Foreign Taxpayers and the CARES Act: NOL Carrybacks, PPP Loans, Permanent Establishment, FTCs

Description

The CARES Act provides significant relief to both domestic and foreign taxpayers. The COVID-19 virus and the aid provided has many unanticipated consequences for multinational taxpayers.

The virus left taxpayers stranded in countries other than their tax home. Taxpayers stranded here or abroad may unavoidably meet residency tests in the countries they were visiting. The risk of inadvertently establishing a permanent establishment is another consequence. This could result if a taxpayer uses physical space to generate significant income in a country other than the primary tax home.

NOL relief, including the suspension of the 80% limitation, and the allowance of a five-year carryback, was welcomed by all taxpayers. NOL carrybacks where taxpayers elected under 965(h) to make their repatriation payments in eight installments are trickier. Taxpayers cannot use carrybacks to offset their transition tax liability. Even more perplexing could be the interaction of these carrybacks with foreign tax credits, Section 250 deductions, and BEAT. Understanding the caveats of this NOL relief is critical for tax professionals advising foreign taxpayers.

Listen as our panel of international experts details the provisions of current economic relief and its effect on foreign taxpayers. Our panel will discuss NOL carryback relief, permanent establishment, foreign owners of U.S. entities and loan relief, and unexpected outcomes and considerations of the CARES Act for global taxpayers.