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Paul Schmidt Comments on Potential for Changes to Earnings-Stripping Rules

News / August 9, 2017

Partner Paul Schmidt is quoted in an article published by Bloomberg BNA’s “Tax Management Transfer Pricing Report” on Aug. 8, 2017. The article, “Documentation Delay: No Hint on Future of Debt-Equity Rules,” reports on how the federal government has yet to announce its intentions regarding the controversial earnings-stripping rules even though a deadline to announce further action on the rules under a White House executive order is nearing.

“It would be difficult to interpret that as a signal that the rules aren't going away,” Schmidt told Bloomberg. While “it's certainly a signal that the rules aren't dead yet, it's not necessarily a signal that they won't be withdrawn.”

He also noted that no matter what the outcome of those rules, questions will remain if Congress completes a tax overhaul. He said there is still “a real perspective” that if the U.S. moves to a territorial tax system, a lot of the work the government is doing will become part of that effort.

Under such a system, “interest expense will have to be addressed,” and that could subsume the regulations, Schmidt said. “At a minimum, these regulations would need to be revised to take into account and be consistent with any changes that would happen in tax reform.”

Read the article (registration required).