Tax Talks

The Proskauer Tax Blog

Some Quick Thoughts on the “Big Six” Unified Framework

Yesterday, the Trump Administration, the House Committee on Ways and Means, and the Senate Finance Committee proposed a “unified framework” for tax reform. The members of the working group are House Speaker Paul Ryan (R-WI), Senate Finance Chairman Orrin Hatch (R-UT), Senate Majority Leader Mitch McConnell (R-TN), House Ways and Means Chairman Kevin Brady (R-TX), Treasury Secretary Steven Mnuchin, and National Economic Council Director Gary Cohn.  These individuals are known as the “Big Six”.

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SEC Adopts Additional Guidance on CEO Pay Ratio Rule

On September 21, 2017, the Securities and Exchange Commission (the “SEC”) adopted interpretive guidance regarding Item 402(u) of Regulation S-K, which governs pay ratio disclosure. The interpretive guidance is intended to provide assistance to companies choosing to use statistical sampling in determining their median employee. In the interpretive guidance, the SEC indicated that it would not pursue enforcement actions against companies that use reasonable estimates, assumptions or methodologies, unless the related disclosures were made without a reasonable basis or provided other than in good faith. The interpretive guidance also clarifies how companies can use internal records to identify the median employee. In addition, the SEC’s staff also released guidance in using statistical sampling and other reasonable methodologies. Finally, the SEC staff revised its Compliance and Disclosure Interpretations to conform prior guidance to the aforementioned interpretive guidance and to permit companies to refer to its pay ratio as a reasonable estimate.

Please visit our initial post on this topic.

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Please feel free to contact any member of the Proskauer Employee Benefits & Executive Compensation Group or the Capital Markets Group with any questions about this post.

IRS Resumes Issuing Transactional Spin-Off Rulings

On September 21, 2017, the Internal Revenue Service (the “IRS”) issued Revenue Procedure 2017-52[1] (the “Rev. Proc.”), introducing an 18-month “pilot program” in respect of corporate “spin-off,” “split-up” and “split-off” transactions (“Spin-off Transactions[2]). Under this pilot program, the IRS will again issue private letter rulings on the general federal income tax consequences of Spin-off Transactions intended to qualify as tax-free under Section 355 (a “Transactional Ruling”).[3] Continue Reading

UK Tax Round Up: September 2017

Welcome to the September 2017 edition of the Proskauer UK Tax Round Up. Since our last edition, the Finance (No 2) Bill has been published and started its passage through the House of Commons, draft legislation for inclusion in next year’s Finance Bill has been published and the date for the first Autumn budget has been announced as 22 November. Please view this month’s issue of the UK Tax Round Up.

Looking Ahead to the 2018 Proxy Season: Preparing for CEO Pay Ratio Rules Disclosure Requirements

As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act enacted in July 2010, Congress directed the Securities and Exchange Commission (SEC) to adopt pay ratio disclosure requiring public companies to disclose the ratio between the annual total compensation of the median employee and the company’s principal executive officer (PEO), generally the company’s chief executive officer (CEO). The Pay Ratio rules required the SEC to amend Item 402 of Regulations S-K, related to company compensation disclosures. Item 402(u) requires companies to disclose:

  1. the median of the annual total compensation of all employees of the company (excluding the company’s PEO);
  2. the annual total compensation of the company’s PEO; and
  3. the ratio of the two amounts.

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Zero Dividend Shares are Ordinary Share Capital

The Upper Tribunal (Tax and Chancery Chamber), the UK’s second level tax appeal court, have just published their judgement in the McQuillan case, which considered whether shares with no right to dividends or any other profits are or are not “ordinary share capital” (OSC) for UK tax purposes. There are a number of UK tax rules that depend on how much OSC is held, and OSC is defined as all share capital except for any share capital that carry a right to a dividend at a fixed rate and no other right to share in the company’s profits. This decision concluded that such shares are OSC.

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Failure to Prevent the Facilitation of Tax Evasion: New United Kingdom Corporate Criminal Offence

Background

As mentioned in our July 2017 edition of UK Tax Round Up, the UK has enacted a new corporate criminal offence of failing to prevent the facilitation of tax evasion. The law comes into effect on 30th September 2017, and businesses should ensure that they have considered its impact before then. A risk assessment could be required to be carried out before 30th September, and applicable policies and prevention measures may need to be considered. Continue Reading

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