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

TaxFacts Intelligence: December 9, 2022

Posted by William Byrnes on December 9, 2022

The Texas A&M Master and LL.M. programs (e.g. international tax, transfer pricing, wealth management, or risk management) are accepting applications from financial professionals and from lawyers. Over 850 enrolled, the enrollment for a course’s section is kept to between 20 and a maximum of 30 so that each student receives meaningful feedback throughout the course from the full-time academic faculty and renowned professional case study leaders, and each other via teamwork and peer review. https://law.tamu.edu/distance-education

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

This week, we have a few pieces of discrete guidance for small business clients who offer dependent care assistance program benefits to employees. The IRS also announced a new pilot compliance program designed to reduce the burden of a qualified plan audit for employers who offer retirement plan options. And, in a piece of good news for small business clients, the IRS has responded to rising gas prices by increasing the standard business mileage rate for the second half of 2022.  Read on for more.

IRS Released Revised Standard Mileage Rates for Second Half of 2022. The IRS released updated optional standard mileage rates that are used to calculate the deductible costs of using a car for business, charitable, medical or moving purposes. For the second half of 2022, the optional standard mileage rate for using a car for business purposes will be 62.5 cents per mile driven for business purposes (up from 58.5 cents per mile in the first half of the year). The rate for miles driven for moving or medical purposes in the second half of 2022 will be 22 cents per mile (up from 18 cents in the first half). The charitable rate remains unchanged at 14 cents per mile. However, the suspension of all miscellaneous itemized deductions and the deduction for moving expenses for the 2018-2025 tax years means that most taxpayers who previously deducted these expenses will no longer be entitled to do so. Those individuals who were previously entitled to take the business mileage expense deduction as an above-the-line deduction, however, many continue to do so. For more information on deducting business-related travel expenses, visit Tax Facts Online. Read More 

IRS Announces a New Program for Retirement Plan Audits. The IRS has released details about a new pilot pre-examination compliance program for plan audits. Under the program, the IRS will send the plan a letter advising that it has been selected for an examination. The plan sponsor is then given 90 days to review the plan for compliance issues. If the sponsor uncovers any issues, it can correct the problem within the 90-day review period if the issue is one that can be corrected under self-correction procedures or can request that the IRS enter a favorable closing agreement. Plan sponsors should be advised that IRS letters are already being mailed. To respond, the sponsor should show that the plan is compliant with any issues raised in the letter, or that the plan was non-compliant but has (or will) correct the problem. The sponsor must also show whether any additional issues have been detected during the compliance review (and steps that are being taken to correct those issues). The IRS will then review that information and, if it agrees, issue a closing letter without additional contact. If the IRS disagrees, it will contact the sponsor and determine whether further audit/action is necessary. For more information on the defined contribution plan qualification rules, visit Tax Facts Online. Read More

Can DCAPs Reimburse Employees for “Hold-the-Spot” Fees? As more offices are reopening in our current “post-COVID” environment, many parents are once again dealing with the potential need for out-of-home childcare. Many childcare providers have begun charging a fee to hold a child’s spot during periods where the child can remain at home. A question then arises as to whether a dependent care assistance program (DCAP) can be used to cover those costs. Informal IRS guidance has provided that these hold-the-spot fees can be considered indirect expenses that are necessary for obtaining childcare (and, thus, can be reimbursed on a tax-preferred basis). However, additional guidance also provides that the fee cannot qualify as an indirect expense unless the childcare in question is ultimately received. So, absent formal guidance, employers may wish to proceed with caution when determining whether a hold-the-spot fee is a qualifying expense. For more information on DCAPs, visit Tax Facts Online. Read More

Look in your Tax Facts Online app for our continuing analysis of 2022 and 2023 legislative and regulatory updates, weekly intelligence, and the impact on planning for a client’s wealth preservation and growth.

Texas A&M, operating budget of $9.6 billion (FY2022) and capital budget of $1.9 billion, is #1 for U.S. public universities, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space! The law school, ranked in the 1st tier of law schools and is ranked in the top 10 for the employment of its graduating law students among U.S. law schools.

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