WASHINGTON, D.C. — The Internal Revenue Service (IRS) has unveiled proposed regulations to provide clarity on the Corporate Alternative Minimum Tax (CAMT), introduced by the Inflation Reduction Act. The CAMT imposes a 15% minimum tax on the adjusted financial statement income (AFSI) of large corporations, effective for taxable years beginning after December 31, 2022.
This tax predominantly affects corporations with an average annual AFSI exceeding $1 billion. The newly proposed regulations define AFSI and outline rules for its determination, including adjustments required by law and regulation. They also address the applicability of the CAMT to corporations within foreign-parented multinational groups and the computation of the CAMT foreign tax credit.
Significantly, the proposed regulations also cover the implications for affiliated corporations filing consolidated income tax returns. To aid corporations during this transition, the IRS has issued Notice 2024-66, which waives penalties for failing to pay estimated CAMT-related taxes for the taxable years starting after December 31, 2023, and before January 1, 2025.
These regulations aim to streamline the implementation of CAMT and ensure compliance among the affected corporations while offering temporary relief from penalties as businesses adjust to the new tax framework.
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