TEI Files Supplemental Comments on Proposed BEAT Regulations.

On December 21, 2018, the Internal Revenue Service (the Service) and the U.S. Department of the Treasury (the Treasury) published proposed regulations (the Proposed Regulations) (1) under new section 59A. (2) Section 59A imposes a liability on the base-erosion minimum tax amount (as defined) of certain taxpayers. (3) Section 59A was enacted as part of Public Law 115-97, (4) colloquially known as the "Tax Cuts & Jobs Act" (the Act). The Service and Treasury (collectively, the Government) requested public comments regarding the Proposed Regulations no later than February 19, 2019. In response to the Government's request, Tax Executives Institute, Inc. (TEI), submitted detailed comments on February 19, 2019 (the February Comments). (5) TEI has continued to analyze the Proposed Regulations in light of the evolving business operations of TEI members in the nearly six months since filing our February Comments. As a result of that analysis, we provide below our brief supplemental comments on the Proposed Regulations. (6)

TEI Background

TEI was founded in 1944 to serve the needs of business tax professionals. Today, the organization has 57 chapters in North and South America, Europe, and Asia. Our more than 7,000 individual members represent over 2,800 of the leading companies around the world. TEI members are responsible for administering the tax affairs of their companies and must contend daily with provisions of the tax law relating to the operation of business enterprises, including the new BEAT regime and many other aspects of the Act. We believe that the diversity and professional experience of our members enables TEI to bring a balanced and practical perspective to the issues raised by the Proposed Regulations, and we are eager to assist the Government in its important effort to effectively and efficiently implement the Act.

TEI Comments

TEI recommended in our February Comments that the Government permit taxpayers to use the "recomputation" method when calculating their BEAT liabilities as an alternative to the Proposed Regulations' "add-back" method. (7) We recommended the recomputation method because it would enable taxpayers with pre-TCJA (i.e., pre-2018) net operating losses (NOLs) to preserve the full benefit of those losses when calculating their BEAT liability, even though the recomputation method would introduce additional complexity when compared to the add-back method.

Since filing our February Comments, an alternative method for...