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United States: Notice 2023-80 – When the US tax code meets Pillar Two

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Tax News and Developments December 2023

In brief

On 11 December 2023, Treasury and the IRS issued Notice 2023-80 (the “Notice“), which represents the US government’s first attempt to address the US federal income tax implications of Pillar Two. The Notice provides guidance on certain foreign tax credit and dual consolidated loss issues that arise in the context of Pillar Two. The Notice also extends the period of relief for the 2021 final foreign tax credit regulations until more guidance is issued. John Barlow, Rafic Barrage, Ethan Kroll, Sam Pollack and Steven Smith analyze the guidance in Notice 2023-80: When the US Tax Code Meets Pillar Two, as first published in the December 2023 issue of Tax Management International Journal.

To read Notice 2023-80: When the US Tax Code Meets Pillar Two, please click here.

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Author

John works with corporate tax departments on cross-border transactions and restructurings. He relies on his tax planning, controversy, and in-house experience to develop practical solutions that meet his clients’ tax, accounting, and commercial needs. As part of his practice, John assists clients in vetting and implementing complex cross-border transactions and transfers of IP. He regularly advises clients on Subchapter-C, foreign tax credit, GILTI/Subpart-F, sourcing, and withholding issues related to these transactions. He also makes sure to work with all in-house stakeholders to ensure successful implementation. In addition, John has substantial experience working with corporate treasury departments to provide practical solutions to tax issues that arise from cross-border treasury activities, including cash pooling, FX hedging programs, and internal debt restructurings. John also regularly assists clients with their IRS-audit defense of cross-border and financial transactions at the exam and appeals level. His clients include companies in the consumer-product, defense, digital, FinTech, pharmaceutical, and software industries.

Author

Rafic H. Barrage is a Principal in Baker & McKenzie's North America Tax Practice Group. He has almost 20 years of broad international tax planning experience. Mr. Barrage advises clients on a variety of issues, including restructuring and entity rationalization, IP migration, supply-chain planning and principal structures, the taxation of digital transactions, deferral and repatriation planning, foreign tax credit planning, and post-U.S. tax reform tax optimization. Mr. Barrage is a recognized leader in his field by The Legal 500 (2010 and 2011) (described as one of the "impressive younger partners" and "technically very strong") and as one of the Tax Controversy Leaders by the International Tax Review (2011 and 2012). Mr. Barrage is an Adjunct Professor of Law at Georgetown University Law Center, where he has taught the International Tax Business Planning workshop since 2013.

Author

Ethan Kroll is a partner in the Los Angeles office and a member of the Firm's tax practice group. He contributes regularly to the Tax Management International Journal's Leading Practitioner Commentary and speaks frequently on international tax issues. Previously, he was a principal at a Big Four accounting firm.

Author

Sam Pollack is a partner in the Firm’s Global Tax Practice Group in Chicago. He provides domestic and international tax planning advice for corporations and pass-through entities.

Author

Steven Smith is an associate in Baker McKenzie’s Los Angeles office and a member of the Firm’s Tax Practice Group.

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