William Byrnes' Tax, Wealth, and Risk Intelligence

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

Posts Tagged ‘tax facts’

Byrnes & Bloink’s TaxFacts Intelligence (October 15, 2020)

Posted by William Byrnes on October 15, 2020


Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

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

This week we have new info on the definition of “business interest” as it relates to the 2017 tax reform and CARES Act modifications. The IRS has released both final and proposed regs on the matter, and there are new rule changes regarding some of the ancillary costs that can come with debt issuance, such as commitment fees and guaranteed payments that are broadly categorized as “substitute” interest costs. We also see new regs on the elimination of qualified transportations benefits and updated deadlines for Form 1095.

Texas A&M University School of Law’s online wealth and international tax risk management graduate curricula for industry professionals has attracted over 160 enrollment this fall semester. Apply now for courses that begin January 11 spring semester. See the international tax course list by > weekly topic here. <

Final Business Interest Regs Relax Definition of “Business Interest” 

The IRS has released final regulations and a new set of proposed regulations on the deduction for business interest, which was modified by the 2017 tax reform legislation.  The new proposed IRS regulations on the business interest expense implement many of the new CARES Act provisions designed to help small business owners in 2020 and future years. While the final regulations largely mirror earlier proposed rules, one significant change relaxes the previous definition of “business interest”.  Under the proposed regulations, interest included commitment fees, debt issuance costs, guaranteed payments and other “substitute” interest costs.  Under the final rules, commitment fees and debt issuance costs are excluded from the definition of interest. For more information on the business interest deduction and the 2020 CARES Act changes, visit Tax Facts Online. Read More

IRS Proposes Regs on TCJA Elimination of Qualified Transportation Benefits

The IRS issued proposed regulations on the 2017 tax reform legislation’s elimination of deductions for certain employer-provided transportation benefits.  Under the proposed rules, if the employer owns or leases the parking facility, the employer can elect to apply a general rule, or one of three simplified methods, for calculating the amount of nondeductible expenses.  Taxpayers may elect to apply the general rule or a simplified methodology for each taxable year and for each parking facility.  For more information on the simplified methods, visit Tax Facts Online. Read More

IRS Provides New ACA Transition Relief for Employer Reporting

As usual, the IRS has released transition relief to extend the deadline for providing Form 1095-C to individuals from February 1, 2021 to March 2, 2021.  However, unlike other years, the IRS has indicated that absent comments indicating a need for future extensions, this will be the last year the extension applies.  The due date to furnish the Forms 1095-B and 1095-C to requisite individuals is extended from February 1, 2021 to March 2, 2021.  Form 1094-C and Form 1095-C that must be provided to the IRS are not subject to the extension.  The employer must furnish these filings to the IRS by March 1, 2021 if the filing is on paper and March 31, 2021 if the employer is filing electronically.  For more information, visit Tax Facts Online. Read More

Texas A&M, annual budget of $6.3 billion (FY2020), is the largest U.S. public university, 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!

Posted in Retirement Planning, Taxation, Uncategorized, Wealth Management | Tagged: | Leave a Comment »

Byrnes & Bloink’s TaxFacts Intelligence (October 8, 2020)

Posted by William Byrnes on October 8, 2020


 

Byrnes & Bloink’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. All four volumes of Tax Facts in print PLUS

  • Tax Facts Intelligence weekly newsletters
  • weekly strategy articles for client advisory
  • weekly transcribed debate discussion for client soft-skill discussion
  • among other weekly client advisory critical updates

Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

 

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

Well, the August 31 deadline for repaying RMDs is a month behind us now, though the 60-day window still applies for later RMDs. Be sure to check out who is a qualifying individual below to see if the three-year repayment window applies. We also have some info on the new lifetime income estimates for 401(k) participants and some advice on making the most of an FSA this year.

Moving Beyond the August 31 RMD Repayment Deadline

Clients are excused from the RMD rules in 2020 because of the COVID-19 pandemic. Importantly, the IRS gave individuals until August 31, 2020 to repay any RMDs that were taken earlier in the year–even if the 60-day rollover window had already closed. Now that August 31 has come and gone, the usual 60-day rollover window will only help clients who took RMDs in July and August. However, clients should remember that “qualifying individuals” can repay their distributions at any time within three years of the distribution. Qualifying individuals include those who (1) have been diagnosed with COVID-19, (2) have a spouse or dependent who has been diagnosed, (3) have experienced financial hardship due to quarantine orders, layoffs, childcare obligations, etc. To learn more about who qualifies for repayment relief, visit Tax Facts Online. Read More

DOL Releases Rules on SECURE Act Lifetime Income Estimates for 401(k) Participants

The SECURE Act requires plan sponsors to provide plan participants with certain projections designed to increase awareness of their accounts’ income-producing potential. Under the DOL interim final rule implementing this law, 401(k) plans and other ERISA-covered defined contribution plans must show plan participants the estimated monthly payment they could receive based upon their account balance and life expectancy. For more information on how the DOL has interpreted the law, visit Tax Facts Online. Read More

Health FSA Checkup: Understanding the Facts to Make the Most of FSAs in the COVID Era

Tax-friendly health payment options may be more important than ever in the wake of the COVID-19 global health emergency. Employees should take the time to gain an understanding of the benefits and limitations of various options. Health flexible spending accounts (FSAs) allow employees to save up to $2,750 (in 2020) pre-tax for use on health expenses incurred during the year. At the plan’s discretion, up to $550 can be carried over to 2021. Because of the “use it or lose it” rule, it’s important for clients to understand just when their health expenses are deemed incurred. To learn more about health FSAs, visit Tax Facts Online. Read More

Texas A&M University School of Law’s online wealth and international tax risk management graduate curricula for industry professionals has attracted over 160 enrollment this fall semester. Apply now for courses that begin January 11 spring semester. See the international tax course list by > weekly topic here. <

Texas A&M, annual budget of $6.3 billion (FY2020), is the largest U.S. public university, 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!

 

Posted in Retirement Planning, Taxation, Wealth Management | Tagged: | Leave a Comment »

Byrnes & Bloink’s TaxFacts Intelligence (October 5, 2020)

Posted by William Byrnes on October 5, 2020


Byrnes & Bloink’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.

  • all Tax Facts books
  • Tax Facts Intelligence weekly newsletters
  • weekly strategy articles for client advisory
  • weekly transcribed debate discussion for client soft-skill discussion
  • among other weekly client advisory critical updates

Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

 

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

This week we see a reminder from the IRS on tax treatment of unemployment compensation. This may be especially important this year with a large number of people receiving unemployment benefits, and the benefit levels being raised considerably for several months to deal with the COVID pandemic. Because withholding is not mandated, there is a greater risk of taxpayers owing a lot of money next year for unemployment benefits received this year.

IRS Reminder on Tax Treatment of Unemployment Compensation

In response to the fact that an unprecedented number of Americans are currently claiming unemployment benefits, the IRS has issued a reminder that these benefits are fully taxable. However, the IRS reminds taxpayers that withholding is completely optional. Taxpayers can elect to have a flat 10% withheld from their unemployment compensation and paid over automatically to the IRS. For more information on the rules for making estimated payments, visit Tax Facts Online. Read More

Proposed Regs on Post-TCJA Qualified Plan Loan Offsets

The IRS proposed regulations help clients with timing for rollover of qualified plan loan offset amounts. The ability to take a qualified plan loan can offer a valuable source of funding in an emergency. However, plan loans are governed by strict repayment rules. Violations can result in the participant’s account balance being reduced (offset) to repay the unpaid balance (after which it is treated as a taxable distribution). These rules are problematic if the employee is terminated or if the plan itself is terminated. TCJA gave these employees extra time to roll over qualified plan loan amounts to prevent unintended consequences. Instead of the 60-day rollover period, the borrower has until the income tax filing deadline to rollover the offset amount. The regulations provide that if the taxpayer files on time, an additional six-month window to complete the rollover will apply even if the taxpayer doesn’t request the extension. For more information, visit Tax Facts Online. Read More

October 15 Deadline for Creditable Coverage Notice

Medicare-eligible individuals who do not enroll in Medicare Part D when first available, but who enroll later, must pay higher premiums permanently unless they have creditable prescription drug coverage. Higher premiums apply if the individual goes at least 63 consecutive days without creditable coverage. To help avoid this, employers are required to provide notice each year as to whether employer-provided coverage is creditable. This year, these notices are due by October 15, 2020. For more information on the creditable coverage requirement, visit Tax Facts Online. Read More

Texas A&M University School of Law’s online wealth and international tax risk management graduate curricula for industry professionals has attracted over 160 enrollment this fall semester. Apply now for courses that begin January 11 spring semester. See the international tax course list by > weekly topic here. <

Texas A&M, annual budget of $6.3 billion (FY2020), is the largest U.S. public university, 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!

Posted in Retirement Planning, Taxation, Wealth Management | Tagged: | Leave a Comment »

Byrnes & Bloink’s TaxFacts Intelligence (October 2, 2020)

Posted by William Byrnes on October 2, 2020


Byrnes & Bloink’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.

  • all Tax Facts books
  • Tax Facts Intelligence weekly newsletters
  • weekly strategy articles for client advisory
  • weekly transcribed debate discussion for client soft-skill discussion
  • among other weekly client advisory critical updates

Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

 

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

We don’t normally cover a lot from the EEOC here at Tax Facts, but this week has some relevant guidance pertaining to ending telework options. Right now companies are sending mixed signals about returning the office work, and it looks like the EEOC is recognizing that the situation may be different for different employers. We also have updates on using 401(k) funds for adoption expenses and Roth IRA conversions in the COVID era.

EEOC Confirms: Employers Are Not Required to Permit Telework Forever

The EEOC released guidance last week clarifying that employers who have permitted employees to work remotely during the pandemic are not required to continue to permit telework indefinitely. The EEOC guidance clarifies that the rules haven’t changed, so that employers are not required to continue to permit telework as a “reasonable accommodation” under the law. However, an employee’s ability to successfully complete all essential job requirements remotely may be a factor in considering whether a request for remote work is reasonable. For more information, visit Tax Facts Online. Read More

IRS Provides Guidance on Exception for 401(k) Withdrawals for Qualified Birth or Adoption

The SECURE Act amended the IRC to allow qualified plan participants to withdraw up to $5,000 for a qualified birth or adoption without becoming subject to the 10% penalty on early distributions. The distribution must be taken within the one-year period following the birth or adoption. For more information, visit Tax Facts Online. Read More

Enhanced Benefits of Roth Conversions in the COVID-19 Era

Clients who have been considering a Roth conversion might want to take a second look, as 2020 has created a unique opportunity for clients to maximize the value of the Roth conversion strategy. The combination of relatively low tax rates and the potential for future tax hikes might make 2020 the ideal time to convert. Clients who convert traditional retirement funds to a Roth opt to pay income taxes on retirement funds now in exchange for a source of tax-free income in the future. With the federal deficit skyrocketing and the election just around the corner, it’s widely expected that tax rates will be higher in the near future than they are today. Clients might consider taking action to “lock in” 2020 tax rates by converting to a Roth. For more information about the details of a Roth conversion strategy, visit Tax Facts Online. Read More

Texas A&M University School of Law’s online wealth and international tax risk management graduate curricula for industry professionals has attracted over 160 enrollment this fall semester. Apply now for courses that begin January 11 spring semester. See the international tax course list by > weekly topic here. <

Texas A&M, annual budget of $6.3 billion (FY2020), is the largest U.S. public university, 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!

Posted in Retirement Planning, Taxation, Wealth Management | Tagged: | Leave a Comment »

Byrnes & Bloink’s TaxFacts Intelligence (September 30, 2020)

Posted by William Byrnes on September 30, 2020


Texas A&M University School of Law’s online wealth and international tax risk management graduate curricula for industry professionals has attracted over 160 enrollment this fall semester. Apply now for courses that begin January 11 spring semester. See the international tax course list by > weekly topic here. <

Texas A&M, annual budget of $6.3 billion (FY2020), is the largest U.S. public university, 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!

 

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

Happy October Fest! Several states now allow employers to use federal forms (1094-C and 1095-C) for state reporting requirements. This may be the beginning of an interesting trend towards simplification of state filing requirements. Obviously, not everything from a federal filing translates directly into state filings (for example, many states treat pension income differently in an attempt to lure retirees), but often much of the information that is filed for a state is redundant to the respective federal forms.

California Allows Employers to Use Federal Forms 1094-C and 10-95-C. Will Other States Follow?

California and several other states have imposed their own state-level individual mandates that closely resemble the Affordable Care Act mandate (now reduced to $0). California’s mandate became effective in 2020. Recently, the state announced that employers can satisfy their state-level reporting responsibilities using the same forms that apply for federal purposes. Employers who offer health insurance to California residents must now also submit their Forms 1094-C and 1095-C to the state franchise tax board (as well as the IRS under federal rules that continue to require employer reporting). Currently, however, the state-level forms must be filed by January 31. Historically, the IRS has extended the federal deadline to March 2. Employers should continue to pay close attention to ensure both state and federal requirements are satisfied. For more information on the employer reporting obligations, visit Tax Facts Online. Read More

PBGC CARES Act Relief for Defined Benefit Plans

Sponsors of defined benefit plans are generally required to pay premiums annually to the PBGC. Calculating the premium amount is complex. The CARES Act extended the deadline for making a 2019 defined benefit contribution until January 1, 2021. However, according to PBGC guidance, these contributions must be made by October 15, 2020 in order to be included in calculating the variable portion of the plan sponsor’s PBGC premium. Contributions paid before January 1, 2021 are not considered late, so the plan sponsor does not have to worry about incurring any additional filing obligations. For more information on the defined benefit plan funding rules, visit Tax Facts Online. Read More

Updated Model Safe Harbor Notice for Rollover Transactions

Retirement plan qualification rules periodically require employers to provide notice to participants who are eligible to take rollover distributions. In Notice 2020-62, the IRS released an updated safe harbor model notice that taxpayers can use under Section 402(f). That notice identifies several types of new distributions that are not eligible for rollover. This model notice can be modified, but is generally required for all 401(k), 403(b) and 457 plans that make distributions that are eligible for rollover to another retirement account. For more information on the notice requirements, visit Tax Facts Online. Read More

 

Byrnes & Bloink’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.

  • all Tax Facts books
  • Tax Facts Intelligence weekly newsletters
  • weekly strategy articles for client advisory
  • weekly transcribed debate discussion for client soft-skill discussion
  • among other weekly client advisory critical updates

Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

Posted in Pensions, Retirement Planning, Taxation, Wealth Management | Tagged: | Leave a Comment »

Byrnes & Bloink’s TaxFacts Intelligence (September 28, 2020)

Posted by William Byrnes on September 28, 2020


Texas A&M University School of Law’s online wealth and international tax risk management graduate curricula for industry professionals has attracted over 160 enrollment this fall semester. Apply now for courses that begin January 11 spring semester. See the international tax course list by > weekly topic here. <

Texas A&M, annual budget of $6.3 billion (FY2020), is the largest U.S. public university, 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!

 

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

The big news this week: A New York federal court vacated four DOL rules implementing the FFCRA paid leave provisions. The CARES Act provided relief to IRA owners by eliminating the need to take required minimum distributions for 2020. This relief also extends to certain beneficiaries of inherited accounts.

NY Federal Court Vacates Four Aspects of the DOL FFCRA Guidance

A New York federal court vacated four DOL rules implementing the FFCRA paid leave provisions. The court struck down the DOL “work availability” rule, meaning that employers may be eligible for paid leave even if there is no work available (assuming they meet the criteria for paid leave). The court also vacated the DOL definition of “healthcare provider” and partially invalidated the “intermittent leave” rules. Now, New York employers cannot require employees to gain consent for intermittent leave. Finally, the court ruled that employers cannot condition FFCRA leave on advance employee documentation of the details leading to the need for paid leave. Employers located in New York (and elsewhere) should review their policies and consult with advisors to determine the best course of action in light of the new uncertainty. For more information on the FFCRA paid leave rules, visit Tax Facts Online. Read More

IRS PLR Allows Employees to Allocate Contributions Between HRAs and a Profit Sharing Plan

The IRS recently blessed an amendment to a profit sharing plan that would also permit employees to make HRA contributions. The issue up for consideration was whether a profit sharing plan covering collectively bargained employees could be amended to allow participants to allocate contributions toward HRAs and the plan on an annual schedule (a default would apply in the absence of an election). The IRS found that the proposed amendment would not cause the plan to be treated as a 401(k), because it would not create an opportunity for participants to elect cash or to use the contributions to pay for taxable benefits. Therefore, the profit sharing plan would not offer a cash or deferred arrangement under IRC Section 401. The IRS also found that the arrangement would not violate the HRA rules. For more information on the profit sharing plan qualification rules, visit Tax Facts Online. Read More

Understanding CARES Act Relief for Inherited IRA Beneficiaries

The CARES Act provided relief to IRA owners by eliminating the need to take required minimum distributions for 2020. This relief also extends to certain beneficiaries of inherited accounts. Under pre-SECURE Act rules, certain inherited IRA beneficiaries were required to drain the account within five years of the original account owner’s death. Now, the CARES Act provides that if 2020 was one of those five years, it is not counted—essentially extending the distribution period to six years. This gives IRA beneficiaries the benefit of tax-free IRA growth for an additional year. For more information on the RMD rules for inherited IRAs, visit Tax Facts Online. Read More

Byrnes & Bloink’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.

  • all Tax Facts books
  • Tax Facts Intelligence weekly newsletters
  • weekly strategy articles for client advisory
  • weekly transcribed debate discussion for client soft-skill discussion
  • among other weekly client advisory critical updates

Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

Posted in Retirement Planning, Taxation, Wealth Management | Tagged: | Leave a Comment »

Byrnes & Bloink’s TaxFacts Intelligence (September 17, 2020)

Posted by William Byrnes on September 17, 2020


Texas A&M University School of Law’s online wealth management, international tax risk management, and general risk management graduate curricula for industry professionals has attracted over 160 enrolled for fall semester. Apply now for courses that begin January 11. 

Texas A&M, annual budget of $6.3 billion (FY2020), is the largest U.S. public university, 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!

 

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

The big news this week: COVID hardship distributions for qualified plans was one of the headline features of the CARES Act, but Notice 2020-50 was recently released and deals with COVID distributions from nonqualified plans as well. Given the wide variety of nonqualified plans this could present some significant planning opportunities. We also see updates on excess parachute payments and proposed regs that would allow HRAs to reimburse expenses for concierge care, which is an increasingly popular option for many individuals and families..

IRS Guidance Sheds Light on Nonqualified Plan Election Rules

IRS Notice 2020-50 provided substantial guidance on the treatment of coronavirus-related distributions for both qualified and nonqualified plan purposes. With respect to Section 409A and nonqualified plans, the IRS confirmed that such a distribution would be treated as a hardship distribution. This allows nonqualified deferred compensation plans to amend their terms to allow either (1) automatic suspension of the individual’s deferral elections throughout 2020 or (2) the right for qualified individuals to elect to suspend their deferral elections during 2020. For more information on hardship and nonqualified deferred compensation plans, visit Tax Facts Online. Read More

Proposed IRS Regs Clarify Definition of “Excess Parachute Payment” for Tax-Exempt Tax Rules

Tax-exempt entities are subject to a 21 percent tax on excess compensation and excess parachute payments under the 2017 tax reform legislation. The IRS has proposed regulations clarifying that certain payments are exempt from the definition. However, amounts paid by the organization itself, a predecessor or related organization may also be included in the calculation. For more information on the new rules, visit Tax Facts Online. Read More

IRS Proposed Regs Allow HRA Reimbursement for Concierge Care

The IRS proposed regulations on direct primary care arrangements impact the medical expense deduction, availability of HRA reimbursements and eligibility for HSA participation. Under the regulations, a direct primary care arrangement could be used for medical care or medical insurance and could also be reimbursed from an HRA. However, individuals covered by these arrangements would lose eligibility to contribute to an HSA under most circumstances. For more information on the types of expenses that HRAs can cover, visit Tax Facts Online. Read More

Byrnes & Bloink’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.

  • all Tax Facts books
  • Tax Facts Intelligence weekly newsletters
  • weekly strategy articles for client advisory
  • weekly transcribed debate discussion for client soft-skill discussion
  • among other weekly client advisory critical updates

Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

Posted in Retirement Planning, Wealth Management | Tagged: , , , | Leave a Comment »

Byrnes & Bloink’s TaxFacts Intelligence Weekly (Wednesday July 22, 2020)

Posted by William Byrnes on July 22, 2020


Texas A&M University School of Law has launched its online international tax risk management graduate curricula for industry professionals.  Apply now for courses that begin August 23: International Tax Risk Management, Data, and Analytics; International Tax & Tax Treaties (complete list here

Texas A&M University is a public university, ranked in the top 20 universities by the Wall Street Journal / Times Higher Education university rankings, and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

 

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

 

The big news this week is the DOL’s new rules on fiduciary exemptions for rollover transactions. This plus the SEC’s Reg BI is starting to fill in the gaps for fiduciary rules since the DOL’s original Obama-era fiduciary rules were mostly invalidated through litigation. We also see new rules for COVID-related distributions and loans from qualified plans.

DOL Fiduciary Exemption: Application to Rollover Transactions

The new DOL proposed exemption for fiduciary advice specifically applies to rollover advice, assuming the circumstances qualify under the five-part test for determining whether the advisor is an investment advice fiduciary. However, the DOL commentary included with the proposed exemption makes clear that not every rollover triggers investment advice fiduciary status. For more information, visit Tax Facts Online. Read More

New Regs on Tax-Exempt Excise Tax Create Exceptions for Certain Individuals Performing Limited Services

To encourage continued volunteer work and avoid double-taxation, the proposed regulations contain some useful exceptions. An individual will not be subject to the 21 percent excise tax if the limited hours exception or non-exempt funds exception applies. For more information on the new exceptions, visit Tax Facts Online. Read More

Expanded Eligibility for CARES Act Retirement Distribution and Loan Relief
The IRS has expanded the list of individuals who qualify under the expanded distribution and loan rules to include anyone whose pay was reduced due to COVID-19 (regardless of whether hours were reduced or whether the individual was laid off). If a taxpayer was planning to start a new job and the start date was pushed back (or the offer was rescinded entirely) due to COVID-19, that taxpayer also qualifies for relief. Further, if a spouse or member of the plan participant’s household has suffered an enumerated impact, the participant becomes eligible for the expanded retirement account access. For more information, visit Tax Facts Online. Read More

 

Byrnes & Bloink’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.

  • all Tax Facts books
  • Tax Facts Intelligence weekly newsletters
  • weekly strategy articles for client advisory
  • weekly transcribed debate discussion for client soft-skill discussion
  • among other weekly client advisory critical updates

Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

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

Byrnes & Bloink’s TaxFacts Intelligence Special Edition for July 15, 2020 – Tax Filing and Tax Payments Due Today

Posted by William Byrnes on July 15, 2020


Texas A&M University School of Law has launched its online international tax risk management graduate curricula for industry professionals.  Apply now for courses that begin August 23: International Tax Risk Management, Data, and Analytics; International Tax & Tax Treaties (complete list here

Texas A&M University is a public university, ranked in the top 20 universities by the Wall Street Journal / Times Higher Education university rankings, and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

 

 

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

 

Back in April we sent out a special newsletter detailing all of the COVID-related tax changes that we had made to Tax Facts Online content up to that point. Not surprisingly, we have continued to see significant changes since then. This week we’re back with a second special newsletter detailing the changes that we have seen since April. Below are all of the changes made that are related to the Families First Coronavirus Response Act, the CARES Act (including the PPP program), and various regulations from the IRS and DOL. As always, log into Tax Facts Online for the full text of these updates and many others.

Families First Coronavirus Response Act: FFCRA Exemption for Very Small Business Clients

Generally, business owners with fewer than 50 employees can claim an exemption from the paid sick leave and expanded FMLA law if they can show that payment would jeopardize their business as a going concern. DOL FAQ have provided new details, which substantially narrow the availability of the exemption. To qualify, the employee must be taking leave to care for children because of COVID-19 and must satisfy one of three possible criteria to demonstrate that paid leave would jeopardize the business. The three conditions are: (1) providing leave would result in the small business expenses and financial obligations exceeding available business revenues, causing the business to stop operating at minimal capacity, (2) absence of the employee requesting leave would result in a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or (3) there are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee requesting paid leave, and these labor or services are needed for the small business to operate at a minimal capacity. For more information on the FFCRA paid leave requirements, visit Tax Facts Online. Read More

Families First Coronavirus Response Act: DOL FAQ Clarify Concurrent Use of FFCRA Leave

The FFCRA implemented a new paid sick leave law and expanded FMLA leave options for employees impacted by COVID-19. Many employers have independent policies in place that provide employees with leave options, and the DOL regulations raised questions about when the employer can require the employee to use that leave prior to, or concurrently with, FFCRA leave. Employers cannot require employees to use leave concurrently during the first two weeks of paid sick leave for non-childcare related reasons. Employers can, under some circumstances, require use of employee leave concurrently with expanded FMLA leave for childcare reasons. Employers are only eligible for tax credits with respect to leave paid out under the new law. If the employer requires the employee to use otherwise available employer-paid leave, the tax credit is unavailable with respect to that portion of the employee’s pay. For more information, visit Tax Facts Online. Read More

Families First Coronavirus Response Act: Employee Rights after FFCRA Leave

Employers are generally prohibited from retaliating against employees to take paid sick leave or expanded FMLA leave under the FFCRA. However, the law does not protect employees from layoffs or furloughs undertaken for other reasons, such as the general economic downturn. Exceptions exist for key employees and very small employers with fewer than 25 employees. The exception allows employers to refuse returning the employee to work in the same position if the employee took leave for childcare-related reasons, and all four of the following hardship conditions exist: (1) the position no longer exists due to economic or operating conditions that affect employment and due to COVID-19 related reasons during the period of leave; (2) the employer makes reasonable efforts to restore the employee to the same or an equivalent position; (3) the employer makes reasonable efforts to contact the employee if an equivalent position becomes available; and (4) the employer continues to make reasonable efforts to contact the employee for one year beginning either on the date the leave related to COVID-19 reasons concludes, or the date 12 weeks after the leave began, whichever is earlier. For more information on the FFCRA, visit Tax Facts Online. Read More

Families First Coronavirus Response Act: Moving to Reopen, Employers Begin Evaluating FFCRA Leave Provisions

Now that many more employers are beginning to evaluate whether to reopen as governments relax restrictions, those who have been closed for upwards of two months will have to evaluate whether they must provide paid leave under the FFCRA as COVID-19 continues to spread. The FFCRA paid sick leave and expanded FMLA provisions only applied to employers who continued to operate in the wake of the pandemic–employees who were simply laid off or furloughed were required to seek unemployment benefits. Upon first glance, the new paid leave requirements under the FFCRA seem to provide 12 weeks of paid time off for most small business employees. However, the benefit triggers differ depending on whether the employee is claiming (1) 80 hours paid sick leave or (2) expanded relief under the FMLA. For more information on the benefit triggers, visit Tax Facts Online. Read More

Families First Coronavirus Response Act and CARES Act: Qualifying Healthcare Expenses Eligible for Tax Credits Even for Furloughed Employees

The FFCRA and CARES Act each provide tax credits for employers who continue to pay employee wages through 2020. The amount of wages paid also includes qualifying health expenses that the employer pays on the employee’s behalf. Qualifying health expenses are amounts paid by the employer to maintain a group health plan if the amounts would be excluded from employees’ income under IRC Section 106(a). These expenses should generally be prorated between employees and based on the periods of coverage relating to the payment of wages. Health insurance plans, prescription drug plans, dental and vision plans, health FSAs, HRAs and most employee assistance plans should all qualify. Additionally, the IRS has confirmed that employers can claim the tax credits for qualified healthcare expenses, regardless of whether the employee is paid qualified wages during the same timeframe. As a result, employers who have furloughed employees, but continue to cover healthcare expenses, can claim a tax credit for those expenses. For more information, visit Tax Facts Online. Read More

CARES Act: Telehealth Coverage and HDHP/HSA Eligibility

In response to the evolving COVID-19 pandemic, the CARES Act further expands the pre-deductible services high deductible health plans (HDHPs) may offer. HDHPs are now permitted to cover the cost of telehealth services without cost to participants before the HDHP deductible has been satisfied. HDHPs providing telehealth coverage do not jeopardize their status as HDHPs. Plan members similarly retain the right to fund HSAs after taking advantage of cost-free telehealth services. Under normal rules, HDHPs cannot waive costs for anything other than certain preventative services without jeopardizing HDHP status. Remote health services can be provided under a safe harbor rule through December 31, 2021. For more information on the HDHP qualification rules, visit Tax Facts Online. Read More

CARES Act: Bonus Depreciation Fix, Amended Returns for Partnerships

The CARES Act provided retroactive relief to partnerships on multiple fronts, including by fixing the so-called “retail glitch” to allow businesses to take advantage of 100% bonus depreciation on qualified improvement property through 2022. Existing law may have prevented partnerships from filing amended Forms 1065 and Schedules K-1. Instead, partnerships would have been required to file an administrative adjustment request, so that partners would not have received relief until filing returns for the current tax year. Revenue Procedure 2020-23 allows partnerships to file amended returns and issue revised Schedules K-1 for 2018 and 2019 to take advantage of retroactive CARES Act relief (and, absent further guidance, even if they are not taking advantage of CARES Act relief). The relief applies for 2018 and 2019 as long as the original Forms 1065 and Schedules K-1 were filed/issued before April 13, 2020 (the date Rev. Proc. 2020-23 was released). Partnerships can file amended Form 1065 and Schedule K-1 (electronically or by mail), by checking the Form 1065 “amended return” box and writing “FILED PURSUANT TO REV PROC 2020-23” at the top. The same statement must be included in a statement attached to amended Schedules K-1 sent to partners. The amended returns must be filed/furnished to partners by September 30, 2020. For more information, visit Tax Facts Online. Read More

CARES Act: IRS Guidance on Business Interest Elections

The IRS gives businesses substantial flexibility in making and revoking elections related to business interest expense deductions under the CARES Act. A taxpayer may elect under Section 163(j)(10)(A)(iii) not to apply the 50 percent ATI limitation for a 2019 or 2020 taxable year (2020 only for partnerships). A taxpayer permitted to make the election makes the election not to apply the 50 percent ATI limitation by timely filing a federal income tax return or Form 1065 (or amendments) using the 30 percent ATI limitation. No formal statement is required to make the election. The taxpayer can then later revoke that election by filing an amended return or form. Similarly, to use 2019 ATI for 2020, the taxpayer merely files using 2019 ATI (and can then later revoke that election by filing a timely amended return or form). For more information, visit Tax Facts Online. Read More

CARES Act: IRS Allows Corporations to Use Prior Year AMT Credits Retroactively
The 2017 Tax Act generally repealed the corporate AMT, but also permitted corporations to continue claiming a minimum credit for prior year AMT paid. The credit can generally be carried forward to offset corporate tax liability in a later year. The CARES Act eliminates certain limitations that applied to the carryover provision, so that corporations can claim refunds for their unused AMT credits for the first tax year that began in 2018 (i.e., the corporation can take the entire amount of the refundable credit for 2018). The corporation must submit the application for refund before December 31, 2020 and, for convenience, the IRS has institutes a fax procedure for both AMT credit and NOL refund purposes. For more information, visit Tax Facts Online. Read More

CARES Act: Relief for Qualified Plan Loans
The CARES Act relaxed the rules to provide relief for qualified plan participants with existing plan loans. If a participant had an existing plan loan with a repayment obligation falling between March 27 and December 31, 2020, that repayment obligation was extended for one year. Any subsequent repayment obligations are to be adjusted to reflect this extension. For plan participants who are “qualifying individuals,” the plan loan limits were increased to the greater of $100,000 or 100% of the vested balance in the participant’s account. For more information, visit Tax Facts Online. Read More

CARES Act: Expanded Charitable Donation Deduction for 2020
The CARES Act made several changes designed to encourage charitable giving during the COVID-19 outbreak. For the 2020 tax year, the CARES Act amended IRC Section 62(a), allowing taxpayers to reduce adjusted gross income (AGI) by $300 worth of charitable contributions made in 2020 even if they do not itemize. Under normal circumstances, taxpayers are only permitted to deduct cash contributions to charity to the extent those donations do not exceed 60% of AGI (10% for corporations). The CARES Act lifts the 60% AGI limit for 2020. Cash contributions to public charities and certain private foundations in 2020 are not subject to the AGI limit. Individual taxpayers can offset their income for 2020 up to the full amount of their AGI, and additional charitable contributions can be carried over to offset income in a later year (the amounts are not refundable). The corporate AGI limit was raised to 25% (excess contributions also carry over to subsequent tax years). For more information, visit Tax Facts Online. Read More

CARES Act: IRS Releases Initial Q&A on Qualified Plan Loan & Distribution Provisions
The IRS released the first Q&A in what is likely to be a series of guidance on the CARES Act retirement-related provisions. One overarching issue is the IRS confirmation that plan sponsors can rely upon past guidance issued in response to Hurricane Katrina in 2005 and the RMD waiver in 2009 for help implementing the CARES Act provisions. Under initial guidance, individuals are only eligible for COVID-19 related distributions or loans if they themselves are impacted (qualification cannot currently be based on a spouse or dependent’s job loss). The Q&A also clarifies that increased loan limits are currently available between March 27, 2020 and September 22, 2020. Further, the guidance confirms that the loan and distribution relief is optional for plan sponsors–and sponsors can elect to adopt one provision and not another (including the loan repayment option). For more information on the CARES Act loan provisions, visit Tax Facts Online. Read More

CARES Act: Calculating Qualified Plan Loans and the One-Year Look-back Rule

The CARES Act allows plan sponsors to double the qualified plan loan limit for qualified individuals. Plan loans made between March 27, 2020 and September 23, 2020 are limited to the lesser of (1) $100,000 or (2) 100% of the participant’s vested account balance. Despite this, even if the individual is qualified, plan sponsors must remain aware of the one-year look-back rule. IN reality, the $100,000 limit is reduced by the excess of the employee’s highest outstanding plan loan balance during the one-year period ending on the day before the loan is made, over the employee’s outstanding balance of any plan loan on the date the loan is made (this calculation also includes loans from any other plans maintained by the employer or member of a controlled group). For more information on the qualified plan loan rules, visit Tax Facts Online. Read More

CARES Act: IRS Waives Physical Presence Requirement for Spousal Consent to Participant Benefit Elections

IRC Section 417 generally requires spousal consent to a waiver of a qualified joint and survivor annuity (QJSA), which includes the waiver of a QJSA as part of a participant’s request for a plan distribution or a plan loan (the availability of which were expanded under the CARES Act). The spousal consent must generally be witnessed by a plan representative or notary public in person (the physical presence requirement). Notice 2020-42 provides relief in permitting remote electronic notarization executed via live auto-video technology that satisfies any state-level requirements that apply to a notary public. The relief in Notice 2020-42 applies to any participant election that requires a signature to be witnessed in the physical presence of a plan representative or notary in 2020. For more information on spousal consent requirements, visit Tax Facts Online. Read More

CARES Act: IRS Expands RMD Waiver Relief for 2020

The CARES Act waived all RMD requirements for 2020. Despite this, the law was enacted after some taxpayers had already taken their 2020 RMDs early in the year. For those who took RMDs very early in the year, the 60-day rollover period had already expired. In response, the IRS announced that anyone who took a 2020 RMD is eligible to roll the funds back into their account penalty-free. The 60-day rollover period was extended through August 31, 2020, so clients still have only a limited amount of time in which to act. Further, the rollover does not count toward the otherwise applicable “one rollover per 12-month period” rule or the restriction on rollovers for inherited IRAs. For more information on the RMD rules, visit Tax Facts Online. Read More

Payroll Protection Program: Defining “Payroll Costs” for PPP

Taxpayers with fewer than 500 employees are eligible for new “payroll protection loans” administered via the Small Business Administration. In general, the loans may be forgiven (and amounts excluded from income for tax purposes) if used to cover payroll costs, which are defined in the CARES Act to include the sum of (A) payments of any compensation with respect to employees that is (1) salary, wage, commission, or similar compensation, (2) payment of cash tip or equivalent, (3) payment for vacation, parental, family, medical, or sick leave, (4) allowance for dismissal or separation, (5) payment required for the provisions of group health care benefits, including insurance premiums, (6) payment of any retirement benefit or (7) payment of State or local tax assessed on the compensation of employees; and (B) the sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment, or similar compensation that is not more than $100,000 in one year, as prorated for the covered period. Payroll costs exclude (1) compensation of an individual employee over $100,000 per year, as prorated for the covered period, (2) taxes imposed or withheld under chapters 21, 22, or 24 of the Internal Revenue Code of 1986 during the covered period, (3) any compensation of an employee whose principal place of residence is outside of the United States, (4) qualified sick leave wages for which a credit is allowed under the FFCRA or (5) qualified family leave wages for which a credit is allowed under the FFCRA. For more information, visit Tax Facts Online. Read More

Payroll Protection Program: The Finer Points of PPP Loan Forgiveness

Loan forgiveness offers powerful assistance to those small businesses who were actually able to receive Paycheck Protection Program loan funds. However, loan forgiveness is not without its costs. While amounts forgiven will not be included in income under the usual cancellation of indebtedness rules, business owners may not be entitled to their typical business deductions either. Notice 2020-32 clarifies that otherwise allowable deductions are disallowed if the payment of the expense (1) results in loan forgiveness under the PPP loan program and (2) the income associated with the loan forgiveness is excluded from income under CARES Act Section 1106(i). Although legislation proposed in Congress may change this result, small business clients should pay close attention to the potential future tax impact of loan forgiveness. For more information on implications of loan forgiveness, visit Tax Facts Online. Read More

Payroll Protection Program: Guidance on PPP Eligibility

The Treasury has updated its guidance related to the CARES Act Paycheck Protection Program (PPP) loan forgiveness requirements. The Treasury now notes that most companies with adequate sources of alternative liquidity are likely not eligible for the program. In order to qualify for the loans, PPP borrowers are now required to provide a good faith certification stating that current economic conditions and uncertainty make the loan necessary to support ongoing operations. While Treasury calls out public companies with substantial market value and access to the capital markets specifically, the guidance could also impact businesses who have adequate alternative liquidity to support operations. PPP borrowers who find they cannot make the certification in good faith are permitted to return the funds. For more information on the PPP loan rules, visit Tax Facts Online. Read More

Payroll Protection Program: Increased Flexibility for PPP Recipients

PPP loan forgiveness is determined based on how the small business client spent the loan proceeds. Under the PPPFA, at least 60% of the loan must be used for payroll costs (this 60% threshold was reduced from 75% under the CARES Act). Under the terms of the CARES Act, amounts used to cover eligible expenses could be forgiven if used during the eight-week period following the loan origination date. The PPPFA extended the eight-week period to 24 weeks from the date the lender made the first loan payment to the small business owner. Unless Congress acts again, the funds must all be spent by December 31, 2020 in order to be eligible for forgiveness. The amount forgiven can also be reduced if the employer made certain staffing cuts or cut employee compensation levels. The PPPFA gives employers until December 31, 2020 to bring workers back to work/restore wage levels and continue to qualify for loan forgiveness (extended from prior law, which set the deadline at June 30)). Read More

IRS, DOL Announce Extension of COBRA Election Period

Under normal circumstances, an individual has 60 days from the date when a COBRA qualifying event occurs to elect COBRA coverage (or make a new COBRA election). In light of the COVID-19 outbreak, the IRS and DOL have announced an extension of this 60-day window. The 60-day election window is essentially paused for relevant time periods that include March 1, 2020. The clock is stopped and will not resume until the end of the “outbreak period”. The outbreak period is defined as the window of time beginning March 1, 2020 and ending 60 days after the date that the COVID-19 national emergency is declared ended. The 45-day payment clock and 30-day grace period for late COBRA payments are also paused. For more information on the COBRA election rules, visit Tax Facts Online. Read More

DOL Releases New COBRA Notice in Light of Growing Employment Litigation

The DOL released a revised COBRA general notice and election notice on May 1, 2020, in response to increasing furloughs and layoffs in the wake of COVID-19–and a growing risk of employment litigation. Employers are not required to post the new notices, but may wish to in light of the evolving situation. These new notices add information about how Medicare eligibility impacts COBRA eligibility (highlighting the fact that COBRA coverage is usually secondary to Medicare). Employers who use the model notices are deemed to comply with COBRA notice requirements. For more information on COBRA coverage election requirements and COVID-19, visit Tax Facts Online. Read More

IRS Provides Relief for Cafeteria Plan Participants in Response to COVID-19

Under normal circumstances, cafeteria plans are not permitted to allow participants to make mid-year election changes except in limited situations. Notice 2020-29 permits employees to allow certain mid-year elections made during calendar year 2020 that would otherwise be impermissible, including changes to salary reduction contribution elections. The guidance also allows participants to revoke (or make) an election with respect to health and dependent care FSAs on a prospective basis during 2020 to respond to changing needs during the COVID-19 pandemic. Further, the guidance clarifies that the relief for high deductible health plans (HDHPs) and expenses related to COVID-19 (regarding an exemption for telehealth services) may be applied retroactively to January 1, 2020. For more information on the mid-year election rules for cafeteria plans, visit Tax Facts Online. Read More

IRS Makes Temporary & Permanent Changes to the FSA Grace Period Rules

IRS Notice 2020-33 and Notice 2020-29, released concurrently, provides relief with respect to unused funds in a flexible spending account. Under Notice 2020-29, if an employee has unused amounts remaining in a health FSA or a dependent care assistance program at the end of a grace period (or plan year) ending in 2020, a cafeteria plan may permit employees to apply those unused amounts to pay or reimburse medical care expenses or dependent care expenses incurred through December 31, 2020. Notice 2020-33 makes a change to the carryover rules that apply to health FSAs, so that the amount that can be carried over to the following year will equal 20 percent of the maximum inflation-indexed salary reduction amount under Section 125 (increasing the carryover amount from $500 to $550 for 2020). For more information on the rules governing health FSAs, visit Tax Facts Online. Read More

Treasury Allows Tax Credit for Employers Paying Health Expenses of Furloughed Workers

Clearing up confusion (and revising initial guidance), the Treasury has announced that if an employer continues to pay an employee’s health insurance costs during a furlough period, the employer is entitled to claim a tax credit with respect to those expenses. This is the case even if the employer is not currently paying the employee’s wages. The employee retention credit is generally equal to up to 50% of the employee wages and certain other qualifying expenses. For more information on the employee retention tax credit, visit Tax Facts Online. Read More

Required Business Expense Reimbursement in the Age of COVID-19

Some employers are now permitting employees to work from home–while others are requiring it. In some jurisdictions (California and Illinois, for example) employers are required to reimburse employees for employment expenses. This may create the need for employers to reimburse employees for the cost of maintaining a home office. Further, the FLSA does not permit an employer to require an employee to pay for business expenses if doing so would reduce the employee’s earnings to below the minimum wage. However, simply providing cash reimbursement may generate additional taxable income for the employee. The miscellaneous itemized deduction for expenses incurred in the “trade or business of being an employee” was suspended for 2018-2025. Employers may instead wish to consider a program where the employer leases or purchases the required equipment for the employee’s use. For more information on the impact of reimbursing business expenses, visit Tax Facts Online. Read More

Dependent Care FSAs Provide Flexibility in the Face of a Pandemic

With so many employees working from home–and scrambling to find childcare options as businesses begin to reopen–many employees rethinking contributions to dependent care FSAs. The rules governing changes to dependent care FSA contributions are more flexible than health FSAs. Employees are permitted to make mid-year changes in pre-tax contributions if their circumstances relating to the need for dependent care changes. Employees can reduce their contributions if they are working from home and do not need childcare, or can increase the contributions when they return to work and need to provide for increased childcare costs. Further, employees who have been furloughed and laid off might want to ask whether their plan contains a spend-down feature. These features are optional, but allow former employees to seek reimbursement for dependent care expenses incurred through the end of the tax year (even if their employment has been terminated). Employers have the option of adding a spend-down feature at any time. For more information on dependent care FSAs, visit Tax Facts Online. Read More

IRS Provides Relief for Employee Donations of Unused Sick, Vacation & PTO

The IRS has provided relief so that employees can forgo sick, vacation or personal leave because of the COVID-19 pandemic without adverse tax consequences. Under the guidance, an employer can make cash payments to charitable organizations that provide relief to victims of the COVID-19 pandemic in exchange for sick, vacation or personal leave which their employees forgo. Those amounts will not be treated as compensation and the employees will not be treated as receiving the value of the leave as income. Therefore, taxable income will not be increased, but the employee cannot claim a deduction for the leave donated to their employer. Employers, however, may deduct these cash payments as a business expense or as a charitable contribution deduction if the employer otherwise meets the respective requirements of either section. For more information on the charitable contributions, visit Tax Facts Online. Read More

Home Office Deductions in the Age of Covid-19

With so many taxpayers working from home—some indefinitely—do to Covid-19, many are likely wondering whether they can deduct their home office expenses. In short, traditional W-2 employees cannot deduct their home office expenses regardless of whether they would otherwise qualify for the deduction. The 2017 tax reform legislation eliminated this deduction for 2018-2025. Self-employed taxpayers can deduct expenses associated with maintaining a home office if the office is used regularly and exclusively as the taxpayer’s principal place of business (if the office is within the dwelling unit). A home office deduction is permitted for self-employed taxpayers with separate structures if the office/workspace is used “in connection with” the trade or business. For more information on the home office deduction, visit Tax Facts Online. Read More

 

Byrnes & Bloink’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.

  • all Tax Facts books
  • Tax Facts Intelligence weekly newsletters
  • weekly strategy articles for client advisory
  • weekly transcribed debate discussion for client soft-skill discussion
  • among other weekly client advisory critical updates

Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

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

Byrnes & Bloink’s TaxFacts Intelligence Weekly (Monday July 12, 2020)

Posted by William Byrnes on July 12, 2020


Texas A&M University School of Law has launched its online international tax risk management graduate curricula for industry professionals.  Apply now for courses that begin August 23: International Tax Risk Management, Data, and Analytics; International Tax & Tax Treaties (complete list here

Texas A&M University is a public university, ranked in the top 20 universities by the Wall Street Journal / Times Higher Education university rankings, and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

 

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

This week we analyze the DOL’s new prohibited transactions exemption for fiduciaries, the DOL’s clarification of which parents are eligible for the FFCRA during the summer school recess when children are normally at home, and Congress’ new exemption for PPP Loan Forgiveness.

DOL Unveils New Prohibited Transaction Exemption (PTE) for Fiduciaries

The DOL has released its long-awaited follow-up to the 5th Circuit’s vacation of its 2016 fiduciary rule. The DOL proposed a new class exemption that grants relief for financial advisors and institutions who provide investment advice (including retirement-related advice) if the terms of the PTE are satisfied. Generally, fiduciaries who receive certain forms of commission with respect to investment advice can run afoul of the prohibited transaction rules unless an exemption applies. For more information on the new exemption, visit Tax Facts Online. Read More

DOL Clarifies FFCRA Eligibility for Parents Who Lack Summer Childcare

FFCRA leave is generally available to parents who cannot work because of childcare needs when the child’s usual place of care or school is closed or unavailable due to COVID-19. Now that schools are closed for summer, many have questioned their eligibility based on cancellations for summer camps, summer enrichment programs or other childcare alternatives. The DOL has clarified its original guidance to provide that an employee’s mere interest in a summer program that was cancelled is insufficient to establish FFCRA eligibility. For more information, visit Tax Facts Online. Read More

Congress Creates New Exemption to Preserve PPP Loan Forgiveness

PPPFA created an exemption to preserve loan forgiveness eligibility in the face of the reality that some employees may not be available or willing to return to work. Employers will not be subject to a proportionate reduction in loan forgiveness based on reductions that occur under either of two scenarios during February 15, 2020 and December 31, 2020. For more information, visit Tax Facts Online. Read More

 

Byrnes & Bloink’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.

  • all Tax Facts books
  • Tax Facts Intelligence weekly newsletters
  • weekly strategy articles for client advisory
  • weekly transcribed debate discussion for client soft-skill discussion
  • among other weekly client advisory critical updates

Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

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

Byrnes & Bloink’s TaxFacts Intelligence Weekly (Friday July 9, 2020)

Posted by William Byrnes on July 10, 2020


Texas A&M University School of Law has launched its online international tax risk management graduate curricula for industry professionals.

Apply now for courses that begin August 23: International Tax Risk Management, Data, and Analytics; International Tax & Tax Treaties (complete list here

Texas A&M University is a public university, ranked in the top 20 universities by the Wall Street Journal / Times Higher Education university rankings, and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

 

 

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

Hope everyone had a great 4th last weekend! This week we analyze more CARES Act developments in the form of an extension of the RMD waiver to cover all of 2020. This potentially helps account holders who took RMDs prior to the passage of the CARES Act. We also see new proposed regs that define “real property” for the purposes of 1031 exchanges, as well extended deadlines related to opportunity zones.

New Regs Define Real Property for 1031 Exchanges

The 2017 tax reform legislation limited the availability of Section 1031 exchanges to exchanges of real property. Despite this, the important term “real property” had never actually been defined for 1031 purposes. The proposed regulations adopt a new definition of real property and make clear that each separate asset involved in a transaction must be analyzed independently to determine whether it qualifies. For more information on these definitions, visit Tax Facts Online. Read More

IRS Expands RMD Waiver Relief for All of 2020

Despite this, the law was enacted after some taxpayers had already taken their 2020 RMDs early in the year. For those who took RMDs very early in the year, the sixty-day rollover period had already expired. In response, the IRS announced that anyone who took a 2020 RMD is eligible to roll the funds back into their account penalty-free. The sixty-day rollover period was extended through August 31, 2020, so clients still have only a limited period of time in which to act. Further, the rollover does not count toward the otherwise applicable “one rollover per twelve-month period” rule or the restriction on rollovers for inherited IRAs. For more information on the RMD rules, visit Tax Facts Online. Read More

Key Deadlines for Opportunity Zone Investments Extended
As is the case with many deadlines this spring and summer, the IRS has extended several key deadlines that apply to opportunity zone investments. For taxpayers whose last day of the 180-day investment period within which to make a QOZF investment was on or after April 1, 2020 and before December 31, 2020, the last day of the 180-day period is extended to December 31, 2020. QOFs that failed to satisfy the 90 percent investment rule for a period ending on or after April 1, 2020 and on or before December 31, 2020 will not be subject to a penalty (i.e., the failure is disregarded). Similarly, the 30-month substantial improvement period for tangible property that is used prior to being acquired is suspended between April 1, 2020 and December 31, 2020. For more information on opportunity zones and extended deadlines, visit Tax Facts Online. Read More

 

Byrnes & Bloink’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.

  • all Tax Facts books
  • Tax Facts Intelligence weekly newsletters
  • weekly strategy articles for client advisory
  • weekly transcribed debate discussion for client soft-skill discussion
  • among other weekly client advisory critical updates

Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

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

Byrnes & Bloink’s TaxFacts Intelligence Weekly (Friday June 26, 2020)

Posted by William Byrnes on June 26, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals.

Apply now for fall courses that begin in August: Enterprise Risk Analytics; Information Security Risk Management; Terrorism Risk Management; International Tax Risk Management, Data, and Analytics II; International Tax & Tax Treaties I and II; Securities Regulation; Investment & Portfolio Management; Financial Innovation (and Risk)

Texas A&M University is a public university, ranked in the top 20 universities by the Wall Street Journal / Times Higher Education university rankings, and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

 

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

 

This week the new ERISA E-disclosure safe harbor was finalized, we have some news on GRATs, and some additional COVID-related updates pertaining to PTO donations and the always loved (but often misunderstood!) home office deduction. How goes the home office for you, dear reader?

DOL Finalizes E-Disclosure Safe Harbor

The DOL finalized its e-disclosure safe harbor proposal, allowing electronic distribution of notices and disclosures required by ERISA. Under the safe harbor documents, retirement plans can deliver documents electronically by posting required documents on the plan sponsor’s website and furnishing notice of internet availability to participants via email. The sponsor can also send the documents directly via email to plan participants, whether in an attachment or in the body of the email. For more information on the new e-disclosure safe harbor, visit Tax Facts Online. Read More

9th Circuit Affirms GRAT Included in Decedent’s Estate

The Ninth Circuit recently confirmed that a decedent’s estate included the value of a grantor retained annuity trust because the decedent received annuity payments up until the date of her death. The decedent in this case died before the GRAT terminated, meaning that there was no actual transfer of the trust property. She had created the GRAT structure to transfer interests in a family business to her daughters, receiving a $302,529 annuity payment annually for 15 years. The business generated enough income so that the value of the partnership interest was not decreased by the monthly annuity payments. Under IRC Section 2036(a), because the decedent was still enjoying the economic benefit of the property at death, the entire value was included in her gross estate. The court rejected the argument that the value should be excluded because the statute does not specifically list “annuities” as property that may be pulled into the estate. For more information on the use of GRATs, visit Tax Facts Online. Read More

Home Office Deductions in the Age of Covid-19

With so many taxpayers working from home–some indefinitely–do to Covid-19, many are likely wondering whether they can deduct their home office expenses. In short, traditional W-2 employees cannot deduct their home office expenses regardless of whether they would otherwise qualify for the deduction. The 2017 tax reform legislation eliminated this deduction for 2018-2025. Self-employed taxpayers can deduct expenses associated with maintaining a home office if the office is used regularly and exclusively as the taxpayer’s principal place of business (if the office is within the dwelling unit). A home office deduction is permitted for self-employed taxpayers with separate structures if the office/workspace is used “in connection with” the trade or business. For more information on the home office deduction, visit Tax Facts Online. Read More

IRS Provides Relief for Employee Donations of Unused Sick, Vacation & PTO

The IRS has provided relief so that employees can forgo sick, vacation or personal leave because of the COVID-19 pandemic without adverse tax consequences. Under the guidance, an employer can make cash payments to charitable organizations that provide relief to victims of the COVID-19 pandemic in exchange for sick, vacation or personal leave which their employees forgo. Those amounts will not be treated as compensation and the employees will not be treated as receiving the value of the leave as income. For more information on the charitable contributions, visit Tax Facts Online. Read More

 

Byrnes & Bloink’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.

  • all Tax Facts books
  • Tax Facts Intelligence weekly newsletters
  • weekly strategy articles for client advisory
  • weekly transcribed debate discussion for client soft-skill discussion
  • among other weekly client advisory critical updates

Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

Posted in Retirement Planning, Taxation, Wealth Management | Tagged: , , , | Leave a Comment »

Tax Facts’ COVID Weekly by William Byrnes and Robert Bloink (June 22, 2020)

Posted by William Byrnes on June 23, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals.

Apply now for fall courses that begin in August: Enterprise Risk Analytics; Information Security Risk Management; Terrorism Risk Management; International Tax Risk Management, Data, and Analytics II; International Tax & Tax Treaties I and II; Securities Regulation; Investment & Portfolio Management; Financial Innovation (and Risk)

Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

 

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

Yes, there are new PPP Rules that allow a lot more flexibility in qualifying for forgiveness. But this week we also have a number of new rules on employee benefits and compensation issues, including a Supreme Court decision on a defined benefits case.

Increased Flexibility for PPP Recipients

PPP loan forgiveness is determined based on how the small business client spent the loan proceeds. Under the PPPFA, at least 60 percent of the loan must be used for payroll costs (this 60 percent threshold was reduced from 75 percent under the CARES Act The PPPFA extended the eight-week period to twenty-four weeks from the date the lender made the first loan payment to the small business owner. Unless Congress acts again, the funds must all be spent by December 31, 2020 in order to be eligible for forgiveness. The amount forgiven can also be reduced if the employer made certain staffing cuts or cut employee compensation levels. The PPPFA gives employers until December 31, 2020 to bring workers back to work/restore wage levels and continue to qualify for loan forgiveness (extended from prior law, which set the deadline at June 30)). Read More

U.S. Supreme Court: DB Participants Lack Standing to Sue Fiduciaries When Payments are Unaffected

The U.S. Supreme Court has now ruled that ERISA-governed defined benefit plan participants lack standing to sue plan fiduciaries in situations where the participants’ own payments were not impacted. In this case, the plaintiffs sued alleging mismanagement of plan funds and self-dealing. However, the plaintiffs’ own fixed pension payments continued to be paid (the plan in this case was overfunded). The Court held that because the plaintiffs would not be impacted financially by the outcome of the case, they lacked standing to sue under Article III of the U.S. constitution. For more information on DB plan funding requirements, visit Tax Facts Online. Read More

New Foreign Earned Income Exclusion Rules

The bona fide residence test and physical presence test generally provide specific time requirements that apply to individuals claiming a tax exclusion for foreign-earned income. An otherwise qualified individual may still exclude foreign earned income for the period in which the individual was actually present in the foreign country even if the individual fails to meet the time requirements. For more information, visit Tax Facts Online. Read More

IRS Waives Physical Presence Requirement for Spousal Consent to Participant Benefit Elections

IRC Section 417 generally requires spousal consent to a waiver of a qualified joint and survivor annuity (QJSA), which includes the waiver of a QJSA as part of a participant’s request for a plan distribution or a plan loan (the availability of which were expanded under the CARES Act). The spousal consent must generally be witnessed by a plan representative or a notary public in person (the physical presence requirement). Notice 2020-42 provides relief in permitting remote electronic notarization executed via live auto-video technology that satisfies any state-level requirements that apply to a notary public. For more information on spousal consent requirements, visit Tax Facts Online. Read More

 

Byrnes & Bloink’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.

  • all Tax Facts books
  • Tax Facts Intelligence weekly newsletters
  • weekly strategy articles for client advisory
  • weekly transcribed debate discussion for client soft-skill discussion
  • among other weekly client advisory critical updates

Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

Posted in Retirement Planning, Taxation, Wealth Management | Tagged: , , , | Leave a Comment »

Tax Facts’ COVID Weekly by William Byrnes and Robert Bloink (June 8, 2020)

Posted by William Byrnes on June 8, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals.

Apply now for fall courses that begin in August: Enterprise Risk Analytics; Information Security Risk Management; Terrorism Risk Management; International Tax Risk Management, Data, and Analytics II; International Tax & Tax Treaties I and II; Securities Regulation; Investment & Portfolio Management; Financial Innovation (and Risk)

Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

 

 Prof. William H. Byrnes
        Robert Bloink, J.D., LL.M.
This week we have new Treasury Guidance on the PPP loan forgiveness requirements. This guidance seems to be primarily aimed at the issue of the “necessity” of the loan, which continues to be somewhat murky. We also have updates on business expense reimbursement, which is an issue that has become more important with employees working from home and changing the pattern of their business expenditures.
New PPP Guidance

The Treasury has updated its guidance related to the CARES Act Paycheck Protection Program (PPP) loan forgiveness requirements. The Treasury now notes that most companies with adequate sources of alternative liquidity are likely not eligible for the program. In order to qualify for the loans, PPP borrowers are now required to provide a good faith certification stating that current economic conditions and uncertainty make the loan necessary to support ongoing operations. PPP borrowers who find they cannot make the certification in good faith are permitted to return the funds. For more information on the PPP loan rules, visit Tax Facts Online. Read More

Required Business Expense Reimbursement in the Age of COVID-19

Some employers are now permitting employees to work from home–while others are requiring it. In some jurisdictions (California and Illinois, for example) employers are required to reimburse employees for employment expenses. This may create the need for employers to reimburse employees for the cost of maintaining a home office. Further, the FLSA does not permit an employer to require an employee to pay for business expenses if doing so would reduce the employee’s earnings to below the minimum wage. For more information on the impact of reimbursing business expenses, visit Tax Facts Online. Read More

New Proposed Regs on UBTI Calculations for VEBAs and SUBs

The IRS proposed regulations address the treatment of unrelated business taxable income (UBTI) for certain tax-exempt entities, including VEBAs and SUBs. UBTI is income generated from an activity unrelated to the tax-exempt purpose of the entity. For more information, visit Tax Facts Online. Read More

2020’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 »

TaxFacts Covid-19 Weekly by William Byrnes and Robert Bloink (Friday May 22, 2020)

Posted by William Byrnes on May 22, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for fall courses that begin in August: Enterprise Risk Analytics; Information Security Risk Management; Terrorism Risk Management; International Tax Risk Management, Data, and Analytics II; International Tax & Tax Treaties I and II; Securities Regulation; Investment & Portfolio Management; Financial Innovation (and Risk) Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

 

 Prof. William H. Byrnes
        Robert Bloink, J.D., LL.M.
This week brings two updates that may affect employee benefits. The first is that mid-year changes to cafeteria plan elections are permissible. This includes FSA and dependent care accounts, which may be important as both healthcare and childcare expenditures for many people are wildly different than what they had anticipated at the end of 2019. The IRS also made some temporary FSA changes permanent. Finally in some non-COVID updates (yes there is some!), the IRS released proposed rules that change how some administrative expenses incurred by trusts and estates can be deducted.
IRS Provides Relief for Cafeteria Plan Participants in Response to COVID-19

Under normal circumstances, cafeteria plans are not permitted to allow participants to make mid-year election changes except in limited situations. Notice 2020-29 permits employees to allow certain mid-year elections made during calendar year 2020 that would otherwise be impermissible, including changes to salary reduction contribution elections. For more information on the mid-year election rules for cafeteria plans, visit Tax Facts Online. Read More

IRS Makes Temporary & Permanent Changes to the FSA Grace Period Rules

IRS Notice 2020-33 and Notice 2020-29, released concurrently, provides relief with respect to unused funds in a flexible spending account. Under Notice 2020-29, if an employee has unused amounts remaining in a health FSA or a dependent care assistance program at the end of a grace period (or plan year) ending in 2020, a cafeteria plan may permit employees to apply those unused amounts to pay or reimburse medical care expenses or dependent care expenses incurred through December 31, 2020. Notice 2020-33 makes a change to the carryover rules that apply to health FSAs, so that the amount that can be carried over to the following year will equal 20 percent of the maximum inflation-indexed salary reduction amount under Section 125 (increasing the carryover amount from $500 to $550 for 2020). For more information on the rules governing health FSAs, visit Tax Facts Online. Read More

IRS Proposes Rules Allowing Deduction of Administrative Fees for Trusts & Estates

The IRS has released proposed regulations that would permit the deduction for certain administrative fees incurred by trusts and estates (including the S portion of an ESBT). The guidance addresses the treatment of these expenses in light of the suspension of all miscellaneous itemized deductions for 2018-2025 under the 2017 tax reform legislation. For more information on the tax treatment of trusts and estates, visit Tax Facts Online. Read More

2020’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 Retirement Planning, Tax Policy, Taxation, Wealth Management | Tagged: , , | Leave a Comment »

TaxFacts Covid-19 Intelligence Weekly by William Byrnes and Robert Bloink (May 18, 2020)

Posted by William Byrnes on May 18, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for Summer courses that begin May: Legal Risk Management; Intro to Risk Management; FATCA & CRS Risk Management; International Tax Risk Management, Data, and Analytics I  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

 

 

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

The devil is in the details, but where exactly? This week we are starting to see how the broad changes in the recent spate of COVID-19 legislation will be administered. We have new notices on loan forgiveness procedures (did you get your PPP loan yet?), COBRA and Medicare, and FFCRA paid leave issues.

The Finer Points of PPP Loan Forgiveness

Loan forgiveness offers powerful assistance to those small businesses who were actually able to receive Paycheck Protection Program loan funds. However, loan forgiveness is not without its costs. While amounts forgiven will not be included in income under the usual cancellation of indebtedness rules, business owners may not be entitled to their typical business deductions either. Notice 2020-32 clarifies that otherwise allowable deductions are disallowed if the payment of the expense (1) results in loan forgiveness under the PPP loan program and (2) the income associated with the loan forgiveness is excluded from income under CARES Act Section 1106(i). For more information on implications of loan forgiveness, visit Tax Facts Online. Read More

New Q&A on CARES Act Qualified Plan Loans & Distributions

The IRS released the first Q&A in what is likely to be a series of guidance on the CARES Act retirement-related provisions. One overarching issue is the IRS confirmation that plan sponsors can rely upon past guidance issued in response to Hurricane Katrina in 2005 and the RMD waiver in 2009 for help implementing the CARES Act provisions. Under initial guidance, individuals are only eligible for COVID-19 related distributions or loans if they themselves are impacted (qualification cannot currently be based on a spouse or dependent’s job loss). The Q&A also clarifies that increased loan limits are currently available between March 27, 2020 and September 22, 2020. Further, the guidance confirms that the loan and distribution relief is optional for plan sponsors–and sponsors can elect to adopt one provision and not another (including the loan repayment option). For more information on the CARES Act loan provisions, visit Tax Facts Online. Read More

New COBRA Notice in Light of Growing Employment Litigation

The DOL released a revised COBRA general notice and election notice on May 1, 2020, in response to increasing furloughs and layoffs in the wake of COVID-19–and a growing risk of employment litigation. Employers are not required to post the new notices, but may wish to in light of the evolving situation. These new notices add information about how Medicare eligibility impacts COBRA eligibility (highlighting the fact that COBRA coverage is usually secondary to Medicare). Employers who use the model notices are deemed to comply with COBRA notice requirements. For more information on COBRA coverage election requirements and COVID-19, visit Tax Facts Online. Read More

Moving to Reopen, Employers Begin Evaluating FFCRA Leave Provisions

Now that many more employers are beginning to evaluate whether to reopen as governments relax restrictions, those who have been closed for upwards of two months will have to evaluate whether they must provide paid leave under the FFCRA as COVID-19 continues to spread. The FFCRA paid sick leave and expanded FMLA provisions only applied to employers who continued to operate in the wake of the pandemic–employees who were simply laid off or furloughed were required to seek unemployment benefits. Upon first glance, the new paid leave requirements under the FFCRA seem to provide 12 weeks of paid time off for most small business employees. However, the benefit triggers differ depending on whether the employee is claiming (1) 80 hours paid sick leave or (2) expanded relief under the FMLA. For more information on the benefit triggers, visit Tax Facts Online. Read More

2020’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 Retirement Planning, Tax Policy, Taxation | Tagged: , , | Leave a Comment »

Byrnes & Bloink’s Covid-19 TaxFacts Intelligence Weekly for May 7, 2020

Posted by William Byrnes on May 7, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for Summer courses that begin May: Legal Risk Management; Intro to Risk Management; FATCA & CRS Risk Management; International Tax Risk Management, Data, and Analytics I  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

 

 

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

Some interesting updates this week. We already knew that NOLs could be applied retroactively under the CARES Act, but now it seems that corporate AMT credits (remember those?) can be, as well.

Also, the last item on extending the COBRA election period might end up being a big deal. Importantly, the election period (the period that you have to decide whether to take the COBRA benefits) has been extended for an unknown amount of time. There has always been a risk of “moral hazard” with the election period since you can wait to see if you need the coverage before making the decision to commit to paying the premiums. However, that risk seemed low when the election period had a hard cut-off at sixty days. Now the election period is extended to sixty days after the end of the COVID-19 national emergency, which doesn’t seem to be likely to occur anytime soon. It will be interesting to see how group health carriers react to this change.

CARES Act Provides NOL Relief for Struggling Businesses

The CARES Act allows corporations to carry back net operating losses (NOLs) incurred in 2018, 2019, and 2020 for five years (excluding offset to untaxed foreign earnings transition tax). Post-tax reform, these NOLs could only be carried forward. For tax years beginning prior to January 1, 2021, businesses can offset 100% of taxable income with NOL carryovers and carrybacks (the 80% taxable income limitation was lifted). With respect to partnerships and pass-through entities, the CARES Act amended the effective date for the new excess business loss rules created by the 2017 tax reform legislation. The new rules will only apply beginning in 2021 (rather than 2018). Pass-through taxpayers who have filed a return reflecting excess business losses will presumably be entitled to refund by filing an amended return, absent guidance to the contrary. For more information, visit Tax Facts Online. Read More

CARES Act Permits Penalty-Free Payroll Tax Deferral for Employers

The CARES Act allows both employers and independent contractors to defer payment of employer payroll taxes without penalty. Importantly, employers with fewer than 500 employees are entitled to withhold payroll taxes as an advance repayment of the tax credit for paid sick leave and expanded FMLA leave under the FFCRA. Under the CARES Act payroll tax deferral, employers are permitted to defer the employer portion of the payroll tax on wages paid through December 31, 2020 for up to two years. Payroll taxes are generally due in two installments under CARES: 50% by December 31, 2021 and the remaining 50% by December 31, 2022. Economic hardship is presumed, meaning the employer does not have to produce documentation establishing that COVID-19 impacted the business. Payroll tax deferral options apparently apply to all employers, regardless of size. However, employers who have loans forgiven under the CARES Act Payroll Protection Loan program are not eligible for the deferral. For more information, visit Tax Facts Online. Read More

CARES Act Employee Retention Tax Credit

The CARES Act creates a new refundable tax credit designed to help employers who retain employees during the COVID-19 health crisis. The credit is taken against employment taxes and is equal to 50% of the first $10,000 of qualified wages paid to the employee. The credit is available for calendar quarters where either (1) operations were either fully or partially suspended because of a government-issued order relating to COVID-19 or (2) the business’ gross receipts declined by more than 50% when compared to the same calendar quarter in 2019. For more information, visit Tax Facts Online. Read More

2020’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 Retirement Planning, Tax Policy, Taxation | Tagged: , | Leave a Comment »

Byrnes & Bloink’s Covid-19 TaxFacts Weekly of April 30, 2020 (Special Notice – IRS Just Issued Notice Denying Deductions for PPP Loan Forgiveness and Its Dead Wrong)

Posted by William Byrnes on April 30, 2020


           Prof. William H. Byrnes

The IRS released on April 30th Notice 2020-32 wherein the IRS interprets general tax law principles to deny business deductions (under Internal Revenue Code Section 162) for the wage and related expenses when the business takes advantage of the SBA’s PPP loan forgiveness.

The IRS Notice is a wrong interpretation of how CARES Section 1106 (see below) and by implication, Internal Revenue Code Section 108 (discharge of indebtedness), works, as well as how Congress intends CARES to work. Congress clearly intends CARES’ SBA loan proceeds to ameliorate Covid-19s damage to small business’ earnings (and thus mitigate the Covid-19 economic recession) by pushing cash flow into, and through, small business.

The IRS is approaching this issue from a perspective that exempting from income the discharge of debt of small businesses and also allowing a deduction for the wage expenses is a ‘double benefit’ and double benefits are not allowed.  Yet, this is exactly what many tax credits allow – a double benefit created from deducting the expenses that generate the tax credit.  A small business that uses the maximum Sick Leave tax credit of $5,110 (Families First Act) and the $5,000 employee retention tax credit for CARES (these two tax credits may be combined) will receive the $10,110 refundable tax credit excluded from gross income AND ALSO a deduction from the small business owner’s gross income (albeit this deduction is reduced by $5,000 to reflect the Employee Retention credit amount yet no reduction is required for the Families First tax credits) which is worth the small business owner’s tax rate – federally either 37% or 29.6%. with the extra Section 199A 20% deduction for business income (see some of Robert and my Tax Facts Intelligence articles on 199A and Covid-19 at ThinkAdvisor).  In New York or California, states with high personal income tax rates, the business expenses deduction is worth more than say, Texas or Florida that do not tax personal income.

So the IRS Notice creates discrimination for many small businesses in favor of the $10,110 refundable tax credits of Families First and CARES in relation to the SBA PPP Loans. Most of the House and Senate certainly did not intend to ‘give with one hand and take back with the other’ regarding the SBA Loans.  Had Notice 2020-32 been published before the additional SBA funding, Congress would have been forced to take a stance on what it intended. Now we must wait until the next relief bill for Congress to confront this issue.

The IRS cites IRC Section 265 for its argument to deny the deduction for the CARES Act’s SBA PPP forgiven amount. The IRS contends that the CARES Act Section 1106 creates a “class of exempt income”.  Section 265 denies business income deductions under Section 162 when the income in question falls into a class of exempt income. But if CARES creates a class of income, then that class is of ‘debt income’ and debt is excludable from gross income.  The IRS’ erroneous interpretation can be stretched that all business deductions should be denied by Section 265 when those expenses are funded by debt income. Even the interest payments on the SBA loans should not be deductible based on this approach.

CARES Act Section 1106‘s Loan Forgiveness exclusion from income is in the same vein as Section 108’s exclusion from income for discharged debt.  Section 108 does not create a class of income for purposes of Section 265. Administratively it would be very burdensome for the IRS to reach back to open tax years and clawback deductions for expenses funded by the discharged debt. Congress knows how to deny tax allowances when it intends to do so because Congress included denying certain allowance items in Section 108, but not a denial of tax deductions.  Congress included proportional reduction of net operating loss, of general business tax credits (under Section 38), among other items, relative to the amount of loan forgiveness to overall income that generated the tax allowances.

CARES ACT Section 1106 states “(i) TAXABILITY.—For purposes of the Internal Revenue Code of 1986, any amount which (but for this subsection) would be includible in gross income of the eligible recipient by reason of forgiveness described in subsection(b) shall be excluded from gross income.”

Section 108 states “(a) Exclusion from gross income (1) In general Gross income does not include any amount which (but for this subsection) would be includible in gross income by reason of the discharge (in whole or in part) of indebtedness of the taxpayer if …”.

Statutorily speaking, why did Congress specifically include that the SBA loan forgiveness is exempt from gross income if Congress intended that the deductions would be disallowed?  Based on the IRS’ logic, if Congress had not included the exclusion then the expenditure for wages would be deductible and would offset the discharged debt, a washout.  So Congress did not need to do anything to achieve the result that the IRS claims that Congress intended by doing something.

Take an example of a New York business.*  Should a New York business choose SBA loan forgiveness or the sick leave plus employee retention tax credits? (Note New York’s decoupling whereby New York has chosen to deny some of the relief of the CARES Act may impact the analysis but I am leaving that aside).  For a business with, by example, 100 employees, a combined $10,000 credit (rounding down) per employee is worth $1,000,000 of tax-exempt tax credit. To generate the $10,000 of tax credit, the business had to pay at least $15,000 in wages, so $1.5 million in wages for the 100 employees.  At the combined federal rate of 37% and New York highest rate of 8.82%, the wage expense generates a deduction of $458,200 (because the wage deduction must be reduced for the $5,000 of Employee Retention tax). But the employer also paid 06.2% social security tax and 01.45% medicare tax, a combined 07.65% which provides an additional $76,500 deduction (again excluding the Employee Retention tax credit portion). The deduction probably exaggerates the Covid-19 loss for the year that may, pursuant to the new NOL provision for CARES, be clawed back from the previous tax years because the Tax Cuts and Jobs Act is suspended for 2020 losses. Combined benefit of $1,534,700 for the business.

An SBA PPP loan forgiveness for the wage amount of $1.5 million is worth exactly that, $1.5 million. Wage deduction lost.  Thus, in this scenario, the tax credits may generate more net benefit than the SBA Loan. And if the IRS argument for Section 265 is carried out, then the interest expense on the SBA loan must be denied, which I estimate will be in the neighborhood of $52,500 until forgiven (maybe the interest will be returned vt the SBA to mitigate the disparity caused by the IRS – I am unclear if the SBA can forgive the interest as well).

What if a small business is insolvent which is just an accounting definition of debt exceeding asset?  Generally, a small business with the SBA loan is going to be insolvent.  Cash flow is king so the issue of asset book insolvency is not actually relevant to running the business.  But for Section 108 it allows exemption from gross income the amount of canceled debt as well as the deduction for the expenses financed by the canceled debt.  Perhaps then, any small business seeking the SBA loan forgiveness needs to obtain an accountant’s letter of business insolvency to trump Notice 2020-32 then file Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness?

Insolvency calculation:
Total liabilities immediately before the discharge – FMV of total assets* before the discharge = Extent to which the taxpayer is insolvent
(Assets includes bankruptcy exempt assets e.g. retirement account and interest in a pension plan).

And because the tax credits can be captured from the Employer’s Social Security portion of the payroll tax, while the cash flowing of the payroll is still an issue, it is less of an issue, albeit the payroll tax on the $1.5 million is just under $80,000 so not significant. However, the business may request an advance refund of the tax credits as the business spends the wages (Form 7200, Advance Payment of Employer Credits Due to COVID-19). Thus, with the advance tax credit refund, the cash flow challenge is addressed. Regardless, the small business may obtain the CARES Act SBA Small Business Interruption Loan – just not the loan forgiveness that eliminates the deductions according to the IRS.

While tax credits are difficult for taxpayers but the SBA loan process is certainly not straight forward and neither is the forgiveness process, for those businesses that managed to obtain the SBA PPP loans.  Depending on the size of the loan and the business’ 2020 wages, the SBA loan may not be more beneficial than the tax credits, or at least, not substantially more.

Thank goodness that the calculations necessary to determine which path is better for the small business will require expensive advice from a tax advisor.  Congress certainly intended that CARES is to ameliorate (the temporarily) lost tax advisory fees resulting from the push back of the tax filing season, right?

May 1 at 3:00 pm CARES Act Webinar – Small Business Incentives – Register w/ the Tarrant County Bar Association
William Byrnes and Neal Newman, Texas A&M School of Law
– SBA PPP, Obtaining Loan, Tax-Free Forgiveness, Tax Deduction Expenses?
– Employee Retention Tax Credit and Payroll Tax Deferral?

* I’m simplifying the numbers, factors, and how tax is determined to represent the broader point. One factor is by example the potential Section 199A deduction of 20% of qualifying business income.  This factor may impact the outcome of the calculation if, by example, a business would generate positive qualfied business income instead of a loss because of the SBA PPP loan forgiveness exemption from income without corresponding deductions. In such a case, the additional 20% deduction would need to be added to the business’ benefit column.  However, I think that most businesses will suffer a 2020 loss year with or without SBA loan forgiveness because of loss of revenues from late February through the 3rd quarter.

On May 1st my esteemed colleague, Low Income Tax Clinic Director Professor Bob Probasco, a 30-year tax litigator veteran, responded as follows: You have a valid argument.  But from the perspective of a tax litigator, rather than an academic – predicting what will happen rather than what the result should be – I’m not sure it’s that clear.

The analogy to § 108 discharge of indebtedness is not exact and could be distinguished by a court.  The link between the § 108 and the specific deductions that were “funded” by the indebtedness is not as clear as the link between CARES § 1106 and the specific expenditures required to qualify for the discharge.  Most discharges of indebtedness, outside CARES, are not motivated by the specific use made of the loaned funds, are they?

Similarly, the analogy to tax credits allowed based on the same expenditures that are deducted does not involve exempt income.  In addition, those examples were more clearly intended by Congress.  You can argue that Congress intended to allow the deductions leading to a § 1106 discharge – but it’s an inference, not as clear as Congress explicitly specifying deduction A and credit B, or credit X and credit Y.  The primary purpose of the CARES Act program, and the main benefit to be derived, was the loan foregiveness itself – pre-tax, rather than tax benefit.  Concluding that the income from the foregiveness would not be taxable gives some support for an inference that they intended to allow the deductions as well, but they didn’t actually say that.

The arguments from a policy perspective are stronger, but I’m not sure that would overcome the language of the statute.  Courts tend to interpret the language of the Code literally, and deviate with judicial doctrines like substance over form and economic substance that benefit the government rather than the taxpayer.

As a practitioner, I could have very comfortably argued either side of the question prior to the Notice.  The Notice is going to make the argument for deduction slightly harder.  It could easily go either way in court, but my guess is that a court is at least slightly more likely to agree with the Notice than to allow deduction of those expenses.

           Prof. William H. Byrnes
        Robert Bloink, J.D., LL.M.
Legislation that is drafted quickly often ends up needing a lot of regulatory and administrative interpretation to help taxpayers adopt the changes in the new rules, and the COVID tax changes are no different.We continue to see actions from the IRS and DOL to clarify the new provisions in COVID-19 legislation. This week those updates include new info on how to enact FFCRA leave (including what to do when employers have concurrent leave policies), the opportunity for partnerships to file amended returns to take advantage of the CARES Act Bonus depreciation fix, and additional flexibility for companies wrestling with the business interest expense deduction under the CARES Act.
 

DOL FAQ Clarify Concurrent Use of FFCRA Leave

The FFCRA implemented a new paid sick leave law and expanded FMLA leave options for employees impacted by COVID-19. Many employers have independent policies in place that provide employees with leave options, and the DOL regulations raised questions about when the employer can require the employee to use that leave prior to, or concurrently with, FFCRA leave. Employers cannot require employees to concurrently use leave during the first two weeks of paid sick leave for non-childcare related reasons. Employers can, under some circumstances, require use of employee leave concurrently with expanded FMLA leave for childcare reasons. Employers are only eligible for tax credits with respect to leave paid out under the new law. If the employer requires the employee to use otherwise available employer-paid leave, the tax credit is unavailable with respect to that portion of the employee’s pay. For more information, visit Tax Facts Online. Read More

Employee Rights After FFCRA Leave

Employers are generally prohibited from retaliating against employees to take paid sick leave or expanded FMLA leave under the FFCRA. However, the law does not protect employees from layoffs or furloughs undertaken for other reasons, such as the general economic downturn. Exceptions exist for key employees and very small employers with fewer than 25 employees. For more information on the exceptions to the FFCRA rules, visit Tax Facts Online. Read More

CARES Act Bonus Depreciation Fix: Amended Returns for Partnerships

The CARES Act provided retroactive relief to partnerships on multiple fronts, including by fixing the so-called “retail glitch” to allow businesses to take advantage of 100% bonus depreciation on qualified improvement property through 2022. Existing law may have prevented partnerships from filing amended Forms 1065 and Schedules K-1. Instead, partnerships would have been required to file an administrative adjustment request, so that partners would not have received relief until filing returns for the current tax year. Revenue Procedure 2020-23 allows partnerships to file amended returns and issue revised Schedules K-1 for 2018 and 2019 to take advantage of retroactive CARES Act relief (and, absent further guidance, even if they are not taking advantage of CARES Act relief). For more information, visit Tax Facts Online. Read More

IRS Guidance on CARES Act Business Interest Elections

The IRS gives businesses substantial flexibility in making and revoking elections related to business interest expense deduction under the CARES Act. For more information about the choices that are available related to the business interest expense deduction, visit Tax Facts Online. Read More

2020’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 | Tagged: , , , | Leave a Comment »

Byrnes & Bloink’s Covid-19 TaxFacts Weekly of April 24, 2020

Posted by William Byrnes on April 23, 2020


           Prof. William H. Byrnes
        Robert Bloink, J.D., LL.M.
More significant information about two of the most important changes to come out of the new legislation related to COVID-19.

The first update is an FAQ from the Department of Labor about the exemption from the expanded FMLA paid leave requirements for staff who are out of work for reasons related to a corona virus infection. The new law only applies to businesses with under 500 employees, but contains a vaguely-worded exemption for very small businesses with less than 50 employees and for whom the paid leave requirement would pose a hardship. While some commentators have thought that the exemption might be loosely interpreted to the point of being nearly automatic, the new FAQs require very small businesses to show particular kinds of challenges before the exemption applies.

We also have an update on the definition of “payroll costs” for small businesses applying for PPP loans. This definition is important because the calculation of those costs determine how large of a loan (which is potentially forgivable if certain requirements are met) the business is eligible for.

FFCRA Exemption for Very Small Business Clients

Generally, business owners with fewer than 50 employees can claim an exemption from the paid sick leave and expanded FMLA law if they can show that payment would jeopardize their business as a going concern. DOL FAQ have provided new details, which substantially narrow the availability of the exemption. For more information on the FFCRA paid leave requirements, visit Tax Facts Online. Read More

Telehealth Coverage and HDHP/HSA Eligibility

In response to the evolving COVID-19 pandemic, the CARES Act further expands the pre-deductible services high deductible health plans (HDHPs) may offer. HDHPs are now permitted to cover the cost of telehealth services without cost to participants before the HDHP deductible has been satisfied. For more information on the HDHP qualification rules, visit Tax Facts Online. Read More

Defining “Payroll Costs” for PPP

Taxpayers with fewer than 500 employees are eligible for new “payroll protection loans” administered via the Small Business Administration. In general, the loans may be forgiven (and amounts excluded from income for tax purposes) if used to cover payroll costs. For more information about how “payroll costs” are defined and calculated, visit Tax Facts Online. Read More

online financial planning & wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for Summer courses that begin May: Wealth Management; Legal Risk Management; Intro to Risk Management; FATCA & CRS Risk Management; International Tax Risk Management, Data, and Analytics I

Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).  A 500,000 strong former students association network worldwide of “Texas Aggies” awaits you – just click our advert box to request information.

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

Byrnes & Bloink’s Covid-19 TaxFacts Special Edition of April 20, 2020

Posted by William Byrnes on April 20, 2020


           Prof. William H. Byrnes
        Robert Bloink, J.D., LL.M.
Over the past few weeks Tax Facts has seen a tremendous number of updates that cover the new COVID-19 legislation and related administrative developments. Undoubtedly we will continue to see more of these updates in the weeks and months to come, but we thought now was good time to help our readers catch their breath a little bit by providing a summary of the changes that have been made. This special Tax Facts newsletter is intended to help you navigate through the entirety of the changes that have been made so that you can understand the full breadth of the new tax landscape.

These updates cover (1) the Families First Coronavirus Response Act, (2) the CARES Act, (3) IRS Notices related to the new legislation, and (4) newly released IRS and DOL FAQs that help taxpayers understand how the new rules will be implemented.
Take a look, and as always, check in with Tax Facts the absolute latest in the tax issues affecting insurance, investments, and employee benefits.

Families First Coronavirus Response Act: Paid Sick Leave Benefits for Small Business Employees

The Families First Coronavirus Response Act applies to private employers with fewer than 500 employees (and government employers), and makes several key changes to paid time off laws. The bill: (1) provides eighty hours’ additional paid sick leave for employees (pro-rated for part-time workers) and (2) expands FMLA protections. The additional paid sick leave is capped at $511 per day (total of $5,110) for employees who cannot go to work or telecommute because they (1) are experiencing COVID-19 symptoms and seeking a diagnosis, or (2) are subject to government-mandated quarantine or a recommendation to self-quarantine. The additional paid sick leave is capped at 2/3 of the employee’s pay rate, subject to a maximum of $200 per day or $2,000 total if the employee (1) is caring for or assisting someone subject to quarantine, (2) caring for a child whose school or care provider is unavailable or (3) experiencing “substantially similar conditions” specified by HHS. For more information on the family and medical leave tax credit available for business owners, visit Tax Facts Online. Read More

Families First Coronavirus Response Act: Tax Relief for Small Business Owners

The law contains a tax credit to help small business owners subject to the new paid sick leave and expanded FMLA requirements. The tax credit is computed each quarter, and allows as a credit (1) the amount of qualified paid sick leave wages paid in weeks 1-2, and (2) qualified FMLA wages paid (in the remaining ten weeks) during the quarter. The credit is taken against the employer portion of the Social Security tax. Amounts in excess of the employer Social Security taxes due will be refunded as a credit (in the same manner as though the employer had overpaid Social Security taxes during the quarter). The Act also provides a tax credit for qualified health plan expenses that are allocable to periods when the paid sick leave or family leave wages are paid. For more information on refundable tax credits, visit Tax Facts Online. Read More

CARES Act: RMDs Suspended for 2020, Penalty Waived for Coronavirus Distributions

The CARES Act suspended the required minimum distribution (RMD) rules for 2020–a suspension that applies to all 401(k), 403(b), and certain 457(b) deferred compensation plans maintained by the government, as well as IRAs. The law also contains a provision waiving the 10 percent early distribution penalty that applies to retirement account withdrawals. The relief generally mirrors the relief commonly granted in more localized natural disaster situations. The Act allows employees to take up to $100,000 in distributions from an employer-sponsored retirement plan (401(k), 403(b) or defined benefit plan) or an IRA without becoming subject to the penalty. Unless the participant elects otherwise, inclusion of the distribution in income is spread over three years, beginning with the tax year of distribution. The Act also provides a repayment option, where the participant has the option of repaying the distribution over the three-taxable year period beginning with the tax year of distribution. In this case, the distribution will be treated as an eligible rollover made in a trustee-to-trustee transfer within the sixty-day window. For more information on expanded access to retirement funds, visit Tax Facts Online. Read More

CARES Act: NOL Relief for Struggling Businesses

The CARES Act allows corporations to carry back net operating losses (NOLs) incurred in 2018, 2019, and 2020 for five years (excluding offset to untaxed foreign earnings transition tax). Post-tax reform, these NOLs could only be carried forward. For tax years beginning prior to January 1, 2021, businesses can offset 100% of taxable income with NOL carryovers and carrybacks (the 80 percent taxable income limitation was lifted). With respect to partnerships and pass-through entities, the CARES Act amended the effective date for the new excess business loss rules created by the 2017 tax reform legislation. The new rules will only apply beginning in 2021 (rather than 2018). Pass-through taxpayers who have filed a return reflecting excess business losses will presumably be entitled to refund by filing an amended return, absent guidance to the contrary. For more information, visit Tax Facts Online. Read More

CARES Act: Penalty-Free Payroll Tax Deferral for Employers

The CARES Act allows both employers and independent contractors to defer payment of employer payroll taxes without penalty. Importantly, employers with fewer than 500 employees are entitled to withhold payroll taxes as an advance repayment of the tax credit for paid sick leave and expanded FMLA leave under the FFCRA. Under the CARES Act payroll tax deferral, employers are permitted to defer the employer portion of the payroll tax on wages paid through December 31, 2020 for up to two years. Payroll taxes are generally due in two installments under CARES: 50 percent by December 31, 2021 and the remaining 50 percent by December 31, 2022. Economic hardship is presumed, meaning the employer does not have to produce documentation establishing that COVID-19 impacted the business. Payroll tax deferral options apparently apply to all employers, regardless of size. However, employers who have loans forgiven under the CARES Act Payroll Protection Loan program are not eligible for the deferral. For more information, visit Tax Facts Online. Read More

CARES Act: Employee Retention Tax Credit

The CARES Act creates a new refundable tax credit designed to help employers who retain employees during the COVID-19 health crisis. The credit is taken against employment taxes and is equal to 50 percent of the first $10,000 of qualified wages paid to the employee. The credit is available for calendar quarters where either (1) operations were either fully or partially suspended because of a government-issued order relating to COVID-19 or (2) the business’ gross receipts declined by more than 50 percent when compared to the same calendar quarter in 2019. For more information, visit Tax Facts Online. Read More

IRS Notice 2020-15: HDHPs Can Pay Coronavirus Costs

The IRS announced that high deductible health plans are permitted to cover the costs associated with the coronavirus. HDHPs can cover coronavirus-related testing and equipment needed to treat the virus. Generally, HDHPs are prohibited from covering certain non-specified expenses before the covered individual’s deductible has been met. Certain preventative care expenses are excepted from this rule. HDHPs will not jeopardize their status if they pay coronavirus-related expenses before the insured has met the deductible, and the insured will remain HSA-eligible. The guidance applies only to HSA-eligible HDHPs. For more information on the rules governing HDHPs, visit Tax Facts Online. Read More

IRS Notice 2020-18: 90-Day Extension of the Federal Tax Payment Deadline

In response to the coronavirus pandemic, the IRS has announced that it will extend the tax payment deadline from April 15, 2020 to July 15, 2020. Interest and penalties during this period will also be waived. The April 15 filing deadline was also extended to July 15, although in separate guidance. Individuals and pass-through business entities owing up to $1 million in federal tax are eligible for the relief, as are corporations owing up to $10 million in federal tax. Individuals who do not anticipate being able to file by July 15 should be aware of their option for requesting a six-month filing extension to October 15. The extension is available by filing Form 4868. For more information on federal tax filing requirements, visit Tax Facts Online. Read More

IRS Notice 2020-23: IRS Expands COVID-19 Extensions

Notice 2020-23 provides expanded relief for taxpayers with a filing or payment obligation arising after April 1, 2020 and before July 15, 2020. Specifically, deadlines are extended to July 15, 2020 for actions required with respect to (1) estate and trust income tax payments and return filings, (2) estate and generation-skipping transfer tax payments and return filings on Form 706 and related forms, (3) gift and generation-skipping transfer tax payments and return filings on Form 709 and related forms, (4) estate tax payments of principal or interest due as a result of an election made under IRC sections 6166, 6161, or 6163 and annual recertification requirements under section 6166. Similarly, taxpayers who faced deadlines with respect to Tax Court actions between April 1 and July 15 have their deadlines postponed until July 15. For more information, visit Tax Facts Online. Read More

IRS FAQ: COVID-19 Filing, Payment Extensions

The IRS FAQ clarifies that the filing and payment extensions (from April 15 to July 15) apply regardless of whether the taxpayer is actually sick or quarantined because of COVID-19. For fiscal year taxpayers with 2019 returns due April 15, the deadline is extended to July 15 regardless of whether April 15 is an original or extended filing deadline. Taxpayers facing filing or payment deadlines that are not April 15 must note that their deadlines have not generally been extended. The relief also does not apply to payroll or excise tax payments (deposit dates remain unchanged, but employers may be eligible for the new paid sick leave tax credit, see Tax Facts Q8550). Taxpayers do not have to do anything to take advantage of the extension—they simply file their returns and make required payments by the new July 15 deadline. Taxpayers who filed and schedule a payment for April 15 must, however, take action to reschedule their payment for July 15 if they wish (by contacting the credit or debit card company if the payment was scheduled directly with the card issuer). For more information, visit Tax Facts Online. Read More

DOL FAQ: Counting Employees for COVID-19 Paid Sick Leave & FMLA Expansion Purposes

A new DOL FAQ provides that an employer is subject to the expanded paid sick leave and FMLA rules if the employer has fewer than 500 full-time and part-time employees. Employees on leave and temporary employees should be included, while independent contractors are not included in the count. Each corporation is usually a single employer. When a corporation has an ownership interest in another corporation, the two are separate employers unless they are joint employers for Fair Labor Standards Act purposes. Joint employer status is based on a facts and circumstances analysis, and is generally the case when (1) one employer employs the employee, but another benefits from the work or (2) one employer employs an employee for one set of hours in a workweek, and another employer employs the same employee for a separate set of hours in the same workweek. For more information on the details provided by current DOL guidance, visit Tax Facts Online. Read More

DOL FAQ: Calculating Sick Pay for Part-Time and Variable Hour Workers Under the Families First Coronavirus Response Act

With respect to the FMLA extension, the rate of pay for part-time employees is based upon the number of hours they would normally be scheduled to work. For employees with variable schedules, pay is based upon a number equal to the average number of hours that the employee was scheduled per day over the 6-month period ending on the date on which the employee takes such leave, including hours for which the employee took leave of any type or (2) if the employee did not work over such period, the reasonable expectation of the employee at the time of hiring of the average number of hours per day that the employee would normally be scheduled to work. As of now, the law provides that leave may not be carried over into 2021. For more information on the law’s requirements, visit Tax Facts Online. Read More

2020’s Weekly Updated Tax Facts Offers a Complete Web, App-Based, and Print Experience for Financial Advisors and Tax Professionals

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 Retirement Planning, Taxation | Tagged: , , , , , | Leave a Comment »

Byrnes & Bloink’s Covid-19 TaxFacts Weekly for April 17, 2020

Posted by William Byrnes on April 16, 2020


online wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for Summer courses that begin May: Wealth Management; Legal Risk Management; Intro to Risk Management; FATCA & CRS Risk Management; International Tax Risk Management, Data, and Analytics I  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

           Prof. William H. Byrnes
        Robert Bloink, J.D., LL.M.
More on the COVID-19 legislation and related administrative guidance from the DOL. This week we have updates on business interest deductions, student loan payment info, and DOL guidance on the PTO that was mandated by the new legislation. Are you keeping up?

 

CARES Act: Business Interest Deduction Relief

The CARES Act increases the 30% of adjusted taxable income (ATI) limit on the business interest deduction (as imposed under the 2017 tax reform law) to 50% for corporations in 2019 and 2020. All entities (corporations and pass-throughs) can elect to use 2019 ATI instead of 2020 ATI in determining the 2020 business interest expense deduction, which could increase the business interest deduction for businesses who are likely to see reduced income levels in 2020. For more information, visit Tax Facts Online. Read More

CARES Act Offers Tax-Preferred Student Loan Repayment Assistance Option

The CARES Act includes a provision that gives employers a way to offer tax-preferred student loan repayment assistance to employees. The Act changes the definition of “educational assistance” in IRC Section 127 to also include employer payments to employees of student loan principal or interest. The payments must currently be made before January 1, 2021. The maximum benefit permitted is a $5,250 payment in 2020 (tax-free). For more information on the requirements for establishing a tax-preferred education assistance program, visit Tax Facts Online. Read More

DOL Guidance on Notice Requirements Related to Expanded COVID-19 Paid Time Off

The DOL has released a notice that all employers must conspicuously post to give employees information about federal relief efforts related to COVID-19. The DOL FAQ notes that when employees are working remotely, employers can email or mail the relevant notices. The notice must be provided to all current employees, but only must be provided in English absent future guidance (a Spanish language notice is available on the DOL website). For more information on the COVID-19 relief efforts, visit Tax Facts Online. Read More

2020’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 Retirement Planning, Taxation | Tagged: , , | Leave a Comment »

Byrnes & Bloink’s Covid-19 TaxFacts Intelligence Weekly for April 10, 2020

Posted by William Byrnes on April 10, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for Summer courses that begin May: Legal Risk Management; Intro to Risk Management; FATCA & CRS Risk Management; International Tax Risk Management, Data, and Analytics I  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

 

 

           Prof. William H. Byrnes
        Robert Bloink, J.D., LL.M.
Today we have three big updates from the newly-passed CARES Act. The first allows NOLs for tax years 2018 through 2020 to be carried back five years. This give business who had NOLs and were waiting to carry them forward to future tax years to apply them to past years, potentially resulting in additional tax refunds. The other two updates relate to deferrals and tax credits for payroll taxes in 2020.
CARES Act Provides NOL Relief for Struggling Businesses

The CARES Act allows corporations to carry back net operating losses (NOLs) incurred in 2018, 2019, and 2020 for five years (excluding offset to untaxed foreign earnings transition tax). Post-tax reform, these NOLs could only be carried forward. For tax years beginning prior to January 1, 2021, businesses can offset 100% of taxable income with NOL carryovers and carrybacks (the 80% taxable income limitation was lifted). With respect to partnerships and pass-through entities, the CARES Act amended the effective date for the new excess business loss rules created by the 2017 tax reform legislation. The new rules will only apply beginning in 2021 (rather than 2018). Pass-through taxpayers who have filed a return reflecting excess business losses will presumably be entitled to refund by filing an amended return, absent guidance to the contrary. For more information, visit Tax Facts Online. Read More

CARES Act Permits Penalty-Free Payroll Tax Deferral for Employers

The CARES Act allows both employers and independent contractors to defer payment of employer payroll taxes without penalty. Importantly, employers with fewer than 500 employees are entitled to withhold payroll taxes as an advance repayment of the tax credit for paid sick leave and expanded FMLA leave under the FFCRA. Under the CARES Act payroll tax deferral, employers are permitted to defer the employer portion of the payroll tax on wages paid through December 31, 2020 for up to two years. Payroll taxes are generally due in two installments under CARES: 50% by December 31, 2021 and the remaining 50% by December 31, 2022. Economic hardship is presumed, meaning the employer does not have to produce documentation establishing that COVID-19 impacted the business. Payroll tax deferral options apparently apply to all employers, regardless of size. However, employers who have loans forgiven under the CARES Act Payroll Protection Loan program are not eligible for the deferral. For more information, visit Tax Facts Online. Read More

CARES Act Employee Retention Tax Credit

The CARES Act creates a new refundable tax credit designed to help employers who retain employees during the COVID-19 health crisis. The credit is taken against employment taxes and is equal to 50% of the first $10,000 of qualified wages paid to the employee. The credit is available for calendar quarters where either (1) operations were either fully or partially suspended because of a government-issued order relating to COVID-19 or (2) the business’ gross receipts declined by more than 50% when compared to the same calendar quarter in 2019. For more information, visit Tax Facts Online. Read More

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

Byrnes & Bloink’s Covid-19 TaxFacts Intelligence Weekly for April 3, 2020

Posted by William Byrnes on April 3, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for Summer courses that begin May: Legal Risk Management; Intro to Risk Management; FATCA & CRS Risk Management; International Tax Risk Management, Data, and Analytics I  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

                    Prof. William Byrnes
          Robert Bloink, J.D., LL.M.
Lots of CVOID-19 legislation in the updates this week. The IRS and DOL continue to release new guidance–and update existing guidance–at an unprecedented and fast pace. For the time being, clients and advisors alike should check the actual text of the guidance before taking concrete action to make sure they are operating under the most up-to-date rules.
IRS Releases FAQ on COVID-19 Filing, Payment Extensions

The IRS FAQ clarifies that the filing and payment extensions (from April 15 to July 15) apply regardless of whether the taxpayer is actually sick or quarantined because of COVID-19. For fiscal year taxpayers with 2019 returns due April 15, the deadline is extended to July 15 regardless of whether April 15 is an original or extended filing deadline. Taxpayers facing filing or payment deadlines that are not April 15 must note that their deadlines have not generally been extended. The relief also does not apply to payroll or excise tax payments (deposit dates remain unchanged, but employers may be eligible for the new paid sick leave tax credit, see Tax Facts Q8550). Taxpayers do not have to do anything to take advantage of the extension–they simply file their returns and make required payments by the new July 15 deadline. Taxpayers who filed and schedule a payment for April 15 must, however, take action to reschedule their payment for July 15 if they wish (by contacting the credit or debit card company if the payment was scheduled directly with the card issuer). For more information, visit Tax Facts Online. Read More

Counting Employees for COVID-19 Paid Sick Leave & FMLA Expansion Purposes

DOL FAQ provides that an employer is subject to the expanded paid sick leave and FMLA rules if the employer has fewer than 500 full-time and part-time employees. Employees on leave and temporary employees should be included, while independent contractors are not included in the count. Each corporation is usually a single employer. When a corporation has an ownership interest in another corporation, the two are separate employers unless they are joint employers for Fair Labor Standards Act purposes. Joint employer status is based on a facts and circumstances analysis, and is generally the case when (1) one employer employs the employee, but another benefits from the work or (2) one employer employs an employee for one set of hours in a workweek, and another employer employs the same employee for a separate set of hours in the same workweek. For more information on the details provided by current DOL guidance, visit Tax Facts Online. Read More

Calculating Sick Pay for Part-Time and Variable Hour Workers Under the Families First Coronavirus Response Act

With respect to the FMLA extension, the rate of pay for part-time employees is based upon the number of hours they would normally be scheduled to work. For employees with variable schedules, pay is based upon a number equal to the average number of hours that the employee was scheduled per day over the 6-month period ending on the date on which the employee takes such leave, including hours for which the employee took leave of any type or (2) if the employee did not work over such period, the reasonable expectation of the employee at the time of hiring of the average number of hours per day that the employee would normally be scheduled to work. As of now, the law provides that leave may not be carried over into 2021. For more information on the law’s requirements, visit Tax Facts Online. Read More

RMDs Suspended for 2020, Penalty Waived for Coronavirus Distributions

The CARES Act suspended the required minimum distribution (RMD) rules for 2020–a suspension that applies to all 401(k), 403(b), and certain 457(b) deferred compensation plans maintained by the government, as well as IRAs. The law also contains a provision waiving the 10% early distribution penalty that applies to retirement account withdrawals. The relief generally mirrors the relief commonly granted in more localized natural disaster situations. The Act allows employees to take up to $100,000 in distributions from an employer-sponsored retirement plan (401(k), 403(b) or defined benefit plan) or an IRA without becoming subject to the penalty. Unless the participant elects otherwise, inclusion of the distribution in income is spread over three years, beginning with the tax year of distribution. The Act also provides a repayment option, where the participant has the option of repaying the distribution over the three-taxable year period beginning with the tax year of distribution. In this case, the distribution will be treated as an eligible rollover made in a trustee-to-trustee transfer within the 60-day window. For more information on expanded access to retirement funds, visit Tax Facts Online. Read More

WEBINAR

Small Business Incentives Under the CARES Act:  Will it Help My Business?

Tuesday, April 7, 2020, 12:00 noon – 1:00 p.m. Central

Learn how the CARES Act affects your business.

Texas A&M Law faculty experts share practical, fact-based information regarding how the CARES Act is affecting those of us in Texas in this free webinar.

 

  • Access to and eligibility for loans for small businesses
  • Implications for payroll tax payments and employee tax credits

Presenters:

Posted in Pensions, Reporting, Retirement Planning, Tax Policy, Wealth Management | Tagged: , | Leave a Comment »

Byrnes & Bloink’s TaxFacts Intelligence Weekly for March 19, 2020

Posted by William Byrnes on March 20, 2020


2020’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

 

Editor’s Note: New rulings from the IRS help clarify that COVID-19 expenses can be paid by HDHPs (before the deductible has been met) and FSAs can pay for genetic testing when the information is intended to be provided to a medical professional for treatment purposes. Note that the decision on genetic testing comes in the form of a PLR that addresses some rather unique facts, so it may not be very broadly applicable. We also have a new (and regrettably timely) ruling on worthless securities.
IRS Announces HDHPs Can Pay Coronavirus Costs

The IRS announced that high deductible health plans are permitted to cover the costs associated with the coronavirus. HDHPs can cover coronavirus-related testing and equipment needed to treat the virus. Generally, HDHPs are prohibited from covering certain non-specified expenses before the covered individual’s deductible has been met. Certain preventative care expenses are excepted from this rule. HDHPs will not jeopardize their status if they pay coronavirus-related expenses before the insured has met the deductible, and the insured will remain HSA-eligible. The guidance applies only to HSA-eligible HDHPs. For more information on the rules governing HDHPs, visit Tax Facts Online. Read More

Tax Court Rules on Deduction

The Tax Court held that a worthless securities deduction may be permitted even if the entity that issued the securities still held some value. In a complex case involving a number of rounds of financing over several years, the court found it was reasonable to believe that a junior interest may be worthless if there are not funds to pay currently, or anticipated in the future, the senior interests. For more information on the worthless securities deduction, visit Tax Facts Online. Read More

IRS Finds Health FSA Can Reimburse a Portion of Ancestry Genetic Testing

In a private letter ruling (applicable only to the taxpayer requesting the ruling), the IRS found that a portion of the ancestry genetic test could be reimbursed by the health FSA. In the redacted PLR, the IRS discussed whether the genetic testing service could be classified as medical care. The taxpayer’s goal was to provide genetic information to their healthcare provider, but it was impossible to purchase the genetic information without also purchasing the ancestry services. The IRS found that portions of the testing may be considered medical care, although ancestry reports could not be classified as reimbursable medical care. The IRS directed the taxpayer to use a “reasonable method” to allocate between medical and non-medical services. For more information on health FSAs, visit Tax Facts Online. Read More

Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for Summer courses that begin May: FATCA & CRS Risk Management; International Tax Risk Management, Data, and Analytics I  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for Summer, call or fill in the form https://law.tamu.edu/distance-education/

 

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

Byrnes & Bloink’s TaxFacts Intelligence Weekly for Financial Advisors (March 16, 2020)

Posted by William Byrnes on March 16, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for Summer courses that begin May: FATCA & CRS Risk Management; International Tax Risk Management, Data, and Analytics I  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for Summer, call or fill in the form https://law.tamu.edu/distance-education/

Editor’s Note: Reconciliation abounds! You need to reconcile your advance premium tax credit payments, the Supreme Court needs to reconcile the ACA without the individual mandate, and employers need to reconcile employee withholdings with the new regs.
Do you (or your clients) receive advance premium tax credit payments? If you haven’t squared them away with 2019 income levels that might delay the return. Also, with new withholding regs it’s a good idea for employers to take a second look at employee allowances.
Finally, the Supreme Court will (again) look at the constitutionality of the ACA. Recall that the last time this happened constitutionality hinged on Congress’ ability to tax, with Chief justice Roberts noting that the Aca was clearly tax legislation since the individual mandate penalty was implemented through the tax code. Now that the individual mandate has been repealed, how will the ACA fare under additional scrutiny? Tune in next year to find out!
And wash your hands!
Tax Season Tip: Failure to Reconcile Advance Premium Tax Credit Payments May Delay Returns

The IRS has released guidance reminding taxpayers who received advance payments of their premium tax credit throughout the year of their obligation to reconcile those payments with respect to their actual household income levels for 2019. Taxpayers have the option of choosing to have premium tax credits applied directly to their monthly insurance premiums. For more information on the premium tax credit, visit Tax Facts Online. Read More

Supreme Court to Once Again Consider ACA Viability

The U.S. Supreme Court has agreed to hear arguments and rule on the continued constitutionality of the Affordable Care Act. The Court may decide whether the remainder of the ACA is constitutional absent the individual mandate. Arguments in the case are set to be heard in October, after the election, and a decision is unlikely before 2021. For more information on the individual mandate, visit Tax Facts Online. Read More
Determining the Employer’s Obligations Under the New Proposed Withholding Regulations

The regulations are clear that the employer is not required to ascertain whether the withholding allowance claimed by the employee is greater than those to which the employee is actually entitled. However, the IRS (or published guidance) may direct an employer to submit employees’ withholding certificates (or the certificates relating to groups of employees) to the IRS. Further, the IRS may notify the employer that an employee is not entitled to claim more than a certain withholding allowance. For more information on the new withholding regulations, visit Tax Facts Online. Read More

2020’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 Pensions, Retirement Planning, Taxation | Tagged: , | Leave a Comment »

Byrnes & Bloink’s TaxFacts Intelligence Weekly for Financial Advisors (March 5, 2020)

Posted by William Byrnes on March 5, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for Summer courses that begin May: FATCA & CRS Risk Management; International Tax Risk Management, Data, and Analytics I  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for Summer, contact Jeff Green, Graduate Programs Coordinator, T: +1 (817) 212-3866, E: jeffgreen@law.tamu.edu or contact David Dye, Assistant Dean of Graduate Programs, T (817) 212-3954, E: ddye@law.tamu.edu. Texas A&M Admissions website: https://law.tamu.edu/distance-education/

Editor’s Note: Litigation on breaches of fiduciary duties in qualified plans has increased dramatically in the past few years, and this week sees an interesting decision from the Supreme Court reducing the statute of limitations where the employee has actual knowledge of the breach. In contrast, the IRS indicates that there is no statute of limitations for employer ACA violations. For more on these topics and many others, log in to Tax Facts for the latest.
U.S. Supreme Court Rules on Statute of Limitations for Fiduciary Breach

The U.S. Supreme Court, in the widely watched Intel case, agreed with former employees that an employer cannot shorten the time period over which plan participants can sue by simply posting relevant information online or sending information in the mail. In most cases, plan participants have six years to bring a lawsuit for fiduciary breach. However, that window is shortened to three years from the date the participant had “actual knowledge” of the fiduciary violation. For more information on investment diversification requirements for 401(k)s, visit Tax Facts Online. Read More

IRS Releases Regs on Post-Reform Deduction for Business Meals and Entertainment

The IRS released regulations governing the post-tax reform treatment of the deduction for business meals and entertainment expenses. The regulations generally mirror guidance release in 2018 and 2019 on the deduction. As such, taxpayers may continue to deduct 50 percent of their business-related food and beverage expenses that are not lavish or extravagant. For more information on the post-reform deduction, visit Tax Facts Online. Read More

IRS: No Statute of Limitations on ACA Penalties for Large Employers

In usual scenarios, when a taxpayer files a return reporting certain information to the IRS, that filing triggers the start of a limitations period after which the IRS can no longer challenge the information in that return (generally, three years). However, the IRS has recently clarified that this rule does not apply with respect to ACA penalty taxes owed by applicable large employers—because there is no actual return that they file in order to report those taxes. This is the case despite the fact that ALEs have certain reporting obligations via annual Forms 1094-C and 1095-C. For more information on how penalties are assessed, visit Tax Facts Online. Read More

2020’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 Pensions, Retirement Planning, Taxation, Wealth Management | Tagged: | Leave a Comment »

Byrnes & Bloink’s TaxFacts Intelligence Weekly for Financial Advisors (Jan 31, 2020)

Posted by William Byrnes on January 31, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for Summer courses that begin late May  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for Summer, contact Jeff Green, Graduate Programs Coordinator, T: +1 (817) 212-3866, E: jeffgreen@law.tamu.edu or contact David Dye, Assistant Dean of Graduate Programs, T (817) 212-3954, E: ddye@law.tamu.edu. Texas A&M Admissions website: https://law.tamu.edu/distance-education/

SECURE Act and Extenders Bill

As a part of the year-end budget package, Congress passed the long-awaited SECURE Act and also addressed the recently neglected extenders provisions. The SECURE Act contains a number of provisions that will impact nearly every American. Some of the highlights include:

·  Pushing the age when required minimum distributions (RMDs) from retirement accounts must begin from 70 1/2 to 72.
·  Permitting contributions to traditional retirement accounts at any age (previously, taxpayers were not permitted to contribute after age 71).
·  Limiting the value of inherited IRAs, so that most accounts inherited by non-spouse beneficiaries must now be distributed within 10 years (rather than over the lifetime of the beneficiary).
·  Increasing the retirement plan start-up credit for small businesses who offer a retirement savings option (to $5,000 per year or $5,500 if auto-enrollment provisions are included).
·  Expanding multiple employer plan (MEP) options so that unrelated employers can join together to offer retirement savings options to employees.
·  Requiring plans to provide annual lifetime income estimates to certain retirement plan participants.

The bill signed into law also extends many tax provisions, known as “extenders”, through the 2020 tax year. Some of those provisions include the Work Opportunity Credit, the new Family and Medical Leave Credit created by the 2017 tax reform legislation and the ability to treat mortgage insurance premiums as qualified residence interest for tax deduction purposes. Additionally, the bill lowers the medical expense threshold back to 7.5% through 2020. We will provide more information on the individual provisions of the SECURE Act and how the law will impact planning for clients as we move into 2020. For more information on the credits extended by the year-end spending bill, visit Tax Facts Online. Read More

Appeals Court Finds ACA Individual Mandate Unconstitutional

The Fifth Circuit Appeals Court ruled that the ACA individual mandate is unconstitutional. However, it declined to invalidate the entire law. Instead, the case was remanded back to the lower court for more detail on other aspects of the law, including the employer mandate that continues in effect. For more information on the individual mandate, visit Tax Facts Online. Read More

IRS Releases Proposed Regulations on TCJA Executive Compensation Deduction Limits

As a follow up to interim guidance released in August, 2018, the IRS has released proposed regulations that clarify the definitions of covered employee, publicly held corporation and applicable employee remuneration. For more information on the new limits that apply, visit Tax Facts Online. Read More

2020’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 Retirement Planning, Taxation | Tagged: | Leave a Comment »

Byrnes & Bloink’s TaxFacts Intelligence Weekly for Financial Advisors (Jan 30, 2020)

Posted by William Byrnes on January 30, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for Summer courses that begin late May  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for Summer, contact Jeff Green, Graduate Programs Coordinator, T: +1 (817) 212-3866, E: jeffgreen@law.tamu.edu or contact David Dye, Assistant Dean of Graduate Programs, T (817) 212-3954, E: ddye@law.tamu.edu. Texas A&M Admissions website: https://law.tamu.edu/distance-education/

Editor’s Note:
A couple of interesting developments this week. The NAIC action towards creating a best interest standard for annuity sales follows moves by several states (most notably New York with its new Regulation 187) to create similar rules. While the NAIC has not yet taken any definitive action in this area, in the words of Bob Dylan “you don’t need a weatherman to know which way the wind blows.”

We also have more SECURE Act updates. The Act upped the penalties for anyone filing a Form 5500, and it has also expanded (again, following the 2017 tax reform law) the possible uses for 529 pans, making them an even more valuable planning tool.

NAIC Committee Votes to Pass Best Interest Standard for Annuity Sales

The Life Insurance and Annuities Committee of the National Association of Insurance Commissioners (NAIC) voted to pass a “best interest” standard that would apply to annuity sales. The NAIC standard would be contained in a model that could be passed by states to create a more uniform approach nationwide. The model law would focus on four key concepts: (1) duty of care, (2) disclosure obligations, (3) conflicts of interest and (4) documentation requirements. For more information on the factors that are important to determining whether an annuity is in a client’s best interest, visit Tax Facts Online. Read More

SECURE Act Increases Cost of Failing to File Form 5500

Form 5500 is a form that must be filed by most employers that offer an employee benefit plan subject to ERISA (exceptions do apply). The SECURE Act has significantly increased the penalties that the IRS may assess for failure to file (note that the DOL may also assess penalties. For more information on when a Form 5500 may be required, visit Tax Facts Online. Read More

SECURE Act Increases 529 Plan Value

The SECURE Act, which primarily impacts retirement-related provisions, also expands upon the permissible uses of Section 529 plan dollars to include apprenticeships and student loan payments. For more information on the use of 529 plan funds, visit Tax Facts Online. Read More

2020’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 Retirement Planning, Taxation | Tagged: | Leave a Comment »

Byrnes & Bloink’s TaxFacts Intelligence Weekly for Financial Advisors (Jan 29, 2020)

Posted by William Byrnes on January 29, 2020


Texas A&M University School of Law has launched its online wealth management, risk management, and international tax risk management graduate curricula for industry professionals. Apply now for Summer courses that begin late May  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for Summer, contact Jeff Green, Graduate Programs Coordinator, T: +1 (817) 212-3866, E: jeffgreen@law.tamu.edu or contact David Dye, Assistant Dean of Graduate Programs, T (817) 212-3954, E: ddye@law.tamu.edu. Texas A&M Admissions website: https://law.tamu.edu/distance-education/

Editor’s Note:

Several interesting updates this week, including New Jersey’s unique approach to SALT taxes, which allows optional entity-level taxation for pass-throughs in exchange for individual tax credits to be distributed to the members. We also see a new IRS Gig Economy Tax Center and the elimination of the “one bad apple” rule for MEPs with the SECURE Act.

Did we see you at the Heckerling estate planning conference last week? It was a week of warm sunshine and hot (well, OK, at least interesting) tax and estate planning developments. Happy planning!

Latest in the SALT Cap Saga: New Jersey Passes Pass-through Entity Tax Workaround

In the latest in the ongoing SALT cap debate, New Jersey has passed a new law creating an optional entity-level tax for pass-through entities. The New Jersey law allows pass-through entities to elect taxation at the entity level. In exchange, the members are given a refundable gross income tax credit. For more information on the SALT cap, visit Tax Facts Online. Read More

IRS Announces New “Gig Economy” Tax Center

More workers than ever are working in the gig, or freelance, economy–whether full-time or simply to supplement regular income. To keep up with the growing gig industry, the IRS has developed a new tool to help gig workers better understand and comply with their tax obligations. Taxpayers can access the site through irs.gov. For more information on the self-employment tax, visit Tax Facts Online. Read More

SECURE Act Eliminates the “One Bad Apple” Rule for MEPs—With Conditions

The one bad apple rule presented one of the primary roadblocks for small business owners interested in the multiple employer plan (MEP) structure. The SECURE Act provides that if one employer’s actions would disqualify the plan, only that employer’s portion of the MEP will be disqualified. For more information, visit Tax Facts Online. Read More

2020’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 Retirement Planning, Taxation | Tagged: | Leave a Comment »

Byrnes & Bloink’s TaxFacts Intelligence Weekly for Financial Advisors (Jan 28, 2020)

Posted by William Byrnes on January 28, 2020


Texas A&M University School of Law has launched its International Tax online graduate curriculum for tax professionals. Apply now for Jan 13 – April 19 transfer pricing courses.  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for the inaugural cohort opportunity, contact Jeff Green, Graduate Programs Coordinator, T: +1 (817) 212-3866, E: jeffgreen@law.tamu.edu or contact David Dye, Assistant Dean of Graduate Programs, T (817) 212-3954, E: ddye@law.tamu.edu. Texas A&M Admissions website: https://law.tamu.edu/distance-education/international-tax

 

TAXFACTS

TaxFacts Intelligence Weekly

William H. Byrnes, J.D., LL.M. and Robert Bloink, J.D., LL.M.
Jan 09, 2020

View in Browser

Editor’s Note: Mileage rates, UBTI for VEBAs, and 401(K)s for part-time employees under the SECURE Act

Vehicle-related reimbursement and deductions can be a big deal. Anyone who tracks mileage for work, medical, or charitable purposes is impacted by the changes in the IRS mileage rates, which have just been updated for 2020. We also have new UBTI rules for VEBAs, which were adopted in light of recent litigation. Finally, the SECURE Act mandates access to employer-sponsored 401(k)s to many part-time workers who could previously be excluded from participation. Learn what the new rules are, including how they impact nondiscrimination testing, with Tax Facts Online.

2020 IRS Business Standard Mileage Rates

In 2020, the optional standard mileage rate for using a car for business purposes will be 57.5 cents per mile driven for business purposes (the 2019 rate was 58 cents per mile). For more information on deducting business-related travel expenses, including medical and charitable mileage rates visit Tax Facts Online. Read More

IRS Regs Clarify UBTI Calculation for VEBAs and SUBs

The IRS has released regulations clarifying how voluntary employees’ beneficiary associations (VEBAs) and supplemental unemployment benefit trusts (SUBs) calculate unrelated business taxable income (UBTI) in light of recent litigation. For more information on the new rules and the related litigation, visit Tax Facts Online. Read More

SECURE Act Expands 401(k) Access for Long-Term, Part-Time Employees

Under the SECURE Act, employees who perform at least 500 hours of service for at least three consecutive years (and are at least 21 years old) must be allowed to participate in the employer-sponsored 401(k). These long-term, part-time employees may, however, be excluded from coverage and nondiscrimination testing requirements. For more information on 401(k) requirements, including detailed descriptions of the nondiscrimination testing requirements, visit Tax Facts Online. Read More

2020’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 Retirement Planning, Taxation | Tagged: | Leave a Comment »

Byrnes & Bloink’s TaxFacts Intelligence Weekly for Financial Advisors (December 12 edition)

Posted by William Byrnes on December 12, 2019


Texas A&M University School of Law has launched its International Tax online graduate curriculum for tax professionals. Apply now for Jan 13 – April 19 transfer pricing courses.  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for the inaugural cohort opportunity, contact Jeff Green, Graduate Programs Coordinator, T: +1 (817) 212-3866, E: jeffgreen@law.tamu.edu or contact David Dye, Assistant Dean of Graduate Programs, T (817) 212-3954, E: ddye@law.tamu.edu. Texas A&M Admissions website: https://law.tamu.edu/distance-education/international-tax

IRS Provides New ACA Transition Relief for Employer Reporting

As usual, the IRS has released transition relief to extend the deadline for providing Form 1095-C to individuals from January 31, 2020 to March 2, 2020. However, unlike other years, the March 2 deadline is now a firm deadline and the IRS has indicated that it will no longer respond to requests for extension beyond that deadline. Form 1094-C and Form 1095-C that must be provided to the IRS are not subject to the extension. The employer must furnish these filings to the IRS by February 28, 2020 if the filing is on paper and March 31, 2020 if the employer is filing electronically. For 2019 forms, the IRS has extended the relief that may allow employers to escape liability if they make a good faith effort to comply with all filing requirements. Because the individual mandate has been reduced to $0, the IRS will also not impose a penalty under IRC Section 6722 upon employers who fail to provide Form 1095-B if certain requirements are satisfied. For more information, visit Tax Facts Online. Read More

December 31 Deadline to Take Full Advantage of Opportunity Zone Deferral is Fast Approaching

The Tax Cuts and Jobs Act introduced opportunity zones into the tax code, which allow taxpayers to defer certain gains if certain deadlines and requirements are satisfied. However, the law only gives taxpayers a limited amount of time to take full advantage of the deferral provisions. Specifically, December 31, 2019, is the deadline for taxpayers who wish to make opportunity zone investments and take full advantage of the 15% step-up in the deferred gains. Taxpayers who invest after this deadline (but before December 31, 2020) and hold the opportunity zone investment through 2026 will be entitled to take 10% step-up in basis (10% of the amount deferred) on the deferred tax. For more information on the opportunity zone rules, including the gain deferral provision, visit Tax Facts Online. Read More

Unpacking the New Section 6050Y Reporting Requirements for Life Insurance Reportable Policy Sales

The new 6050Y regulations create new reporting obligations for many who issue, acquire or sell life insurance policies in a reportable policy sale post-tax reform. An “issuer” under the new regulations is anyone that bears any part of the risk associated with the life insurance contract, including those collecting premiums and paying death benefits. However, where there are multiple issuers, the reporting obligations are satisfied if only one issuer or designee reports on a timely basis. New forms released by the IRS to complete the reporting obligations include Form 1099-LS, Reportable Life Insurance Sale and Form 1099-SB, Seller’s Investment in Life Insurance Contract. While some reporting requirements have been delayed, it’s important to understand the basics of these forms now. Form 1099-LS must be filed by anyone who acquires a life insurance policy (or interest therein) in a reportable policy sale. Basic information about the sale, policy, acquirer and seller must be included. Form 1099-SB must be filed by the issuer of the life insurance policy to report both the seller’s investment in the contract and the surrender amount if the sale is a reportable policy sale (or transferred to a foreign person). For more information on the new 6050Y reporting requirements, visit Tax Facts Online. Read More

2020’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 Retirement Planning, Taxation | Tagged: , , , | Leave a Comment »

Byrnes & Bloink’s TaxFacts Intelligence Weekly for Financial Advisors (December 5 edition)

Posted by William Byrnes on December 6, 2019


Texas A&M University School of Law has launched its International Tax online graduate curriculum for tax professionals. Apply now for Jan 13 – April 19 transfer pricing courses.  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for the inaugural cohort opportunity, contact Jeff Green, Graduate Programs Coordinator, T: +1 (817) 212-3866, E: jeffgreen@law.tamu.edu or contact David Dye, Assistant Dean of Graduate Programs, T (817) 212-3954, E: ddye@law.tamu.edu. Texas A&M Admissions website: https://law.tamu.edu/distance-education/international-tax

Final Regulations Confirm: No “Clawback” for Gifts Made Under Expanded Transfer Tax Exemption

The 2017 tax reform legislation significantly expanded the transfer tax exemption, which applies to exempt both lifetime and postmortem gifts from transfer taxes. However, the new provision is set to sunset after 2025, leading many taxpayers to question whether large gifts made while the provision is effective would be exempt once the exemption reverts to the much lower $5 million (as adjusted for inflation) limit. In general, the exemption applies first to gifts made during life and then to the individual’s remaining estate. Under the final regulations, estates are allowed to compute the available estate tax credit using the higher of the basic exclusion amount that applied to gifts made during life or the basic exclusion amount applicable on the date of death. Essentially, this rule provides certainty that taxpayers can make large gifts now (i.e., gifts that exceed the $5 million exemption) without generating transfer tax liability if the exemption amount is reduced in the future. For more information on the estate tax, visit Tax Facts Online. Read More

Court Finds Prudent Process Sufficient to Overcome DOL Fiduciary Liability

Many retirement plan sponsors and advisors have been left in uncertainty since the DOL fiduciary rule was vacated. A September 2019 case involving a DOL fiduciary enforcement action may shed light on resolution of fiduciary issues in the retirement plan context. In this case, the court found that retirement committee members were not liable under ERIA for a failure to monitor the committee’s investment manager more closely. The committee here had implemented processes and procedures, including regular meetings and reports, and acted in accordance with those procedures. After the DOL initiated action, the court agreed that the committee was entitled to rely upon those procedures. Once an error or problem arose and the committee became aware—or reasonably should have become aware—of the issue, the committee correctly increased its oversight until the issue was resolved. Here, that issue was that the committee’s instructions with respect to investments were not being followed. Once the committee noticed, they stepped up oversight. Importantly, this ruling shows that a prudent process is often sufficient to avoid fiduciary liability even if a decision results in investment losses. For more information on the fiduciary standard, visit Tax Facts Online. Read More

IRS Cracking Down on Syndicated Conservation Easements

In recently released IR-2019-182, the IRS announced that it has substantially increased resources to crack down on syndicated conservation easements. Under the IRC, a special rule allows taxpayers to take a deduction for donations of qualified conservation easements (an exception to the general rule prohibiting deductions for donations of less than an entire interest in property). A qualified conservation easement is a contribution of real property including a restriction (granted in perpetuity) for the use of the property, which must be used for conservation purposes. Syndications are often set up to purchase real property for conservation easements. Most syndications involve tiers of pass-through entities so that investors in the entities can more fully use the charitable deduction (which is subject to an adjusted gross income cap like any other charitable deduction). Often, the actual deduction will far exceed the amounts invested—sometimes because inflated property values are used. These and substantially similar arrangements are now classified as listed transactions, which must be disclosed to the IRS. Clients should be made aware of this increased potential for enforcement across several IRS divisions. For more information on the requirements for claiming a conservation easement deduction, visit Tax Facts Online. Read More

 

2020’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 Retirement Planning, Taxation | Tagged: , , , , | Leave a Comment »

Byrnes & Bloink’s Thanksgiving TaxFacts Intelligence for Wealth Advisors

Posted by William Byrnes on December 3, 2019


Texas A&M University School of Law has launched its International Tax online curriculum for graduate degree candidates. Admissions is open for Jan 13 – April 19 transfer pricing courses.  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for the inaugural cohort opportunity, contact Jeff Green, Graduate Programs Coordinator, T: +1 (817) 212-3866, E: jeffgreen@law.tamu.edu or contact David Dye, Assistant Dean of Graduate Programs, T (817) 212-3954, E: ddye@law.tamu.edu. Texas A&M Admissions website: https://law.tamu.edu/distance-education/international-tax

Often-Overlooked Section 1202 Tax Break for Small Business Adds New Value Post-Reform

Section 1202, while often overlooked by small business owners and investors alike, can provide a valuable tax benefit post-reform because many small businesses have transitioned to C corporation status to take advantage of the simpler 21 percent corporate tax rate. Section 1202 allows for an exclusion of up to 100 percent of gain realized when qualified small business stock is sold. To qualify, the stock must be acquired by the taxpayer when the stock was originally issued and held for at least five years. Further, the Section 1202 stock exclusion only applies to stock in C corporations with active businesses and assets of $50 million or less (measured when the stock is issued). Excluded gains are limited to the greater of: $10 million or 10 times the basis of the qualified small business stock. For more information on the exclusion, visit Tax Facts Online. Read More

IRS Expands Nondiscrimination Relief for Closed Defined Benefit Plans

Although the IRS has previously extended the nondiscrimination relief for closed DB plans in Notice 2014-5, newly released Notice 2019-60 also expands the relief to include relief from benefits, rights and features testing for closed plans. To qualify, the plan must have closed via amendments adopted before December 13, 2013. Notice 2019-60 does not change prior relief, but adds additional relief. Closed plans’ benefits, rights and features are treated as satisfying testing if the benefits, rights and features were provided at the time of the amendment closing the plan and one of two conditions are satisfied: (1) no amendments were adopted after January 29, 2016 that expanded or restricted eligibility for the benefits, rights and features or (2) if there was such an amendment, the benefit, right or feature does not benefit a relatively larger proportion of highly compensated employees (measured using the plan’s ratio percentage) than before the amendment. This relief is available for plan years ending after November 13, 2019 and before January 1, 2021. For more information on defined benefit plan nondiscrimination testing, visit Tax Facts Online. Read More

Advisory Fees Withdrawn From Annuity Not Treated as Distributions to the Owner

A recent IRS letter ruling found that investment advisory fees paid periodically from an annuity contract case value should not be treated as amounts received by the contract owner. The annuities in this case were nonqualified deferred annuities. As part of the annuity, the product owner would receive investment advice from a licensed advisor on how to allocate the case value of the contract. The fees were to be negotiated in an arm’s length transaction, but were not to exceed 1.5 percent of the annuity cash value. The fees were paid directly to the advisor (in other words, the owner would never receive the amounts deducted from the annuity value). The IRS found the fees “integral” to operation of the annuity contract based on the fact that the owner would receive ongoing investment advice. Further, the fees did not compensate the advisor for services related to any other asset (other than the annuity). The IRS concluded that the fees were an expense of the contract, not distributions to the owner. For more information on the tax treatment of nonqualified annuities, visit Tax Facts Online. Read More

2020’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 Retirement Planning, Taxation | Tagged: , , | Leave a Comment »

Byrnes & Bloink’s November 21 TaxFacts Intelligence for Wealth Advisors

Posted by William Byrnes on November 22, 2019


Texas A&M University School of Law has launched its International Tax online curriculum for graduate degree candidates. Admissions is open for Jan 13 – April 19 transfer pricing courses.  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for the inaugural cohort opportunity, contact Jeff Green, Graduate Programs Coordinator, T: +1 (817) 212-3866, E: jeffgreen@law.tamu.edu or contact David Dye, Assistant Dean of Graduate Programs, T (817) 212-3954, E: ddye@law.tamu.edu. Texas A&M Admissions website: https://law.tamu.edu/distance-education/international-tax

IRS Proposes New Life Expectancy Tables for Calculation IRA & 401(k) RMDs

The IRS has released new proposed life expectancy tables that would be used in calculating required minimum distributions from both IRAs and employer-sponsored retirement plans. The new tables generally assume longer life expectancies and provide information needed to calculate RMDs for participants living to 120 (the current tables stop at 115). For most clients, the primary impact will be seen in lower required distributions beginning in 2021 Individuals taking RMDs from inherited accounts will also be entitled to switch to the new life expectancy tables under a proposed transition rule, as will those clients currently receiving substantially equal periodic payments. For more information on the RMD rules, visit Tax Facts Online. Read More

IRS Releases Proposed Regulations Implementing Tax Reform Changes to Eligible Terminated S Corporations

The IRS has released proposed regulations that would implement some of the tax reform changes that apply to S corporations that convert to C corporation status. Under tax reform, certain adjustments under IRC Section 481(a) that are required because of the revocation of the S corporation election of an “eligible terminated S corporation” (ETSC) are taken into account ratably during the six tax years beginning with the year of the change (under previous law, most changes had to be accounted for within a one-year period). The proposed regulations’ “no newcomers rule” clarifies that an ETSC is defined as one that (1) was an S corporation on December 21, 2017, (2) during the two-year period beginning on December 22, 2017, revokes its S corporation election, and (3) all of the owners of the corporation on December 22, 2017 are the same as on the day the election is revoked (in identical proportions). The proposed regulations also implement a “snapshot approach” to determining the ratio needed to make allocations under the rules. For more information, visit Tax Facts Online. Read More

Participating in Two Retirement Plans? Need-to-Know Information on Contribution Limits

In today’s day and age, many clients may participate in more than one employer-sponsored retirement plan. This means that clients must understand the deferral limits that limit the amount that can be contributed on a tax-preferred basis each year. The elective deferral limit is a per-person limit, meaning that each client gets one amount per year (for most clients, the 2019 deferral limit is $19,000, or $25,000 for clients who have reached age 50). This means that clients participating in two 401(k) plans can make $19,000 in pre-tax contributions, spread between the two plans (457(b) plans and 403(b) plans are not subject to this aggregation rule). A second limit, known as an “annual additions limit”, governs the total employer and employee contributions that can be made in a single year. For 2020, that limit is $576,000 and $632,000 for clients 50 and up. The annual additions limit applies to plans offered by a single company, or by companies that are related. Clients participating in two plans sponsored by unrelated companies should be aware that a separate annual additions limit applies to each plan. For more information on the rules governing elective deferrals, visit Tax Facts Online. Read More

2020’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 »

Byrnes & Bloink’s TaxFacts Intelligence Weekly – Actionable Analysis for Financial Advisors

Posted by William Byrnes on November 18, 2019


Texas A&M University School of Law has launched its International Tax online curriculum for graduate degree candidates. Admissions is open for Spring (January) semester for the transfer pricing courses.  Texas A&M University is a public university of the state of Texas and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). 

Final 401(k) Hardship Distribution Rules Take Effect January 1, 2020

Plan participants and sponsors should note that the final regulations governing 401(k) hardship distributions take effect in 2020. As of 2020, participants who take a hardship distribution must now be permitted to continue to make deferrals within the six months following the hardship distribution. While some aspects of the new rules are optional, this new requirement is mandatory with respect to qualified plans. For more information on hardship distributions, visit Tax Facts Online. Read More

IRS Releases Proposed Regs on Accounting for Advance Payments

The IRS has released proposed regulations implementing changes made by the 2017 tax reform legislation that impact the tax treatment of advance payments. The regulations generally adopt the rules contained in Revenue Procedure 2004-34— the approach in place prior to tax reform. For more information on the tax treatment of advance payments, visit Tax Facts Online. Read More

IRS FAQ Provides for Specific Identification in Transactions Involving Virtual Currency

The recently released FAQ on the tax treatment of virtual currency confirms that transactions in bitcoin and other forms of virtual currency will be taxed as transactions in property. The guidance goes further and answers the question of whether taxpayers should identify particular virtual currency that is part of a transaction. For more information on the tax treatment of bitcoin, visit Tax Facts Online. Read More

2020’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 »

Byrnes & Bloink’s TaxFacts Intelligence Weekly – Actionable Analysis for Financial Advisors

Posted by William Byrnes on September 20, 2019


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

Texas A&M University School of Law has launched its International Tax online curriculum for graduate degree candidates. Admissions is open for Spring (January) semester for the transfer pricing courses.  Texas A&M University is a public university of the state of Texas and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). 

IRS Releases Guidance on Failure to Cash Distribution Checks

The IRS has released guidance providing that when a check for a fully taxable distribution from a qualified plan is mailed to a plan participant, but not cashed, it is considered to have been “actually distributed” from the plan and is taxable to the participant in the year of distribution. Further, the failure to cash the check did not change the plan administrator’s withholding obligations with respect to the distribution and did not change the obligation to report the distribution on Form 1099-R (assuming the distribution exceeds the applicable reporting threshold). Despite these findings, the IRS was careful to note that it continues to consider the issue of uncashed distribution checks in situations involving missing participants. For more information on the withholding requirements that may apply to qualified plan distributions, visit Tax Facts Online. Read More

December 31 Opportunity Zone Deadline Fast Approaching

Investors who are considering an opportunity zone investment should be advised that now is the time to take advantage of the new rules in order to maximize the potential for deferral. December 31, 2019 is the final day that investors can elect to roll their gains into opportunity zone funds in order to obtain the full 15% reduction in the amount of the deferred gain. Generally, taxpayers can defer capital gains tax by rolling gains into a qualified opportunity fund (gains may be deferred until December 31, 2026). If the investment is held for at least seven years, the taxpayer will receive a 15% reduction in the amount of the deferred gain (so that the funds are invested for a full seven years). In turn, the fund has 180 days to acquire qualified property once the taxpayer invests the gain. Because gain on the sale of Section 1231 property is not determined until year-end, taxpayers wishing to roll over Section 1231 gain should be advised to track 1231 sales carefully to determine whether such sales will result in gain (treated as long-term capital gain) or loss (treated as ordinary loss). For more information on the opportunity zone rules, visit Tax Facts Online. Read More

IRS Extends Nondiscrimination Relief for Closed Defined Benefit Plans

Many employers who have closed defined benefit plans to new participants have continued to allow groups of “grandfathered” employees to earn benefits under the closed defined benefit plans. Because of this, many of these plans have had difficulties meeting the applicable nondiscrimination requirements as more of these grandfathered employees become “highly compensated” over time. Proposed regulations published in 2016 contain special rules to make it easier for these plans to satisfy the nondiscrimination requirements and Notice 2014-5 was released to provide temporary relief if certain conditions are satisfied. The proposed regulations modify the rules applicable to defined benefit replacement allocations (DBRAs) that allow some allocations to be disregarded when determining whether a defined contribution plan has a broadly available allocation rate in order to allow more allocations to satisfy the rules. Further, the regulations provide a special nondiscrimination testing rule that can apply if a benefit or plan feature is only made available to grandfathered employees in a closed plan. In anticipation of the finalization of these regulations, Notice 2019-49 expands the nondiscrimination relief to plan years beginning before 2021, so long as the conditions in Notice 2014-5 are satisfied. For more information the nondiscrimination rules, visit Tax Facts Online. Read More

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

TaxFacts Intelligence Weekly of Aug 29, 2019 – Actionable Analysis for Financial Advisors

Posted by William Byrnes on August 30, 2019


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

Tuition Waiver for International Tax Online Courses (more information here)

Texas A&M University School of Law will launch August 26, 2019 its International Tax online curriculum for graduate degree candidates. Admissions is open for the inaugural cohort of degree candidates to pilot the launch of the Fall semester introductory courses of international taxation and tax treaties, and provide weekly feedback on content, support, and general experience in exchange for waiving the tuition and providing the books free.  Texas A&M University is a public university of the state of Texas and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). 

IRS Reverses Stance on Lenient Enforcement of ACA Employer Mandate

In a recent reversal of practice, in the early weeks of August the IRS began issuing Notice 972CG to employers informing them that they owe substantial penalties for failing to strictly comply with the ACA employer mandate. Generally, the Notice is sent to inform employers who have made late or incorrect filings of Forms 1094-C and 1095-C that penalties now apply (the current notices generally apply for mistakes made in 2017). The penalty that applied in 2017 was $260 per return ($50 per return if the filing was made within 30 days of the original due date). Employers must respond to the Notice 972CG within 45 days (from the date listed on the notice) or the IRS will bill the employer for the penalty amount listed. If the employer disagrees in whole or part with the proposed penalty, box B or box C of the notice should be checked and the employer must submit a signed statement detailing the disagreement, including supporting documentation if applicable. Generally, the employer will be required to explain that the late or incorrect filing was due to reasonable cause. For more information on responding to this notice and other correspondence that the employer may receive with respect to the employer mandate, visit Tax Facts Online. Read More

The Latest Tax Scam: Beware Fake IRS Letters

Nearly every taxpayer has heard warnings about phone-based IRS scams, assuming they have not experienced the calls themselves. However, because the general advice to avoid falling prey to these scams is often accompanied by the advice “the IRS will only contact you via U.S. mail” to initiate a dispute, scammers have now begun sending fake IRS letters–at the exact point in the year when legitimate IRS mail correspondence is at its highest. To avoid falling prey to letter-based scams, keep in mind that IRS letters arrive in government envelopes and provide a notice or letter number in the top right corner, along with a truncated version of your tax ID number. The tax year in question will also appear in the top right corner. A contact telephone number–usually a “1-800” number will appear. If the letter contains what appears to be a personal phone number, you can verify by visiting irs.gov, where legitimate contact information will be posted. Also keep in mind that the IRS will not send threats, such as threats of arrest or deportation. For more information on federal income tax filing requirements, visit Tax Facts Online.Read More

Own an S Corporation? Here’s How to Fix a Violation of the S Corp Requirements

For many clients, making the election to be taxed as an S corporation can have substantial benefits–but also carries the burden of risking disqualification if the business fails to meet the requirements governing S corporations. Selling shares to an impermissible shareholder (such as a partnership), violating the “one class of stock” rule can result in automatic revocation of the S status. To prevent this, the business must show the IRS that the violation was inadvertent, which can be accomplished by submitting a ruling request explaining how the violation occurred. Generally, the S corporation should seek to demonstrate to the IRS that it took remedial action as soon as it learned of the violation, explain the circumstances involved and how the S corporation discovered the violation, in which case the IRS may grant retroactive relief–so that it is treated as though no violation occurred at all. For more information on the specific requirements that an S corporation must satisfy, visit Tax Facts Online. Read More

Tax Facts Team
Molly Miller
Publisher
William H. Byrnes, J.D., LL.M
Tax Facts Author
Jason Gilbert, J.D.
Senior Editor
Robert Bloink, J.D., LL.M.
Tax Facts Author
Connie L. Jump
Senior Manager, Editorial Operations
Alexis Long, J.D.
Senior Contributor
Patti O’Leary
Senior Editorial Assistant
Danielle Birdsail
Digital Marketing Manager
Emily Brunner
Editorial Assistant

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

TaxFacts Intelligence Weekly of Aug 1, 2019 – Actionable Analysis for Financial Advisors

Posted by William Byrnes on August 5, 2019


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

 

Tuition Waiver for International Tax Online Courses (more information here)

Texas A&M University School of Law will launch August 26, 2019 its International Tax online curriculum for graduate degree candidates. Admissions is open for the inaugural cohort of degree candidates to pilot the launch of the Fall semester introductory courses of international taxation and tax treaties, and provide weekly feedback on content, support, and general experience in exchange for waiving the tuition and providing the books free.  Texas A&M University is a public university of the state of Texas and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). 

IRS Expands List of Preventative Care Coverage Not Subject to HDHP Deductibles
Pursuant to the executive order directing the agencies to expand the use of HSAs and HDHPs for individuals suffering from certain chronic conditions, the IRS has released Notice 2019-45, which expands the definition of “preventative care” to include certain treatments and medications related to chronic illnesses. Generally, HDHPs may now provide these forms of care on a pre-deductible basis without jeopardizing the plan’s status as an HDHP and the participant’s ability to use HSA funds in connection with that HDHP. The agencies have indicated that they will review the new list, which includes items deemed to be “low cost”, every five to ten years. The new table, contained Notice 2019-45, includes items such as glucometers for patients suffering from diabetes and beta blockers for patients suffering from congestive heart failure. For more information on HDHPs, visit TaxFacts Online. Read More
 

IRS Releases Premium Tax Credit-Related Inflation Adjustments for 2020
The IRS has released the Affordable Care Act (ACA) premium tax credit-related inflation adjusted numbers for use in 2020. In 2020, the percentage used to determine whether an individual is eligible for employer-sponsored health insurance that is affordable is 9.78% (down from 9.86% in 2019). This means that individuals who contribute more than 9.78% of their household income toward health insurance in 2020, he or she may be eligible for premium tax credit assistance. For more information on determining when health coverage is deemed affordable for ACA purposes, visit Tax Facts Online. Read More

 

IRS Announces Compliance Campaign Directed at S Corps
The IRS has announced that one of the areas it will be focusing its compliance efforts upon in the coming year involves S corporations that were formerly C corporations. The primary issue of focus will be the built-in gains tax. In general, the built-in gains tax applies to C corporations that convert to S status at a time when they have net unrealized built-in gain, and then sell assets within five years after converting to an S corporation. The tax should be paid at the S corporation level, but the IRS has determined that the tax is often not paid. While this does not necessarily mean that audit resources will be directed toward these entities, it does mean that the IRS has determined that it is necessary to dedicate training and resources toward the goal of ensuring proper compliance with the built-in gains tax. For more information on situations where S corporations may be taxed at the entity level, visit Tax Facts Online. Read More

 

Posted in Estate Tax, Retirement Planning, Taxation | Tagged: , , | Leave a Comment »

TaxFacts Intelligence Weekly of July 11

Posted by William Byrnes on July 11, 2019


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

Prof. William H. Byrnes, Esq. and Robert Bloink, Esq. of

Texas A&M University Law Wealth Management programs

Jul 11, 2019

View in Browser

IRS Snapshot Guidance Provides Insight into Post-2018 Plan Hardship Distribution Requirements

The Bipartisan Budget Act of 2018 made substantial changes to the rules governing hardship distributions from qualified plans beginning in 2019. These changes have left many employers wondering how to adequately comply with the new rules. The IRS has directed its agents to review the language in the plan document, as well as any written statement provided by the participant to ensure all documents are properly executed and signed. Further, agents are directed to examine any records that the employer used to verify that a true hardship did exist, as well as the amount of that hardship. These records can include bills, eviction notices, closing documents for purchase of a home, etc. The employee should also provide documentation to establish that no other readily available source of funds existed, which can be as simple as an employee attestation. For more information on post-2018 hardship distributions, visit Tax Facts Online. Read More

IRS Clarifies Treatment of Transportation Benefits Upon Termination of Employment

An IRS information letter has clarified that a taxpayer forfeits any unused transportation benefits upon termination of employment. Because employers have only been permitted to provide tax-preferred transportation benefits to current employees, those benefits must be lost once the individual is no longer an employee. This is the case even if the benefits were provided through pre-tax employee contributions, and even if the employee is fired (i.e., compensation reductions cannot be reimbursed if the employee had not fully used them). Importantly, employees can change their elections regarding transportation benefits monthly without the need for a change in status event. For more information on employer-provided transportation benefits, visit Tax Facts Online. Read More

Ninth Circuit Affirms Termination of Pension Benefits for Working Retiree

The Ninth Circuit recently confirmed that a pension plan was within its rights to terminate pension benefits to a participant who retired early, but then returned to work in the same industry. This was the case even though the plan itself had initially approved the taxpayer’s post-retirement work in the same industry in which he worked prior to retirement. Although Supreme Court precedent prohibits a pension from adding additional requirements to a participant’s benefit eligibility after that participant has retired, the court here found that the precedent did not apply because the plan in question had always required participants to withdraw from the industry in order to be eligible for benefits. The plan had begun enforcing the rule pursuant to a voluntary corrective action with the IRS that was entered in order to maintain the plan’s tax-qualified status. For more information on situations where a pension plan may reduce a participant’s benefits, visit Tax Facts Online. Read More

Tax Facts Team
Molly Miller
Publisher
William H. Byrnes, J.D., LL.M
Tax Facts Author
Jason Gilbert, J.D.
Senior Editor
Robert Bloink, J.D., LL.M.
Tax Facts Author
Connie L. Jump
Senior Manager, Editorial Operations
Alexis Long, J.D.
Senior Contributor
Patti O’Leary
Senior Editorial Assistant
Danielle Birdsail
Digital Marketing Manager
Emily Brunner
Editorial Assistant
For questions, contact Customer Service at 1-800-543-0874.

CONNECT WITH TAXFACTS

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

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

 

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

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 »

Premium Tax Credit Brings Changes to Your 2014 Income Tax Returns

Posted by William Byrnes on January 26, 2015


When filing your 2014 federal income tax return, you will see some 457c5-6a00d8341bfae553ef01b7c7029b32970b-pichanges related to the Affordable Care Act. Millions of people who purchased their coverage through a health insurance Marketplace are eligible for premium assistance through the new premium tax credit, which individuals chose to either have paid upfront to their insurers to lower their monthly premiums, or receive when they file their taxes. When you bought your insurance, if you chose to have advance payments of the premium tax credit, the Marketplace estimated the amount based on information you provided about your expected household income and family size for the year.

If you received the benefit of advance credit payments, you must file a federal tax return and reconcile the advance credit payments with the actual premium tax credit you are eligible to claim on your return.  You will use IRS Form 8962Premium Tax Credit (PTC) to make this comparison and to claim the credit. If your advance credit payments are in excess of the amount of the premium tax credit you are eligible for, based on your actual income, you must repay some or all of the excess when you file your return, subject to certain caps.

If you purchased your coverage through the Health Insurance Marketplace, you should receive Form 1095-A, Health Insurance Marketplace Statement from your Marketplace. You should receive this form by early February.

Form 1095-A will provide the information you need to file your taxes, including the name of your insurance company, dates of coverage, amount of monthly insurance premiums for the plan you and other members of your family enrolled in, amount of any advance payments of the premium tax credit for the year, and other information needed need to compute the premium tax credit.

Tax Facts on Individuals & Small Business

2014_tf_on_individuals_small_businesses-m_1Due to a number of recent changes in the law, taxpayers are currently facing many questions connected to important issues such as healthcare, home office use, capital gains, investments, and whether an individual is considered an employee or a contractor.  Financial advisors are continually looking for competitive information to help them provide the best answers for their clients and to obtain new clients.  National Underwriter’s Tax Facts series is the only resource written specifically for the financial advisor and producer providing fast, clear, and authoritative answers to pressing questions, and it does so in the convenient, timesaving, Q&A format for which Tax Facts is famous.

Anyone interested can try Tax Facts on Individuals & Small Business, risk-free for 30 days, with a 100% guarantee of complete satisfaction.  Call 1-800-543-0874.

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

2015 Tax Facts – TRIPLE Book Combo

Posted by William Byrnes on November 4, 2014


2015_tf_triple_combo_cover-m2015 Tax Facts on Insurance & Employee Benefits/2015 Tax Facts on Investments/2015 Tax Facts on Individuals & Small Business – TRIPLE Book Combo

Obtain the three Tax Facts Editions: 2015 Tax Facts on Insurance & Employee Benefits,2015 Tax Facts on Investments, and Tax Facts on Individuals & Small Business with the convenience of a single order and a savings of $99!  The 2015 editions are filled with updated, authoritative, and clear answers to critical tax questions covering insurance, employee benefits, investments, business formation/choice of entity, individual income taxation and much more!  Pertinent planning points are provided throughout.

Posted in book | Tagged: | Leave a Comment »

11 health insurance tax facts a taxpayer needs to know about

Posted by William Byrnes on June 24, 2014


Employers and those who advise them may have questions about what expenses qualify for deductions, which tax credits they can take advantage of, and what the new rules mean for grandfathered plans. Individuals may be wondering how HSA distributions are taxed, or whether benefits received under a personal health insurance policy are taxable. 

1. Are premiums paid for personal health insurance deductible as medical expenses?

2. May an employer deduct as a business expense the cost of premiums paid for accident and health insurance for employees?

3. What credit is available for small employers for employee health insurance expenses?

4. Are benefits received under a personal health insurance policy taxable income?

5. How is employer-provided disability income coverage taxed?

6. How is personal disability income coverage taxed?

William Byrnes and Robert Bloink have the well-researched answers you’re looking for on LifeHealthPro !

 


If you are interested in discussing the Master or Doctoral degree in the areas of financial planning, please contact me: profbyrnes@gmail.com to Google Hangout or Skype that I may take you on an “online tour” 

 

 

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

Almost half of tax returns still due in remaining 25 days to file!

Posted by William Byrnes on March 21, 2014


The IRS announced in Newswire 2014-32 that almost half of the tax returns expected to be filed for the year 2013 had yet to be filed by March 14, 2014. How many returns will be filed in this last 25 day period?  About 70 million tax returns of the total expected 149 million returns of 2013! If half of these outstanding tax returns are filed with the assistance of a tax preparer, that’s 35 million potential clients in the past 25 days of the tax season! Not a bad profession to be in!

Over the next 25 days this blog will contain many articles for small business owners on taking certain deductions and obtaining various tax credits that allow a small business owner or entrepreneur to minimize the tax imposed on the trade or business and thus maximize the business’ after-tax return.

The IRS reminds small business owners and entrepreneurs of three tax facts that may impact the outstanding 2013 return.

Tax Fact 1: Optional safe harbor method to determine the business use of a home deduction.  Also known as the simplified option for claiming the home office deduction, beginning in 2013, taxpayers can use the optional safe harbor method to determine the deduction for the business use of a home.

If a taxpayer works from home, then it may be possible for the taxpayer to claim the home office deduction.  However, in years past this home office deduction has been rather complicated to calculate.

1. Generally, in order to claim a deduction for a home office, a taxpayer must use a part of your home exclusively and regularly for business purposes. Also, the part of your home used for business must be:

  • the principal place of business, or
  • a place where the taxpayer meets clients or customers in the normal course of business, or
  • a separate structure not attached to the home. Examples might include a studio, garage or barn.

What clearly does NOT qualify for a home office deduction?  By example, a taxpayer sets up a computer in her bedroom on a dresser that she uses for personal emails and for keeping her business records.  In the dresser drawers are pens, paperclips, some receipts, as well as hair clips and some pieces of jewelry.  The IRS isn’t going to allow a home office deduction based on that computer on that dresser.

The taxpayer may be able to use the simplified option to claim the home office deduction instead of claiming actual expenses. Under this method, the taxpayer multiplies the allowable square footage of the office area by a prescribed rate of $5.  The maximum footage allowed by the IRS is 300 square feet. The deduction maximum limit using this method is thus $1,500 per year.

If the taxpayer is self-employed and chooses the actual expense method, then the taxpayer should use Form 8829Expenses for Business Use of Your Home, to calculate the amount of the home office deduction.  The taxpayer claims the deduction on Schedule CProfit or Loss From Business, whether using the simplified or actual expense method.

If the taxpayer is an employee, then additional rules apply to claim the deduction. For example, in addition to the above tests, the business use must also be for the employer’s convenience.  By example: a “work from home” arrangement.

Tax Fact 2: Standard mileage rate. Beginning in 2013, the standard mileage rate for the cost of operating a car, van, pickup, or panel truck for each mile of business use is 56.5 cents per mile.

Tax Fact 3: Additional Medicare Tax. Beginning in 2013, a 0.9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than:

  • $125,000 if married filing separately,
  • $250,000 if married filing jointly, or
  • $200,000 if single, head of household, or qualifying widow(er) with dependent child.

Medicare wages and self-employment income are combined to determine if a taxpayer’s income exceeds the threshold. RRTA compensation should be separately compared to the threshold.

tax-facts-online_medium

Due to a number of recent changes in the law, taxpayers are currently facing many questions connected to important issues such as healthcare, home office use, capital gains, investments, and whether an individual is considered an employee or a contractor. Financial advisors are continually looking for updated tax information that can help them provide the right answers to the right people at the right time. This brand-new resource provides fast, clear, and authoritative answers to pressing questions, and it does so in the convenient, timesaving, Q&A format for which Tax Facts is famous.

“Our brand-new Tax Facts title is exciting in many ways,” says Rick Kravitz, Vice President & Managing Director of Summit Professional Network’s Professional Publishing Division. “First of all, it fills a huge gap in the resources available to today’s advisors. Small business is a big market, and this book enables advisors to get up-and-running right away, with proven guidance that will help them serve their clients’ needs. Secondly, it addresses the biggest questions facing all taxpayers and provides absolutely reliable answers that help advisors solve today’s biggest problems with confidence.”

Robert Bloink, Esq., LL.M., and William H. Byrnes, Esq., LL.M., CWM®—are delivering real-life guidance based on decades of experience.  The authors’ knowledge and experience in tax law and practice provides the expert guidance for National Underwriter to once again deliver a valuable resource for the financial advising community,” added Rick Kravitz.

Anyone interested can try Tax Facts on Individuals & Small Business, risk-free for 30 days, with a 100% guarantee of complete satisfaction.  For more information, please go to www.nationalunderwriter.com/TaxFactsIndividuals or call 1-800-543-0874.

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

Master Limited Partnerships’ (MLPs)

Posted by William Byrnes on March 20, 2014


By Theron West and William Byrnes.

Why Are Wealth Managers Interested In MLPs?

According to the National Association of Publicly Traded Partnerships, Master Limited Partnerships (“MLPs”) have reached a market capital of $400 billion, with over 100 MLPs traded on major exchanges.  Generally established as LLCs with advantageous partnership flow through tax treatment, MLPs present attractive return vehicles to attract long term capital to the energy extraction, energy transportation (“midstream”), and most recent, energy distribution (“downstream”), markets.

MLPs have offered profitable vehicles for “midstream” businesses, that is, businesses that own assets which focus primarily on the transportation of natural resources like natural gas or crude oil.  One reason that midstream assets have been so profitable is that the pipelines and ships act as toll roads for the natural resources.  By owning these midstream assets many MLPs can avoid the volatility of the oil and gas markets directly by charging a fixed price for the units shipped.  However, in recent years many MLPs have entered into the “downstream” asset business, that is, the refining, processing or marketing of natural resources.

What is an MLP?

At the most basic level, the MLP is a type of publicly traded entity that is taxed as a partnership, but publicly traded on a national securities market in the same manner as corporate stock. M any investors are attracted to invest in MLPs because of this type of security’s high yield offer of return.  MLPs entice investors by contractually agreeing to distribute quarterly all available cash.

How is an MLP Taxed?

IRC Section 7704 provides that a publicly traded partnership will be taxed as a corporation unless the partnership meets certain gross income requirements.  A partnership satisfies the gross income requirements when at least 90 percent of the partnership’s gross income is “qualified income.”  Some forms of qualified income include interest, dividends, real property rents, income and gains derived from the exploration, development, mining or production, processing, refining, transportation (pipelines, ships, trucks), or the marketing of any mineral or natural resource.

Mutual Funds Investors?

IRC Section 851 was amended by the American Jobs Creation Act of 2004, and now provides that a RIC may include “net income derived from an interest in a qualified publicly traded partnership” in calculating its 90 percent income requirement.  Essentially, this amendment provided mutual funds the ability to diversify their portfolios because any income derived from the MLP will not affect its status as a RIC.  Still, there are significant limitations imposed on the ability of a mutual fund to invest in MLPs.  A mutual fund is not permitted to invest more than twenty-five percent of its assets in a MLP.  Nor are mutual funds permitted to own more than 10 percent of the interests issued by a MLP.


2014_tf_on_investments-m

 

2014 Tax Facts on Investments provides clear, concise answers to often complex tax questions concerning investments.  Pertinent planning points are provided throughout.

Organized in a convenient Q&A format to speed you to the information you need, 2014 Tax Facts on Investments delivers the latest guidance on:

tax-facts-online_medium

  • Mutual Funds, Unit Trusts, REITs
  • Incentive Stock Options
  • Options & Futures
  • Real Estate
  • Stocks, Bonds
  • Oil & Gas
  • Precious Metals & Collectibles
  • And much more!

Key updates for 2014:

  • Important federal income and estate tax developments impacting investments, including changes from the American Taxpayer Relief Act of 2012
  • Expanded coverage of Reverse Mortgages
  • Expanded coverage of Real Estate Investment Trusts (REITs)
  • More than 30 new Planning Points, written by practitioners for practitioners, in the following areas:
    • Limitations on Loss Deductions
    • Charitable Gifts
    • Reverse Mortgages
    • Deduction of Interest and Expenses
    • REITs

The company also points out that the expert authors—Robert Bloink, Esq., LL.M., and William H. Byrnes, Esq., LL.M., CWM®—are delivering real-life guidance based on decades of experience.

The authors’ knowledge and experience in tax law and practice provides the expert guidance for National Underwriter to once again deliver a valuable resource for the financial advising community,” added Kravitz.

 

 

Posted in Wealth Management | Tagged: , , , | 1 Comment »

The National Underwriter Company Publishes Tax Facts on Individuals & Small Business

Posted by William Byrnes on February 4, 2014


Tax and financial advisors will now have a new tool for helping individuals and small businesses navigate today’s toughest tax questions

NEW YORK, /PRNewswire/ — In order to aid professionals faced with complicated, confusing tax questions, National Underwriter has released the newest addition to its highly popular Tax Facts library, Tax Facts on Individuals & Small Business, an essential tax reference for financial advisors & planners, insurance professionals, CPAs, attorneys, and other practitioners advising small businesses and individuals.

For more than half a century, Tax Facts has been an essential resource designed to meet the real-world tax-guidance needs of professionals in both the insurance and investment industries.

2014_tf_on_individuals_small_businesses-m_1Due to a number of recent changes in the law, taxpayers are currently facing many questions connected to important issues such as healthcare, home office use, capital gains, investments, and whether an individual is considered an employee or a contractor. Financial advisors are continually looking for updated tax information that can help them provide the right answers to the right people at the right time. This brand-new resource provides fast, clear, and authoritative answers to pressing questions, and it does so in the convenient, timesaving, Q&A format for which Tax Facts is famous.

“Our brand-new Tax Facts title is exciting in many ways,” says Rick Kravitz, Vice President & Managing Director of Summit Professional Network’s Professional Publishing Division. “First of all, it fills a huge gap in the resources available to today’s advisors. Small business is a big market, and this book enables advisors to get up-and-running right away, with proven guidance that will help them serve their clients’ needs. Secondly, it addresses the biggest questions facing all taxpayers and provides absolutely reliable answers that help advisors solve today’s biggest problems with confidence.”

The company also points out that the expert authors—Robert Bloink, Esq., LL.M., and William H. Byrnes, Esq., LL.M., CWM®—are delivering real-life guidance based on decades of experience.

“The authors’ knowledge and experience in tax law and practice provides the expert guidance for National Underwriter to once again deliver a valuable resource for the financial advising community,” added Kravitz.tax-facts-online_medium

Anyone interested can try Tax Facts on Individuals & Small Business, risk-free for 30 days, with a 100% guarantee of complete satisfaction.  For more information, please go to www.nationalunderwriter.com/TaxFactsIndividuals or call 1-800-543-0874.

ABOUT NATIONAL UNDERWRITER
For over 110 years, National Underwriter has been the first in line with the targeted tax, insurance, and financial planning information you need to make critical business decisions. With respected resources available in print, online, and in eBook formats, National Underwriter remains at the forefront of the evolving insurance industry, delivering the thorough and easy-to-use resources you rely on for success. National Underwriter is a Summit Professional Network.

ABOUT SUMMIT PROFESSIONAL NETWORKS
Summit Professional Networks supports the growth and vitality of the insurancefinancial services and legalcommunities by arming professionals with the knowledge and education they need to succeed at every stage of their careers. We provide face-to-face and digital events, websites, mobile sites and apps, online information services, and magazines giving professionals multi-platform access to our critical resources, including Professional Development; Education & Certification; Prospecting & Data Tools; Industry News & Analysis; Reference Tools and Services; and Community Networking Opportunities.

Using all of our resources across each community we serve, we deliver measurable ROI for our sponsors through a range of turnkey services, including Research, Content Development, Integrated Media, Creative & Design, and Lead Generation.

For more information, go to http://www.summitprofessionalnetworks.com/.

Press Contact:
Marcia Mermelstein
Summit Professional Networks
201-526-2340
mmermelstein@SummitProNets.com

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

Assoc. Dean Byrnes’ Book “Tax Facts on Individuals and Small Business” Published | Thomas Jefferson School of Law

Posted by William Byrnes on December 30, 2013


Read about > Assoc. Dean Byrnes’ Book “Tax Facts on Individuals and Small Business” Published | Thomas Jefferson School of Law <

Posted in book | Tagged: | Leave a Comment »

William Byrnes author of 2 tax titles published September 2013

Posted by William Byrnes on October 21, 2013


IMG_1962

Summit Professional Network’s National Underwriter published two books authored by Associate Dean William Byrnes and Robert Bloink: 2014 Tax Facts on Investments and 2014 Tax Facts on Insurance & Employee Benefits

William Byrnes explained National Underwriter Company’s place in the market: “National Underwriter has been the leading publisher for over 110 years to the insurance industry.  Tax Facts was first published over 60 years ago and has become in the words of Michael E. Kitces, Director of Financial Planning of Pinnacle Advisory Group:

“…  THE benchmark standard that all other resources are measured by, for financial planners that might need to look up a question about any kind of tax-related issue involving a client. The Tax Facts series sits on a bookshelf right next to my desk for easy and regular access, and only leaves when I replace it with each year’s update!”  (source: http://pro.nuco.com/Pages/AboutUs.aspx)

William Byrnes added “Tax Facts has built strong a subscriber base of over 20,000 financial planning professionals.  I think financial planning professionals relate to the approach of contextualizing client problems in a Question – Answer format.  Clients don’t come with neatly packaged issues, but instead want to tell their stories and ask questions.  Thus, Tax Facts takes that approach, by example leveraging case studies and typical client questions in the expanding online version.”

William Byrnes continued “Robert Bloink’s experience as a former IRS Counsel and national insurance markets advisor combines well with my big 4 and publication background.”

When asked “What is new about the 2014 edition?” Robert Bloink replied “We have included a new section on cross border employment and estate tax issues, captive insurance and alternative risk transfer, reverse mortgages, DOMA, Affordable Care Act, and REITs as well as expanding coverage of annuities, structured settlements, retirement planning and deferred compensation.”

Alexis Long worked with Thomas Jefferson joint degree juris doctorate and LLM alumnus, Marcus Threats, on the REIT Q&A section which sprung from his senior writing project.  Mr. Threats said that “I obtained a legal education to address challenges that I had experienced in the property investments markets.  While the opportunity for a dual degree at Thomas Jefferson attracted me to the law school, the authorship with a renown professional publisher has really made my Thomas Jefferson education stand out.”

William Byrnes interjected: “This Thursday Adjunct Professor Alexis Long begins the next Publications course via the online LLM and interested students should contact her or myself.  We are already planning the 2014 year and about to complete our JD and LLM publication teams.”

William Byrnes continued: “By the way, in November Robert and I expect to announce the publication of our third Tax Facts title addressing entrepreneur’s income tax and small business tax issues and hope it gains market traction in line with these two titles.”

Posted in book, Estate Tax, Retirement Planning, Taxation, Wealth Management | Tagged: , , , , | Leave a Comment »

FREE SHIPPING on any purchase through 06/30/2013 at NationalUnderwriter – SHOP NOW!

Posted by William Byrnes on June 24, 2013


Readers stay updated and informed with good ol’ fashioned BOOKS that SHIP FREE this week only, Monday, June 24th – Sunday, June 30th at NationalUnderwriter!

Check out my Tax Facts series (banners on the left and right column of my blog) and for free shipping click below….

FREE SHIPPING on any purchase through 06/30/2013 at NationalUnderwriter – SHOP NOW!

2013_tf_on_investments_cover-m_2

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

 
%d bloggers like this: