Last September, the U.S. Treasury Department issues proposed regulation changes regarding the Section 199 Domestic Production Activities Deduction (DPAD), an important tax incentive designed to encourage domestic manufacturing within the United States. However, according the Dean Zerbe, alliantgroup’s National Managing Director and the former Senior Counsel to the U.S. Senate Finance Committee, the proposed regulations would have quite the opposite effect and force companies to have their manufacturing work performed overseas.
In an article featured in Tax Analysts, Zerbe reviews the specifics of the new DPAD regulations, detailing how the adoption of a new standard that bars companies from claiming DPAD if they use subcontractors to manufacture their products will ultimately lead to a reduction in domestic manufacturing. In the piece, Zerbe asserts that Treasury should instead keep the current qualifying standard, but provide additional guidance that would simplify how to identify taxpayers that are eligible to claim the deduction.
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