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U.K. Election and Taxes • C Corp Conversion • Gig Work Defense

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This is a weekend roundup of Bloomberg Tax Insights, which are written by practitioners featuring expert analysis on current issues in tax practice and policy. The articles featured here represent just a handful of the many Insights published each week. For a full archive of articles, browse by jurisdiction at Daily Tax Report, Daily Tax Report: State, and Daily Tax Report: International.

This week we look at what the U.K. election means for taxes, private equity fund entity choice, California’s new worker classification law, multilateral v. unilateral digital taxation, and good deeds with opportunity funds. We’ll hear from:

Paul Falvey of BDO U.K. on what the election means for U.K. taxes

Jeremy Swan, Jonathan R. Collett, and Robert Richardt of CohnReznick LLP on private equity C Corp conversion

Christopher Karachale and Nancy Dollar of Hanson Bridgett LLP on a potential defense to the California classification law

Duncan Edwards of BritishAmerican Business on unilateral v. multilateral digital services tax solutions

Christopher Hanewald of Wyatt, Tarrant & Combs LLP on finding the good in opportunity zones

Boris Johnson, U.K. prime minister, delivers a speech outside No. 10 Downing St. in London on Friday, Dec. 13, following the general election.

Photographer: Chris Ratcliffe/Bloomberg

The Conservative Party has won the 2019 general election. Paul Falvey of BDO U.K. discusses what this means for U.K. taxes. How bold will the new government be? Read: What the Election Result Means for U.K. Taxes

Since enactment of the 2017 tax law, some large private equity funds have converted from publicly traded partnerships to C corporations. Jeremy Swan, Jonathan R. Collett, and Robert Richardt of CohnReznick LLP look at whether conversion makes sense for middle-market funds. Read: What Middle-Market Private Equity Funds Should Know About C-Corp Conversions

California’s new worker classification law—intended to restrict the classification of workers as independent contractors—goes into effect on Jan. 1. Christopher Karachale and Nancy Dollar of Hanson Bridgett LLP analyze a potential defense raised by technology platform companies, which argue they are third-party payment intermediaries and not employers. Read: IRS Form 1099-K in the Technology Platform Defense to California AB 5

Several countries have enacted or proposed a digital services tax on such firms as Google and Apple. Duncan Edwards of BritishAmerican Business says these unilateral measures are the wrong solution to a genuine problem and stresses the need to pursue a multilateral agreement. Read: Taxing the 21st Century Economy—A Multilateral Approach?

The opportunity zone program has fans and critics. Many of those fans are among the affluent and their advisers. While the program has received some deserved criticism as a way to make the wealthy wealthier, it is also a significant opportunity for local nonprofits, economic development organizations, and local governments to shape an incomplete program into something transformational, writes Christopher Hanewald of Wyatt, Tarrant & Combs LLP. Read: Impact Investing and Finding the Good in Opportunity Zones

From the Archive

Bloomberg Tax contributors have stayed on top of the twisted tale of Brexit from the beginning.

With the U.K.’s departure from the EU having been postponed for a third time, until Jan. 31, 2020, James Ross, of McDermott Will & Emery, considered whether the Brexit fog is now finally about to lift.

Clive Jie-A-Joen and Monique van Herksen listed some transfer pricing aspects companies may want to consider while they are making (last-minute) Brexit-triggered decisions.

Beyond Tax

What’s happening outside the world of tax?

Litigators can learn about good legal writing from a recent New York Times review giving zero stars to Brooklyn’s Peter Luger Steak House. Boies Schiller Flexner LLP’s Evan North says litigators who contend with audiences ranging from neutral to hostile should take the same approach as the review and catch and release all but the most compelling legal arguments. Read: What a Peter Luger Steak House Review Can Teach Lawyers About Effective Legal Writing

The global growth of cryptocurrency paves the way for an expanding legal practice around regulatory and investigations work. FTI Consulting’s Steve McNew has seen the growth first hand and examines the most common types of legal cases, illicit activities, and other issues emerging around cryptocurrency. Read: Crypto Advancements Stir Legal Work in Investigations, Asset Tracing

Decades after their debut, MS Word and email are still used by law firms for contract management. Olga V. Mack, CEO of ParleyPro, explores the opportunities contract management software (CMS) can bring to law firms and legal departments willing to understand its core technologies enabling real-time access, artificial intelligence, and blockchain capabilities. Read: Beyond MS Word—Three Technologies Transforming Contract Management

Law firms need to protect against cyber attacks. OpenText legal and data experts offer steps to take and warn a key concern is that a breach may violate the professional and ethical obligations lawyers have to protect privileged client information from unwanted access and disclosure. Read: Four Steps Law Firms Should Take to Reduce Cybersecurity Risks

Jane Fogarty, vice president and global counsel at SYNNEX Corp., explains why it’s important to listen to and address whistleblower complaints, especially for global companies. She walks through some decisions SYNNEX made when upgrading its internal review program. Read: How a Global Company Embraces Internal Whistleblowers

The director of the U.K.’s Serious Fraud Office, Lisa Osofsky, has made clear her goal of increasing U.S.-U.K. cooperation in investigating and prosecuting complex international financial crimes. Timothy J. Coley, counsel with Buckley LLP, says increased cooperation between the SFO and U.S. law enforcement agencies like the Justice Department and the SEC’s Division of Enforcement would be mutually beneficial. Read: Stronger Transatlantic Cooperation Could Be Boon for DOJ, Ailing U.K. Serious Fraud Office

Public comments on proposed CFIUS regulations are in, and final regulations must take effect by Feb. 13, 2020. Kirkland & Ellis attorneys look at the issues raised by industry trade groups, foreign government agencies, and law firms about their potential breadth, perceived ambiguities, and gaps, and highlight areas where more clarification and guidance is needed. Read: Proposed CFIUS Regs Draw Questions on Foreign Investment Definitions, Enforcement

Exclusive Content for Bloomberg Tax Subscribers

(*Note: Your Bloomberg Tax login will be required to read the following content.)

Kim Blanchard of Weil, Gotshal & Manges looks at whether treating a domestic partnership as an aggregate causes small U.S. partners to become subject to the passive foreign investment company (PFIC) regime.

The weekend roundup of Bloomberg Tax Insights will take a break for the holidays and return Jan. 4.

Bloomberg Tax Insights articles are written by experienced practitioners, academics, and policy experts discussing developments and current issues in taxation. To contribute please contact Erin McManus at emcmanus@bloombergtax.com.

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Workers

Truework Launches Credentials to Extend Verifications to the Gig Economy

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SAN FRANCISCO, July 28, 2021 /PRNewswire/ — Truework, the income verification API that powers over 15k lending institutions, today announced it has launched Credentials, a new technology that expands verification coverage beyond their instant network of 35 million employees. Credentials will allow the growing population of 1099 and other hard-to-reach employees to share their employment and income data with verifiers when instant verifications aren’t possible.

Alongside Truework’s Instant and Smart Outreach products, Credentials solidifies Truework as the only one-stop API to verify income and employment for any U.S. employee. From large banks to small fintech startups, any lender can connect to Truework’s API with one line of code, or submit verifications directly through truework.com.

“It’s always been hard for 1099 employees to get the same access to loans and other financial products as W2 employees,” says Ryan Sandler, CEO of Truework. “A big reason is that accessing verified income data for 1099 employees hasn’t been possible for most banks. Truework Credentials will enable the thousands of banks on Truework to expand credit access to underserved 1099 borrowers.”

Verifying employment and income is a huge burden for gig-economy workers: many are employed as 1099 contractors, so their income is variable and current underwriting models haven’t adapted yet to easily verify their financial status. As lenders have struggled to verify employment and income for gig economy workers, credit access to a growing demographic in the U.S. has been limited. The need for verifying employment and income often arises at key life moments, like applying for a loan or new job or buying a home, making this challenge even more stressful for hopeful borrowers.

Truework Credentials lets applicants log into their payroll provider to share verified income and employment data with authorized third parties, such as lenders. With integrations to over 150 payroll providers and gig economy marketplaces, Credentials allows hundreds of thousands of workers to share verified payroll data in just a few clicks.

As the product grows, more gig-economy workers will be able to verify income and employment through Truework.

“The Credentials product has been live with a handful of banks and lending institutions over the past few weeks, and we plan on rolling it out to all of our customers over the next few months. The product will be available to API customers, and will be the first of its kind available for lenders using Encompass® as well as self-serve users on Truework.com.”

Last month, Truework announced its integration with the leading loan origination software provider Encompass®, by ICE Mortgage Technology. The company is one of the first API-enabled verification platforms to be integrated with Encompass®.

Truework puts an emphasis on  security and compliance, maintaining both SOC 2 and ISO 20071 certifications, and operates as a Consumer Reporting Agency under the Fair Credit Reporting Act – including when providing verifications through Credentials.  This assures Truework’s customers of the highest levels of data security and legal compliance (particularly when obtaining verifications for credit decisions) through data accuracy and error correction. Whenever an employee has successfully completed a verification using Credentials, their third-party account details are never stored and deleted as soon as the connection has been made. Truework only shares the appropriate data after the verifying party (i.e., lender) has provided proper authorization from the employee.

To learn more about Truework Credentials, visit https://www.truework.com/blog/announcements/posts/2021-07-28-announcing-credentials-truework

About Truework
Truework is an API-enabled platform for employment and income verification that lets banks, lenders and background check providers verify any U.S. employee. Through partnerships with payroll providers such as Gusto, Zenefits, UKG and Paylocity, Truework has the second-largest instant verification network with over 35 million employees. Founded by Ryan Sandler, Ethan Winchell and Victor Kabdebon in 2017, the company is backed by Activant Capital, Sequoia Capital, Khosla Ventures and others. To learn more, visit www.truework.com.

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IDLES are giving away 2,000 free Bristol gig tickets to NHS workers

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The band are headlining a one-off gig on The Downs this September.

IDLES are offering NHS staff in Bristol and the surrounding regions the chance to sign up for one of 2,000 free tickets for their upcoming headline Bristol show. The band will perform at a one-off outdoor gig held on The Downs on 3 September.

“We know it’s not much,” says the band and event promoters Team Love and Simple Things in a new joint statement. “But it is a gesture of our thanks to you for your incredible work and selflessness over the last 18 months in treating and caring for people at the frontline of the Covid-19 pandemic.”

NHS staff in Bristol, North Somerset and South Gloucestershire will receive an email this week offering them tickets for the homecoming gig. Workers will need their NHS email address in order to register their interest. 

The full IDLES show line-up is set to be revealed tomorrow (28 July). General sale tickets will also be made available then. Read the full statement below and revisit the IDLES cover story.



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Gig economy workers are not dispensable – they deserve to feel secure at work

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In the past few years, the “gig economy” has ballooned in size to make up around 5m people – or 16 per cent of Britain’s workforce. These are jobs on short term contracts or freelance work, but with few rights or protections. Services are booked through apps or platforms where workers are paid for each piece of work they do, not by time worked, and those workers are in insecure working arrangements.

Most of us have used these services, and increasingly so throughout the pandemic – ordering goods online or ordering takeaways or a cab home. As a Labour MP, I’ve spent plenty of time hearing about and from workers in the gig economy, but I wanted to see first-hand what it means to be in this type of insecure employment.

I was given the opportunity to spend a day with an Amazon delivery driver, who we’ll call “Mike” to protect his identity. Amazon is the richest company in the world, and its owner, Jeff Bezos, the wealthiest person on earth. The astronomical wealth that allowed Bezos to launch himself in a rocket to the edge of space is in stark contrast with the conditions of the workers who create that wealth, key workers such as Mike.

Delivery drivers like Mike are technically self-employed and contracted through an agency used by Amazon, which means that even though he has no holiday pay, entitlement to the National Minimum Wage, Statutory Sick Pay, or other basic rights that most of us take for granted, the lack of which has been so devastating throughout the pandemic, Amazon controls almost every facet of his work.

The incredibly demanding delivery targets placed on Mike forced him to work at a frantic pace in the sweltering heat and made him park illegally. He said regularly has to speed to meet his targets or else risk losing his income or his job.

Because of his “self-employment”, he has no legal entitlement to rest breaks. Whether an Amazon driver has to urinate in a bottle or is able to find a toilet is a matter of luck. This is not just undignified but prevents women from this type of work for reasons that don’t need to be explained.

Amazon have said that they are “committed to ensuring that the people contracted by our independent delivery providers are fairly compensated and are treated with respect” and that drivers have a “number of ways” to share concerns.

Many of the drivers work full-time, but for others gig work is used to top up their incomes in order to put food on the table – a symptom of endemic in-work poverty, which 1 in 6 families now find themselves caught in.

What I found from talking to Mike and other gig workers is that they value the flexibility and can enjoy their jobs, but there is frustration at a complete lack of voice. Without being technically “employed’”, they are dispensable, and they live with the anxiety of being unable to provide for their families if they fall ill and fear they could lose their jobs or income at any time with no recourse.

These sorts of gig economy services are now an important part of our economy, and their workers are key workers. But their employment conditions do not reflect that.

Too often bogus self-employment is used to exploit gig-economy workers for everything they are worth, but without any of the basic rights and protections that all working people should have — this is why Labour is pledging to end bogus self-employment and insecure work. Only the greed of the economy’s richest companies and the inaction of our government stand in the way of giving Mike and millions like him rights and protections from day one to provide the security they deserve with the flexibility they want.

Andy McDonald is shadow secretary of state for employment rights and protections and Labour MP for Middlesbrough

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