If you have paid US Transition Tax or GILITI for a Small Business, you may be in a position to get some or all of it back
On December 24, 2019, the US District Court handed down a momentous ruling allowing a lawsuit against the Treasury Department to proceed. The suit alleges that Treasury has failed to consider the impact on small business of the Transition Tax, enacted in the Tax Cuts and Jobs Act of 2017.
The ruling was made on the basis that any taxpayer who has spent even $1 in order to comply with the requirements of the Transition Tax is entitled to bring suit against the government. Or even, entitled to relief.
Under the Regulatory Flexibility Act of 1980, federal agencies are required to review the impact on small businesses of their regulations. The facts of the case, now proceeding in federal court, are such that Treasury has performed not a single minute of study or made any allowances for small businesses, such as a de minimums threshold. While hunting for Google’s and Apple’s taxes, Treasury has steamrolled small businesses.
The court is indicating that the Treasury’s handling of the Transition Tax for Small Business may be very wrong. The door is opening for all small business owners affected by the US Transition Tax to apply to the IRS for relief of Transition Tax already paid.
Any business owners in this situation would benefit from this opportunity for a review of their filing. “Small Business”, under US tax law is any business under USD$25,000,000 in average gross sales over the past three years and has fewer than 500 employees.
Please contact Shawn Bausch, Sr. Tax Manager, for a free consultation.