDURE MONTHLY ROUNDTABLE PRESENTATION: The Foreign Account Tax Compliance Act (FATCA) is the most sweeping reform of the U.S. information reporting and withholding tax system. Since Congress enacted FATCA in 2010, it has become a model for other countries, becoming a central topic of multilateral and bilateral dialogue and negotiation. Jorge Castro, a former IRS senior official who worked closely on FATCA implementation, will provide an insider’s perspective to how FATCA came to be, as well as discuss current developments and hot issues on the horizon both domestically and globally.
OCTOBER 20TH, 2014 | TAX NOTES AbbVie’s REVERSAL REFLECTS UNCERTAINTY REFLECTS UNCERTAINTY OVER INVERSION RULES
While it’s too soon to say whether Notice 2014-52 is curbing multinationals’ appetite for inversions, practitioners say it’s at least giving them pause. ‘‘The notice is having its intended effect by forcing companies to think twice about moving forward with an inversion deal,’’ said Jorge Castro, a former senior IRS official who now runs the tax consulting firm Castro Strategies, LLC. ‘‘Companies are doing a thorough cost benefit analysis for moving forward with an inversion, carefully weighing the business and tax benefits post-notice,’’ Castro said. They may also be considering the political element and potential public relations fallout, he said. ‘‘There are more companies with pending inversion deals, so their next steps will be interesting to follow in the coming weeks,’’ Castro said.
By Kristen A. Parillo
AUGUST 5TH, 2014 | POLITICO MORNING TAX
SO WHAT’S NEXT FOR THE IRS LB&I DIVISION? Jorge Castro, a former senior IRS official who now runs Castro Strategies LLC, told Morning Tax that "it’s not uncommon for someone in Sam’s leadership position to only be at the IRS for a few years and then return to the private sector." And as for the spate of departures that have hit the Large Business & International division in recent months in addition to Maruca heading out, Castro said he doesn’t expect too much of a shakeup as the dust settles. Doug O’Donnell, who took over as acting deputy commissioner (international) for Michael Danilack, is “a longtime IRS executive — he knows the international office really well, he knows the IRS top brass really well, and he's very savvy and well-respected,” Castro said. “I think with Doug at the helm, it’ll be a pretty smooth leadership transition."
"To me what’s going to be interesting to follow is whether over the next few months there are any further changes to the IRS international operations,” Castro said.
By Mackenzie Weinger
With Rachael Bade
JUNE 24TH, 2014 | AINonline NATA ANTICIPATES FET RULING SOON
A Notice of Proposed Rulemaking (NPRM) from the Treasury Department on the assessment of federal excise taxes in the aircraft management industry could be issued as early as August, according to Jorge Castro, a consultant to the National Air Transportation Association speaking at the group’s annual Air Charter Summit in Washington, D.C. last week.
By Curt Epstein
JUNE 17TH, 2014 | NATIONAL AIR TRANSPORTATION ASSOCIATION AIR CHARTER SUMMIT 2014
IRS FEDERAL EXCISE TAX ISSUE UPDATE: In the time since the IRS Chief Counsel issued materials concluding that aircraft management services provided to an aircraft owner could be subject to the commercial Federal Excise Tax, NATA has spearheaded efforts to educate government officials on the need for better industry guidance on the application of these taxes. In this session, you will hear from Jorge Castro about the progress being made to address this significant issue from those advocating for the industry.
FEBRUARY 18TH, 2014 | POLITICO IRS HEADACHES MEAN PAIN FOR TAXPAYERS
“There is a larger workload and there are significantly fewer employees. What does that mean? It means there is less time for employees to interact with taxpayers. That’s not optimal,” said Jorge Castro, a former senior IRS official who now runs a D.C. consulting firm. “Taxpayers benefit from interacting with a well-trained workforce that understands their issues.”
By Lauren French
FEBRUARY 3RD, 2014 | TAX NOTES MOVES AND APPOINTMENTS
Jorge Castro has opened a new tax consulting firm, Castro Strategies LLC, where he serves as founder and principal. Castro announced his intent to start a firm in November 2013 when he left his position as Counselor to the IRS Commissioner. The firm will focus on domestic and international regulatory and policy issues, including matters before the OECD. Castro also served as senior tax aide to Senate Finance Committee member John D. Rockefeller IV, D-W.Va., and to the late House taxwriter Stephanie Tubbs Jones of Ohio, and practiced tax law at McKee Nelson LLP in Washington. Castro received his JD from the University of Wisconsin Law School.
By Jaime Arora
JANUARY 22ND, 2014 | MAPI WEBINAR IRS PRIORITIES FOR 2014 AND BEYOND
Presenter Jorge Castro was, until very recently, a senior official at the IRS. He has expertise in tax regulatory, policy, and compliance matters. He also worked in the Senate and House of Representatives, and will provide members with an executive and legislative branch perspective on tax issues.
Among the topics discussed will be domestic and international priorities for the IRS and Treasury Department and the subsequent effects on member companies.
NOVEMBER 25TH, 2013 | POLITICO INFLUENCE
FIRST IN PI.... IRS'S CASTRO TO LAUNCH TAX FIRM: Former Internal Revenue Service official Jorge Castro is launching Castro Strategies, a firm focusing on domestic and international tax regulatory and policy issues. Castro is a former senior aide to Senator Jay Rockefeller (D-W.Va.) and has served at the IRS as Senior Counselor. His last day at the IRS was Friday. 'My three years at the IRS have been dynamic and rewarding,' Castro said in an email. 'Whether it was working on domestic tax issues or representing the United States on international tax projects and the Organization for Economic Co-operation and Development, it has been a great honor to have worked alongside the dedicated men and women of the IRS. I look forward to launching this new venture and fully utilizing my ten years of legislative and executive branch experience.'
By Byron Tau
With Andrea Drusch