Tax Law and International Tax Law

A New York Court of Claims judge has ordered substantial revisions to how New York City administers its Pied-à-Terre tax surcharge, canceling previously issued notices and shifting the burden of proof to the Department of Finance. The ruling requires individualized determinations before notices can be sent and eliminates the controversial exemption application process that had confused thousands of property owners. While the decision doesn't strike down the PAT law itself, it fundamentally restructures

While those upward bracket shifts may provide meaningful tax savings on higher-value properties, Washington’s Real Estate Excise Tax (“REET”) structure remains one of the most closely watched elements of transactional planning for commercial and residential property owners and developers. Because Washington applies a tiered, progressive REET rate system for real estate sales, alongside strict rules governing the transfer of controlling interests in entities that own real property, even minor statutory adjustments can drastically alter the economics of a transaction if deal timing or contract mechanics are mishandled.

A New York court has temporarily halted the implementation of New York City's pied-à-terre tax, ruling that the city's notices to homeowners were arbitrary and violated due process rights. The judge ordered the city to restart the entire rollout process while separate lawsuits challenge the tax's legality itself. Despite the stay, property owners who received notices are advised to continue filing for exemptions pending further court guidance.

Partner Lauren Azebu examines the qualified small business stock (QSBS) gain exclusion rules under Section 1202, exploring the complexities that arise when QSBS is held through pass-through entities. The article analyzes technical issues including ownership limitations, transfer restrictions, and entity conversion strategies, while highlighting areas where guidance remains limited and emphasizing the importance of proactive planning.

H. David Rosenbloom contributes an essay examining United States income tax treaties as part of a commemorative publication honoring Kees van Raad's nearly five decades of teaching international tax law. The essay explores the defense and significance of U.S. tax treaty policy within the broader context of international taxation.

The Second Circuit Court of Appeals has weighed in on a critical tax question affecting partnership and LLC owners, affirming a narrow interpretation of who qualifies as a "limited" partner exempt from self-employment tax. This decision creates potential conflict with the Fifth Circuit's approach, raising questions about whether the Supreme Court will need to resolve the split and provide definitive guidance on this important issue for business owners.

The IRS and Treasury Department have issued proposed regulations addressing the allocation of deductions to foreign-source income under Section 951A, while recent Tax Court decisions clarify critical issues surrounding the Section 245A dividends-received deduction, consolidated return consents, and penalty assessment procedures. These developments carry significant implications for multinational corporations navigating foreign tax credit limitations and domestic loss calculations.

A New York Court of Claims judge has ordered substantial revisions to how New York City administers its Pied-à-Terre tax surcharge, canceling previously issued notices and shifting the burden of proof to the Department of Finance. The ruling requires individualized determinations before notices can be sent and eliminates the controversial exemption application process that had confused thousands of property owners. While the decision doesn't strike down the PAT law itself, it fundamentally restructures

The US Treasury and IRS have issued new guidance targeting ETF tax strategies, including the controversial '351 conversion transaction' that allows investors to defer taxation on appreciated securities. Revenue Ruling 2026-20 and Notice 2026-62 identify multiple strategies as potentially abusive, signaling increased scrutiny of tax deferral mechanisms used by exchange-traded funds and investment partnerships.

Texas Comptroller Don Huffines has issued an executive order directing his office to amend Rule 3.330 to remove marketplace and platform fees from the definition of taxable data processing services, potentially ending what he calls a "hidden double tax" on online marketplace sellers, food delivery apps, ride-hailing services, and other platform-based businesses.

DDP can sound like the perfect solution for a customer: the seller handles everything and delivers the goods. But for the seller, Delivered Duty Paid can bring obligations and costs that aren’t always obvious when the deal is made.

The Texas Comptroller has issued an executive order that fundamentally changes how data processing taxes apply to electronic commerce transactions, specifically targeting marketplace and platform fees that have been subject to controversial taxation. This policy shift addresses a longstanding issue where businesses faced potential double taxation on marketplace transactions, with both the platform fee and the underlying sale being taxed separately.