The IRS said taxpayers can choose to follow the old, pre-2021 rules in determining their eligibility for the credit for tax years 2022 and 2023. That will enable them to temporarily avoid the tougher new standards on some issues that have stirred much of the controversy, like the new rules’ requirements that taxpayers must have a nexus of activity in a foreign country and must be able to recover some kinds of significant costs there in order to have the resulting taxes qualify for the credit. Digital services taxes (DSTs)will still be ineligible for the credit. The IRS and Treasury are currently considering possible amendments to the 2021 rules, and they indicated additional temporary relief was possible for years after 2023.
