Recently the Senate reached an agreement on the Inflation Reduction Act of 2022 (the “IRA”). At present, the IRA is only a draft bill and has not been passed by Congress nor signed by the President (although its eventual passage and enactment is anticipated). One of the provisions in the proposed bill includes a new 15% corporate alternative minimum tax (Corporate AMT) that would be imposed on the “adjusted financial statement income” (AFSI) of certain large corporations (very generally, and described in greater detail below, corporations reporting at least $1 billion average adjusted pre-tax net income on their consolidated financial statements), for tax years beginning after December 31, 2022.
Many of our clients will be unaffected by this proposal. The proposed Corporate AMT would apply only to certain very large corporations, like Amazon, that have, or are part of, certain related groups that have considerable financial statement income. In a report released August 1, 2022, the Congressional Research Service (CRS), suggests that “[r]elatively few corporations would be affected by the tax.” According to the CRS, citing an analysis by the Joint Committee of Taxation, only about 150 taxpayers would be subject to the Corporate AMT each year. The CRS also indicates that the Corporate AMT would raise an additional $313 billion in corporate revenue over the 10-year budget window, about half of which would be collected from manufacturing businesses.
If you have any questions regarding this proposed bill, we will continue to monitor the situation. This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.
Fraser Trebilcock attorney Paul V. McCord has more than 20 years of tax litigation experience, including serving as a clerk on the U.S. Tax Court and as a judge of the Michigan Tax Tribunal. Paul has represented clients before the IRS, Michigan Department of Treasury, other state revenue departments and local units of government. He can be contacted at 517.377.0861 or pmccord@fraserlawfirm.com.