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

Archive for March, 2019

TaxFacts Intelligence Weekly

Posted by William Byrnes on March 29, 2019


EDITOR’S NOTE FOR ONLINE SUBSCRIBERS
You will notice a new orange banner appearing at the top of your screen called “Latest Developments”. In this section we are offering new features, and we will introduce other features later in the year….

· Tax Facts Intelligence Weekly – current as well as archive weekly newsletters you receive by email as another way to access our latest developments.

· Thumbs Up/Thumbs Down – a debate each week between Robert Bloink and myself (William Byrnes) whereby we take opposing viewpoints on tax policy and argue our opinions. Find out if you agree or disagree and, eventually, you will be able to vote on whose side you are on for that week.

· Featured Articles – a weekly article with archives written by Robert Bloink and myself, thought leaders in finding customer needs for new products and how to make new practice tools work with your clients, perhaps in ways you may not have thought about.

· Recent Updates – as you may know, our digital version of Tax Facts is updated weekly and not annually like our print version of Tax Facts. You can now see any significant changes made to a Tax Facts question that week as it will appear in the “Latest Developments” section, so you are aware of changes. These changes can even be delivered to your smartphone should you choose.

We are looking for another big year providing lots of value-added commentary and analysis. I am always interested in your feedback so feel free to email me at williambyrnes@gmail.com.

Sixth Circuit Confirms Insurance Agents Remain Independent Contractors

The Sixth Circuit Court of Appeals recently confirmed that life insurance agents were properly classified as independent contractors, rather than employees. The case involved eligibility for benefits under ERISA, and a district court, using the traditional Darden factors for determining classification status, had ruled in 2017 that the agents were employees who were eligible for ERISA benefits. For more information on insurance agents and employment classification issues, visit Tax Facts Online. Read More

Renewed Importance of Checking “Compensation” Definition in Retirement Plans Post-Tax Reform

The definition of “compensation” is important for many reasons in the retirement planning arena, but has gained new importance in light of suspended deductions and exclusions post-tax reform. Retirement plans generally must use the IRC’s definition of compensation for nondiscrimination testing purposes, which includes, for example, nondeductible moving expenses (but excludes deductible moving expenses). Post-reform, however, all moving expenses are nondeductible. Despite this, the moving expense deduction was only suspended, not eliminated. This is one example of how tax reform has created a level of uncertainty regarding the appropriate definition of compensation while all tax reform provisions remain (at least temporarily) in effect. For more information on the definition of compensation for qualified plan purposes, visit Tax Facts Online. Read More

Grandfathered Health Plan Status: Still Important for Employers

In the years that have passed since the ACA became effective, many employers may have forgotten the importance of maintaining the grandfathered status of their health insurance plans. Grandfathered health plans remain exempt from many of the ACA market reform provisions and help employers avoid some of the more difficult compliance issues presented by the ACA. To maintain grandfathered status, employers should be sure to maintain proper documentation of the plan coverage extending from March 23, 2010 to the present. If and when the plan enters a new policy or contract, it should provide the health insurance company with documents governing the plan terms to make sure the change will not cause loss of grandfathered status. Adding new employees or new contributing employers will not impact the grandfathered status of the plan, so long as the principal purpose of any restructuring of the business was not to cover additional people under a grandfathered plan. Amendments to the plan that eliminate certain benefits can cause loss of grandfathered status, as can increases in certain cost-sharing requirements and copayments. For more information on grandfathered health plans, visit Tax Facts Online. Read More

2019’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

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TaxFacts Intelligence Weekly

Posted by William Byrnes on March 27, 2019


EDITOR’S NOTE FOR ONLINE SUBSCRIBERS
You will notice a new orange banner appearing at the top of your TaxFacts & App screen called “Latest Developments”. In this section we are offering new features, and we will introduce other features later in the year….

· Tax Facts Intelligence Weekly – current as well as archive weekly newsletters you receive by email as another way to access our latest developments.

· Thumbs Up/Thumbs Down – a debate each week between Robert Bloink and myself (William Byrnes) whereby we take opposing viewpoints on tax policy and argue our opinions. Find out if you agree or disagree and, eventually, you will be able to vote on whose side you are on for that week.

· Featured Articles – a weekly article with archives written by Robert Bloink and myself, thought leaders in finding customer needs for new products and how to make new practice tools work with your clients, perhaps in ways you may not have thought about.

· Recent Updates – as you may know, our digital version of Tax Facts is updated weekly and not annually like our print version of Tax Facts. You can now see any significant changes made to a Tax Facts question that week as it will appear in the “Latest Developments” section, so you are aware of changes. These changes can even be delivered to your smartphone should you choose.

We are looking for another big year providing value-added commentary and analysis. I am always interested in your feedback and “practitioner note” submissions so feel free to email me at williambyrnes@gmail.com.

IRS Releases New Safe Harbor for Depreciating Passenger Autos Under Tax Reform 

Post-reform, taxpayers are generally entitled to an additional depreciation deduction for qualified property, including passenger automobiles, if that property was placed in service after September 27, 2017 (and before 2027). If the passenger auto qualifies for 100% depreciation deduction in year one, the tax legislation increased the first-year limitation by $8,000. Assuming the depreciable basis is less than the first year limitation, the additional amount is deductible in the first tax year after the end of the recovery period. Under the safe harbor, however, the taxpayer can take the depreciation deductible for the excess amounts during the recovery period up to the limits applicable to passenger autos during this time frame. The IRS will publish a depreciation table in Appendix A of Publication 946, which taxpayers must use to apply the safe harbor. The safe harbor only applies to passenger autos placed into service before 2023, and does not apply if (1) the taxpayer elected out of 100% first year depreciation or (2) elected to expense the automobile under Section 179. For more information on the rules that apply in determining the depreciation deduction for passenger automobiles, visit Tax Facts Online. Read More

PBGC Proposes Regulations to Simplify Calculating Withdrawal Liability Under the Multi-Employer Pension Reform Act

PBGC recently released a set of proposed regulations to amend the rules on calculating withdrawal liability and annual withdrawal liability payments when an employer withdraws from a multi-employer pension plan. Under the regulations, in calculating withdrawal liability, plan sponsors must disregard benefit suspensions for the ten plan years following the plan year in which the suspension of benefits became effective, and include the suspended benefits when determining the plans unvested benefit liability (UVBs) during that period. The proposed regulations would also require plan sponsors to disregard surcharges when determining how to allocate UVBs to a withdrawing employer, as well as certain increases in contribution rates. The regulations provide detailed guidance on how each element necessary to calculate a withdrawing employer’s liability could be calculated. For more information on benefit reductions under the MPRA, visit Tax Facts Online. Read More

Court Clarifies When Disabled Employees May be Entitled to Disability Benefits

A district court recently clarified that an employee’s request for reasonable accommodations for a disability does not necessarily mean that the employee will also qualify for benefits under a short-term disability plan. In this case, the employee provided evidence from his doctor that stated he was unable to drive in traffic, but the employer’s plan required that he be unable to perform essential duties of his job in order to qualify for disability benefits. The employer denied the claim for benefits because the employee’s job did not involve driving, although he was entitled to work from home so that he could avoid driving into an office (the “reasonable accommodation” in this case). The court agreed with the employer that the employee’s ability to perform his job was not impaired, so he was not entitled to disability benefits. The key takeaway from this case is that, even if an employee has a disability that requires reasonable accommodation, that employee is not necessarily entitled to receive employer-sponsored disability benefits. For more information on employer-sponsored disability benefits, visit Tax Facts Online. Read More

2019’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

 

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Request for Applications: Associate Dean of Faculties, Texas A&M University

Posted by William Byrnes on March 26, 2019


Dear Faculty,

The Office of the Dean of Faculties seeks applications for the position of Associate Dean of Faculties.  This is an internal search with an expected completion by the end of the Spring semester.

The Associate Dean of Faculties reports to the Dean of Faculties and Associate Provost and plays a major role in the proactive planning for the Office of the Dean of Faculties, representing faculty needs and issues. The Associate Dean of Faculties works with multiple university constituencies to facilitate an environment in which each faculty member can achieve his or her maximum potential. The Associate Dean of Faculties oversees and/or collaborates in administrative aspects of key faculty-related processes such as recruiting, hiring, evaluation, tenure and promotion, and grievances. This position is part-time (50-70% time) and it is limited to senior tenured faculty members. The Associate Dean of Faculties is expected to maintain a faculty appointment, with associated responsibilities in teaching and/or research.

The ideal candidate will have the ability to communicate effectively and evaluate all requests objectively. The individual must also be able to work well with all segments of the University and external constituencies and have demonstrated a commitment to diversity, equity and inclusion. The applicant must possess the ability to verbalize the office goals to both large and small groups. Experience implementing and designing processes and projects is ideal.  Familiarity with faculty associated rules, guidelines, and administrative procedures is helpful. Further, acumen and expertise with database management and data presentation are important.

The position description can be found at dof.tamu.edu/Associate-DOF.

Applications should include a cover letter with a clear statement of why the applicant believes he or she is qualified for the position, a description of key relevant experience, and a vision statement for the position and its role in the Office of the Dean of Faculties; a vitae; and names of three references. For full consideration, applications should be received no later than COB Wednesday April 3, 2019. The position will remain open until filled. Applications should be submitted through email todof@tamu.edu.

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TaxFacts Intelligence Weekly

Posted by William Byrnes on March 25, 2019


EDITOR’S NOTE FOR ONLINE SUBSCRIBERS
You will notice a new orange banner appearing at the top of your screen called “Latest Developments”. In this section we are offering new features, and we will introduce other features later in the year….· Tax Facts Intelligence Weekly – current as well as archive weekly newsletters you receive in email today as another way to access our latest developments.

· Thumbs Up/Thumbs Down – a debate each week between Robert Bloink and myself (William Byrnes) whereby we take opposing viewpoints on tax policy and argue our opinions. Find out if you agree or disagree and, eventually, you will be able to vote on whose side you are on for that week.

· Featured Articles – a weekly article with archives written by Robert Bloink and myself, thought leaders in finding customer needs for new products and how to make new practice tools work with your clients, perhaps in ways you may not have thought about.

· Recent Updates – as you may know, our digital version of Tax Facts is updated weekly and not annually like our print version of Tax Facts. You can now see any significant changes made to a Tax Facts question that week as it will appear in the “Latest Developments” section, so you are aware of changes. These changes can even be delivered to your smartphone should you choose.

We are looking for another big year providing lots of value-added commentary and analysis. I am always interested in your feedback so feel free to email me at williambyrnes@gmail.com.

IMPORTANT TAX DEVELOPMENTS

IRS Provides Additional Rules for Employers’ Ability to Recover Mistaken HSA Contributions
The IRS clarified when an employer can recover health savings account (HSA) contributions made in error. Generally, erroneous HSA contributions must be corrected by reducing future contributions. The IRS Office of the Chief Counsel released an information letter stating an employer can recover mistaken contributions if the employer has clear documentary evidence that demonstrates an administrative or process error that caused the mistaken contribution. Examples of correctable mistakes provided by the IRS include situations where the participants’ names were confused, mathematical errors and duplicate payroll transmittals. For more information on excess HSA contributions, visit Tax Facts Online and Read More.

8th Circuit Denies Bankruptcy Exemption for Retirement Accounts Transferred Incident to Divorce 
The 8th Circuit denied the bankruptcy exemption for retirement plan assets that the debtor acquired incident to divorce. Qualified plan assets and up to about $1.3 million in IRA assets are usually protected from creditors in bankruptcy. In this case, the debtor received a portion of his former spouse’s 401(k) and her entire IRA in their divorce settlement, via a domestic relations order. The courts relied upon the Supreme Court’s prior ruling that inherited IRAs are not exempt in bankruptcy in concluding that assets acquired through a divorce are not primarily retirement assets of the debtor. Instead, the assets represented a property settlement, so were not entitled to any type of special treatment in bankruptcy. For more information on the treatment of qualified plans in divorce, visit Tax Facts Online and Read More.
LITIGATION WATCH

Wellness Programs Post-EEOC: What Remains Important 
EEOC regulations that were recently vacated and removed focused incentives an employer could offer without rendering the program impermissibly involuntary. Although the incentive based regulations were removed, the remaining regulations provide some clarity on this “voluntariness” issue. The program may not require employees to participate, and the employer is not permitted to deny health coverage or limit group health plan or other benefits if the employee chooses not to participate in the program. The employer cannot take an action that would be considered retaliation or take any adverse employment actions for non-participation. For more information on the rules that currently govern employer-sponsored wellness programs, visit Tax Facts Online and Read More.

 

2019’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

 

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TaxFacts Intelligence Weekly March 21, 2019

Posted by William Byrnes on March 21, 2019


William H. Byrnes, J.D., LL.M. and Robert Bloink, J.D., LL.M.

IRS Ruling Provides New Impetus for Lump-Sum Pension Buyouts for Retirees

The IRS has released a ruling that impacts whether pension plan sponsors are permitted to provide lump-sum distributions to plan participants who are already receiving plan benefits via regular annuity payments. The issue was whether, under the IRS required minimum distribution (RMD) rules, a lump-sum payment would constitute an impermissible increase in the payment amounts these participants were receiving. In 2015, the IRS reversed its previous stance allowing these lump-sum payments to participants in pay status and stated its intent to amend the RMD rules to prohibit these payment options. Now, the IRS has once again changed course and announced that, for the time being anyway, it is no longer planning to amend the RMD rules to prohibit lump-sum payments to pension plan participants already receiving annuity payments under the plan. For more information on lump sum pension buyout offers, visit Tax Facts Online. Read More

Tax Court Case Could Eliminate Valuable Split-Dollar Insurance Estate Planning Strategy

The Tax Court is set to hear a case that has had planners who help very wealthy clients use split-dollar strategies to minimize transfer taxes waiting for results since 2014. This issue in this case involves the value of several life insurance policies. Here, a parent purchased life insurance on her sons’ lives–the policies were technically purchased through revocable “dynasty” trusts–for $29.9 million (premium costs). When she died, her reimbursement rights under these “split-dollar” arrangements were valued at only $7.5 million, because the policies would not pay out until the sons died at some future date (essentially, the strategy is valuable because the difference between the two values is a tax-free gift). The IRS has argued that a fair market valuation approach must be used in split-dollar cases, which would assign the much higher premium cost to the value of the policies using the logic typically applied to buy-sell arrangements in family businesses. Initially, the Tax Court indicated that the economic benefit theory of split-dollar could be applied, a result that would favor the estate. Since then, the court has noted that the estate may have to prove it can satisfy an exception under IRC Section 2703 to avoid full taxation of the $29.9 million in premiums paid. A similar case, Cahill v. Comm., was settled out of court in 2018. For more information on split-dollar plans, visit Tax Facts Online. Read More

Sixth Circuit Allows Employer to Terminate Retiree Health Benefits Despite Collective Bargaining Agreements

The Sixth Circuit recently overturned a district court ruling, finding instead that an employer was permitted to terminate certain retiree health benefits despite the presence of collective bargaining agreements (CBAs). The plaintiffs in this case failed to show that the CBAs’ general durational clauses did not apply to healthcare benefits covered under the agreements. In the Sixth Circuit, a CBA’s general durational clause applies to every provision, unless the contract clearly states that it does not. Despite language pertaining to health benefits in the CBAs, that language did not specifically state the duration of the health benefits, so that the general durational clauses applied and the employer was permitted to modify or terminate coverage when the relevant CBAs expired. For more information on retiree-only health benefits provided in the employment context, visit Tax Facts Online. Read More

 

2019’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

 

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15 Recent Tax Debates Between Robert Bloink and William Byrnes

Posted by William Byrnes on March 18, 2019


the weekly tax debate transcribed from Tax Facts authors Professors Robert Bloink and William Byrnes, both of Texas A&M University Law School’s Wealth Management graduate program for professionals.

— More Bloink & Byrnes Go Thumb to Thumb:

  1. IRS Relief for Tax Underpayment: Bloink & Byrnes Go Thumb to Thumb
  2. IRS’ New 199A Real Estate Safe Harbor
  3. Postcard Premiere of IRS Form 1040
  4. Repeal SALT Cap, Raise Corporate Tax
  5. Tax Deferral on Stock Options and RSUs
  6. Should Annuity Products Get a Fiduciary Safe Harbor?
  7. Should Tax Hikes Need Supermajority Vote?
  8. Does DOL’s HRA Proposal Go Far Enough?
  9. Should 2017 Tax Changes Be Permanent?
  10. Is the Proposed Child Tax Credit Even Needed?
  11. Is Inflation Indexing of Capital Gains Good?
  12. Are New USA Plans a Boon to Savers?
  13. Was It Right to Kill the DOL Fiduciary Rule?
  14. Is DOL Rule on Health Plans Bad?
  15. Trump’s RMD Rule Change

 

2019’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

 

Posted in Tax Policy, Taxation | Tagged: , , , | Leave a Comment »

TaxFacts Intelligence (Week of March 14, 2019)

Posted by William Byrnes on March 14, 2019


William H. Byrnes, J.D., LL.M. and Robert Bloink, J.D., LL.M.

Mar 14, 2019

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IRS: Employers Must Exercise Caution in Providing “Free Lunch” for Employees 

The IRS has released a technical advice memorandum (TAM) that sheds light on the potential tax implications when employers provide employees with free meals in the office. Post-tax reform, meals provided “for the convenience of the employer” may receive favorable tax treatment. In the TAM, the IRS denied exclusion of the meals’ value from employee compensation. Here, the employer provided free meals to all employees in snack areas, at their desks and in the cafeteria, justifying provision of these meals by citing need for a secure business environment for confidential discussions, employee protection, improvement of employee health and a shortened meal period policy. The IRS rejected these rationales, stating that the employer was required to show that the policies existed in practice, not just in form, and that they were enforced upon specific employees. In this case, the employer had no policies relating to employee discussion of confidential information and provided no factual support for its other claims. General goals of improving employee health were found to be insufficient. The IRS also considered the availability of meal delivery services a factor in denying the exclusion, but indicated that if the employees were provided meals because they had to remain on the premises to respond to emergencies, that would be a factor indicating that the exclusion should be granted. For more information on “de minimis” type fringe benefits, visit Tax Facts Online. Read More

Common Scenarios in Client Retirement Planning: Account Consolidation and the Rules of the Road

Most clients will change jobs a few times in their lives, which often means they wind up with multiple 401(k) and other types of retirement plans. Consolidating can produce many benefits–namely, making it easier to manage retirement assets and easing RMD calculations, but there are rules to consolidating and clients also need to be aware of benefits that may be unique to any one type of plan. Clients should evaluate their goals with respect to eventual withdrawals, as the rules for penalty-free withdrawals–for example, via using an IRA to establish a series of substantially equal periodic payments to provide penalty-free withdrawals prior to age 591/2. For more information on the rollover rules and how they may impact clients considering retirement account consolidation, visit Tax Facts Online. Read More

April 1 is Fast Approaching: Important Deadline for Clients With First-Time RMD Obligations

While April 15 is a well-known and understood deadline, most clients don’t associate April 1 with any important tax-related deadlines—but April 1 is, in fact, one of the most important deadlines for clients who turned 701/2 years old in the previous year. For those clients who maintain traditional retirement accounts, such as 401(k)s and IRAs, April 1 is the date by which they must take their first required minimum distribution (RMD) from the account if they turned 701/2 in the previous year. For example, a client who turned 701/2 in 2018 must take their first RMD by April 1, 2019. This April 1 deadline is a special rule that applies only to first-time RMDs–a client’s 2019 RMD will be due by December 31, 2019. This means that clients who choose to wait until the April 1 deadline will be required to take two RMDs in 2019. For each subsequent year, the generally applicable December 31 deadline is the relevant date for RMDs. For more information on lifetime RMD requirements, visit Tax Facts Online. Read More

 

2019’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

 

Posted in Taxation | Tagged: , , | Leave a Comment »

 
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