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

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.

1. Relief applicable to foreign and domestic taxpayers
2. Deadline relief
3. Foreign entities and loan relief
4. NOL carrybacks
5. 163(j) interest limitation changes
6. Residency tests
7. Permanent establishment
8. Other issues for foreign taxpayers

The panel will review these and other critical considerations:

• How do specific countries determine residency?
• Which taxpayers might be affected by permanent establishment (PE) rules?
• What relief, if any, is anticipated for residency and PE status?
• When it may be best to forego an NOL carryback
• What caveats are there for carrybacks of NOLs with foreign tax credits?
• How does 163(j) relief impact foreign taxpayers?

Learning Objectives

After completing this course, you will be able to:

• Determine the impact of NOL carrybacks on foreign tax credits
• Decide which deadlines are effected by recent relief
• Identify which entities and taxpayers are eligible for loan relief
• Ascertain which taxpayers may unwittingly classify as residents of certain countries

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of pass-through taxation, including taxation of partnerships, S corporations and sole proprietorships, qualified business income, net operating losses and loss limitations; familiarity with net operating loss carry-backs, carry-forwards and carried interests.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).