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William Byrnes (Texas A&M) tax & compliance articles

Archive for December, 2017

New Paper: “The Games They Will Play: Tax Games, Roadblocks, and Glitches Under the New Legislation”

Posted by fhalestewart on December 11, 2017


With new tax legislation comes new tax games, which is the topic the new paper, “The Games They Will Play: Tax Games, Roadblocks, and Glitches Under the New Legislation,” available from SSRN.  I haven’t reviewed it, but it has received a large amount of publicity in the press.  It’s written by a group of tax professors.  Here is the abstract:

This report describes various tax games, roadblocks, and glitches in the tax legislation currently before Congress. The complex rules proposed in the House and Senate bills will allow new tax games and planning opportunities for well-advised taxpayers, which will result in unanticipated consequences and costs. These costs may not currently be fully reflected in official estimates already showing the bills adding over $1 trillion to the deficit in the coming decade. Other proposed changes will encounter legal roadblocks that will jeopardize critical elements of the legislation. Finally, in other cases, technical glitches in the legislation may improperly and haphazardly penalize or benefit individual and corporate taxpayers. This report highlights particular areas of concern that have been identified by a number of leading tax academics, practitioners, and analysts.

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Recent PLRs Highlight How Not to Run a Charitable Organization

Posted by fhalestewart on December 10, 2017


Every week, the IRS releases PLRs covering the gamut of tax issues.  Several released this week drive home the point that running a 501(c)(3) organization is a complex process.

From PLR 2017-49015

PLR1

From PLR 2017-49014PLR2

Neither of these releases involves complex issues.  Instead, we see organizations that are not operating charitably,  not maintaining adequate books and records or allowing the IRS to examine records as requestions.  Anyone of these problems will provide the IRS adequate reason to revoke a tax-exempt status.

As a final point, charitable giving typically ramps up at year-end.  This is a good time to contact organizations to see if they are still tax-exempt.

 

 

 

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EU Finance Minister Blacklists 17 Jurisdictions

Posted by fhalestewart on December 7, 2017


From the Financial Times

European finance ministers have blacklisted 17 countries in a key part of the bloc’s crackdown on aggressive tax avoidance, while 47 other nations promised reforms to avoid being labelled tax havens.

American Samoa, Bahrain, Barbados, Grenada, Guam, South Korea, Macau, Marshall Islands, Mongolia, Namibia, Palau, Panama, St Lucia, Samoa, Trinidad & Tobago, Tunisia and United Arab Emirates were all listed as so-called non-compliant jurisdictions.

The grey-list of countries promising to reform to meet the European Union’s criteria has grown by nine countries since Friday. Cape Verde and Morocco were the last two countries to agree commitments; Tunisia’s reform proposal arrived too late for it to be moved off the blacklist.

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Non-Qualified Deferred Compensation: When Can You Make Distributions (pt. 2)?

Posted by fhalestewart on December 5, 2017


As I noted in my previous post, the NQDC statute specifically states there are six events when a NQDC plan can make a distribution, one of which is when the service provider “separates from service,” which is defined in the Treasury Regulations as:

An employee separates from service with the employer if the employee dies, retires, or otherwise has a termination of employment with the employer.

As with other aspects of this statute, there is little room for a liberal legal interpretation of the definition.

The statute further defines “termination of employment” as,

Whether a termination of employment has occurred is determined based on whether the facts and circumstances indicate that the employer and employee reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the employee would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than 20 percent of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services to the employer if the employee has been providing services to the employer less than 36 months).

The statute provides 2 tests.  Either there is a complete termination of employment or an 80% reduction in the amount of work performed (as compared to the preceding three years) by the service provider.  This is one of the few areas where a bit of definitional “play” exists in the statute.

Finally, the statute provides the following, non-exclusive set of factors to use in a “facts and circumstances” determination as to whether termination has in fact occurred:

1.) Whether the employee continues to be treated as an employee for other purposes (such as continuation of salary and participation in employee benefit programs),

2.) Whether similarly situated service providers have been treated consistently, and

3.) Whether the employee is permitted, and realistically available, to perform services for other service recipients in the same line of business.

 

In 2009, F. Hale Stewart, JD. LL.M. graduated magna cum laude from Thomas Jefferson School of Law’s LLM Program.  He is the author of three books: U.S. Captive Insurance LawCaptive Insurance in Plain English and The Lifetime Income Security Solution.  He also provides commentary to the Tax Analysts News Service, as well as economic analysis to TLRAnalytics and the Bonddad Blog.  He is also an investment adviser with Thompson Creek Wealth Advisors. 

 

 

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Recent IRS Releases of Interest to Wealth Professionals

Posted by fhalestewart on December 4, 2017


In 2009, F. Hale Stewart, JD. LL.M. graduated magna cum laude from Thomas Jefferson School of Law’s LLM Program.  He is the author of three books: U.S. Captive Insurance LawCaptive Insurance in Plain English and The Lifetime Income Security Solution.  He also provides commentary to the Tax Analysts News Service, as well as economic analysis to TLRAnalytics and the Bonddad Blog.  He is also an investment adviser with Thompson Creek Wealth Advisors. 

 

Announcement 2017–15, page 534.

Announcement 2017–15 provides relief to victims of Hurricane Maria and the recent California wildfires. It permits easier access to funds held in workplace retirement plans and in IRAs, for periods beginning in September and October 2017 and ending March 15, 2018. The relief provided in the announcement is in addition to the relief already provided by the IRS pursuant to several recent news releases.

Notice 2017–67, page 517.

This notice provides guidance on the requirements for providing a qualified small employer health reimbursement arrangement (QSEHRA) under section 9831(d) of the Internal Revenue Code, the tax consequences of the arrangement, and the requirements for providing written notice of the arrangement to eligible employees.

 

https://www.irs.gov/pub/irs-irbs/irb17-47.pdf

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