Re/insurance broker Arthur J. Gallagher & Co. has said that it is not anticipating any additional tax liabilities or material adverse impacts from the introduction of the Inflation Reduction Act of 2022 (IRA) in the US.
The IRA, which was passed by the U.S. Senate on August 7, 2022, is not expected to have any negative implications for the broker, based on its current form.
The Act aims to curb inflation by reducing the deficit, lowering prescription drug prices, and investing into domestic energy production while promoting clean energy solutions.
It aims to raise $739 billion and authorize $370 billion in spending on energy and climate change, $300 billion in deficit reduction, three years of Affordable Care Act subsidies, prescription drug reform to lower prices, and tax reform.
$313 billion of revenue for these plans is expected to be raised by imposing a 15% corporate minimum tax rate for companies with higher than $1 billion of annual financial statement income, with a further $124 billion to come from increased tax enforcement and $73 billion by imposing a 1% excise tax on stock buybacks.
Based on itscurrent outlook, AJ Gallagher believes that it will likely meet the Adjusted Financial Statement Income threshold for large corporations under the IRA, thus making it subject to the 15% tax rate beginning in 2023.
But the broker assures that, based on its current tax filing elections and positions, it’s not expected that these new minimum tax provisions would result in material additional tax liabilities.
In addition, AJ Gallagher says that, in its current form, the IRA is not expected to have a material adverse impact on its ability to utilize its tax credit carryforwards.
However, the company stipulated that its analysis at this stage is based on the current form of the IRA, and said its views may change in response to regulations or interpretations adopted by the IRS to implement the Act.
