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TAX TAKE: CAMT Regs Coming Out? Probably Not Anytime Soon

Tax Alert

Last week we saw the Internal Revenue Service (IRS) punt again on instructive guidance on the 15 percent corporate alternative minimum tax (CAMT). Instead, we got a placeholder extension of the waiver for penalties for underpayments, this one covering payments due on April 15 (or May 15 for certain taxpayers with taxable years starting in February 2024).

Notice 2024-33 is timely and helpful but narrowly construed, only affecting potential underpayment penalties. It follows a series of similar guidance targeting the edges of the CAMT, while taxpayers wait for the formal rulemaking. 

So far, we've seen:

  • Notice 2023-7: Provided interim guidance intended to clarify the application of certain aspects of the CAMT.
  • Notice 2023-20: Provided interim guidance regarding the application of the CAMT to life insurance companies.
  • Notice 2023-42: Waived tax penalties with respect to a corporation's CAMT liability for any taxable year in 2023.
  • Notice 2024-10: Provided guidance regarding the application of the CAMT to shareholders of controlled foreign corporations.
  • Notice 2023-64: Provided guidance on the use of financial statements, foreign tax credits, consolidated groups, net operating losses(NOLs), and other adjustments under the CAMT.

The IRS has stated that the ongoing delays in issuing a proposed rule reflect "continuing challenges associated with determining whether a corporation is an Applicable Corporation and the amount of a corporation's CAMT liability." Other challenges include balancing administrability against the worries of some in Congress that the implementing rules may allow corporations to avoid or minimize the tax. For example, Senators Elizabeth Warren (D-MA) and Michael Bennet (D-CO) raised early concerns about potential CAMT avoidance if corporate financial reports to shareholders are not the foundational source for determining the CAMT's applicability.

Our crystal ball on timing is clouded by these variables, but it's worth noting that as recently as last month, a senior Treasury Department Office of Tax Policy official noted that proposed CAMT regulations were still "months away."

Once the regulatory process is complete, Treasury will send a copy of the final CAMT regulations to Congress for purposes of the Congressional Review Act (CRA), which gives Congress 60 in-session days to consider a potential resolution that would invalidate the rulemaking. It may not be a factor this year, but a GOP majority next year could try to use the CRA to send the rule back to the drawing board or to highlight differences with a president who vetoes it. It's yet another example of how the elections will play a deciding role in tax policymaking in 2025. #TaxTake

Upcoming Speaking Engagements and Events

Loren will speak on the panel "The Brave New World of Profit Allocation Post-Pillar One" at the Tax Council Policy Institute's 25th Annual Tax Policy Practice Symposium "The Gathering Storm: 2025 and the Coming Tax and Fiscal Showdown" on May 16.

Marc will moderate the session "Tax Legislative Outlook" at the FBA 2024 Insurance Tax Seminar on May 30.

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