Adrian Johnson
TLDR:
Key Points:
- IRS and Treasury issue proposed regulations on the Corporate Alternative Minimum Tax (CAMT).
- The CAMT imposes a 15% minimum tax on large corporations with an average annual Adjusted Financial Statement Income (AFSI) exceeding $1 billion.
The Internal Revenue Service and the Treasury Department recently issued proposed regulations providing guidance on the Corporate Alternative Minimum Tax (CAMT). The CAMT was created by the Inflation Reduction Act to impose a 15% minimum tax on the adjusted financial statement income of large corporations. These regulations include definitions and rules for determining and identifying AFSI, statutory and regulatory adjustments, foreign parented multinational groups, CAMT foreign tax credit, and consolidated income tax returns. The Treasury estimates that approximately 100 of the largest and most profitable companies will annually pay the CAMT, leveling the playing field for small businesses. The proposed rules aim to address U.S. corporate tax avoidance and generate revenue. Stakeholders can comment on the regulations by Dec. 12, 2024, with a public hearing scheduled for Jan. 16, 2025, as the Treasury and IRS carefully consider feedback before finalizing the rules.
The Treasury and the IRS are being cautious in their approach to the regulations due to a recent Supreme Court decision overturning the Chevron doctrine, potentially leading to more challenges from companies. Crafting rules to implement this tax has been a significant project for the Treasury Department, as Congress delegated authority to implement the CAMT. The proposed regulations focus on following Congress’s statutory direction without creating unnecessary adjustments to the tax base. The regulations address limited and targeted cases where adjustments are needed to achieve congressional intent, such as bankrupt and troubled companies. The Treasury and the IRS are open to feedback and plan to make changes based on received comments as appropriate.
