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Bipartisan House Bill Would Temporarily Zero Out BEAT

Posted on Dec. 17, 2020

The base erosion and antiabuse tax would be temporarily reduced to provide economic relief for businesses under a new bipartisan bill introduced in the House.

The Save Jobs During the Pandemic Act of 2020 would cut the current 10 percent minimum tax to zero for those with BEAT liability in tax year 2020.

The bill — introduced December 16 by Reps. Andy Kim, D-N.J.; Peter T. King, R-N.Y.; and Thomas R. Suozzi, D-N.Y. — is intended to limit businesses’ additional costs that could put jobs at risk.

“We need to explore every avenue possible to protect our businesses and save jobs during this pandemic,” Kim said in a release.

Companies may incur BEAT liability even if they earn less income because of changes that the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136) made to net operating losses. A lower regular tax liability increases the likelihood of a BEAT liability, according to Jose Murillo of EY.

According to the release, because the reduced tax rate would only be for tax year 2020, the long-term effectiveness of the base erosion provision would not be at risk.

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