The IRS recently issued a Chief Counsel Memorandum clarifying when a family member of a 2% shareholder in an S corporation is entitled to a deduction under Section 162(l) of the Internal Revenue Code (the “Code”) for health plan insurance premiums paid for coverage provided to the family member by the S corporation. Chief Counsel …
IRS Expands Self-Correction Procedures for Retirement Plans
Certain qualified retirement plan errors are now easier to fix under the new expanded IRS self-correction procedures. On April 19, 2019, the IRS released the revised Employee Plans Compliance Resolution System (“EPCRS”) under Revenue Procedure 2019-9. EPCRS allows employers of all sizes to identify and correct retirement plan errors under the Self-Correction Program (“SCP”), Voluntary …
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Are You My Partner?
Like the poor little bird in the Dr. Seuss book that struggled to identify its mother, it can sometimes prove difficult for partners in a partnership to identify their partners for federal income tax purposes. Partnerships for tax purposes include general partnerships, limited partnerships and limited liability companies taxed as partnerships. The federal income tax …
IRS Announces Expanded Penalty Waiver for Individuals with Underpayment of 2018 Estimated Income Taxes
With the 2018 deadline for filing of individual income tax returns just around the corner, taxpayers should be aware of the recent announcement by the Internal Revenue Service (IRS) of expanded relief from penalties for individuals whose 2018 federal income tax withholding and estimated tax payments fell short of their tax liability for the year. …
New Tax Bill Introduced to Improve IRS and Taxpayer Protections
On March 28, 2019, U.S. Senate Finance Committee Chairman Chuck Grassley (R-IA) and Senator Ron Wyden (D-OR) introduced new tax legislation referred to as the Taxpayer First Act of 2019. This legislation is largely aimed at improving and modernizing the IRS as well providing taxpayers with greater protections. Highlights of the proposed bipartisan legislation include: Creating …
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Don’t Believe Everything You Hear – You Can Terminate Your 401(K) Safe Harbor Match Formula Mid-Year (Usually)
I have recently had two separate employers tell me that they wanted to stop making safe harbor matching contributions to participants in their 401(k) retirement plans in the middle of a plan year. The employers had very different reasons for wanting to eliminate their safe harbor match mid-year, but they had identical stories about what …
Tax Tip: Generation-Skipping Transfer Trusts
Generation-Skipping Transfer (GST) trusts have long been a popular estate tax planning tool used to defer transfer tax to a future generation. While the estate tax exemption is at a historical high, the GST tax exempt status of existing trusts is still important when planning for a family’s overall tax situation. Trusts established by a …
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IRS Issues New Form For Reporting Non-Deductible Fines and Penalties
Internal Revenue Code Section 162, as amended by the 2017 Tax Cuts and Jobs Act (TCJA), provides that no deduction is allowed for any amount paid to, or at the direction of, a governmental entity in relation to the violation of any law. A corresponding obligation to report the receipt or imposition of such “fines …
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2018 Gift Tax Returns
If you made gifts in 2018 now is the time to begin thinking about filing a gift tax return. If you made gifts in 2018 in excess of the gift tax annual exclusion amount ($15,000 per donee in 2018, or $30,000 if a husband and wife elect to split gifts and a gift tax return …
New IRA Technical Advice Memorandum Suggests There May Not Always Be Such a Things as a Free Lunch for Employees
For many years, the IRS has looked the other way when employers have provided their employees with free meals. A new Technical Advice Memorandum (“TAM”) suggests otherwise, in ultimately holding that employer-provided meals were not excludible from income except in limited situations. In 2014, the Department of Treasury released its priority guidance plan, which raised the …