The PFAS Roadmap: Pathway to Environmental Justice

In October 2021, the United States Environmental Protection Agency (USEPA) issued its PFAS Roadmap, establishing a comprehensive, three-year plan to address the potential risks posed by this large class of manmade compounds, often referred to as “forever chemicals.” The Roadmap takes a “whole of Agency” approach to address the risks of PFAS, outlining a wide range of measures to be taken under the authority of multiple statutes, including the Clean Water Act (CWA), Safe Drinking Water Act (SDWA), Toxic Substances Control Act (TSCA), Resource Conservation and Recovery Act (RCRA), and Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). In outlining the measures to be taken, the Roadmap also evinces a commitment to promoting and implementing environmental justice (E.J.) principles, and ensuring that disparate impacts to E.J. communities are addressed.

From inception, the Biden administration has signaled its intention to prioritize E.J. concerns in pursuing its environmental agenda. On January 27, 2021, just one week after taking office, President Biden signed Executive Order (E.O.) 14008, which, in addition to addressing climate change and clean energy matters, set forth broad E.J. objectives for the administration, declaring:

Agencies shall make achieving environmental justice part of their missions by developing programs, policies, and activities to address the disproportionately high and adverse human health, environmental, climate-related and other cumulative impacts on disadvantaged communities, as well as the accompanying economic challenges of such impacts. It is therefore the policy of my Administration to secure environmental justice and spur economic opportunity for disadvantaged communities that have been historically marginalized and overburdened by pollution and underinvestment in housing, transportation, water and wastewater infrastructure, and health care.

(E.O. 14008, Section 219.)

Building upon the objectives outlined in the E.O., the Roadmap likewise prioritizes protection of disadvantaged communities as a basic tenet of its approach, noting that many known and likely sources of PFAS contamination (including military bases, airports, industrial facilities, and waste management and disposal sites) are located near low-income communities and communities of color. E.J. concerns are to be considered in pursuing each of the goals outlined in the Roadmap, which fall into three broad categories: 1) Research; 2) Restrict; and 3) Remediate, through the establishment of specific E.J. objectives.

The “Research” goal is, “Invest in research, development, and innovation to increase understanding of PFAS exposures and toxicities, human health and ecological effects, and effective interventions that incorporate the best available science.” The corresponding E.J. objective is “Conduct research to understand how PFAS contribute to the cumulative burden of pollution in communities with environmental justice concerns.”

The “Restrict” goal is, “Pursue a comprehensive approach to proactively prevent PFAS from entering air, land, and water at levels that can adversely impact human health and the environment.”  The E.J. objectives for this goal include, “Prevent or minimize PFAS discharges and emissions in all communities, regardless of income, race, or language barriers.”

The “Remediate” goal is to “Broaden and accelerate the cleanup of PFAS contamination to protect human health and ecological systems.” Two objectives highlighting E.J. concerns are: 1) “Help ensure that communities impacted by PFAS receive resources and assistance to address contamination, regardless of income, race, or language barriers”; and 2) “Accelerate the deployment of treatment, remediation, destruction, disposal, and mitigation technologies for PFAS, and ensure that disposal and destruction activities do not create new pollution problems in communities with environmental justice concerns.”

To further these E.J. objectives, the Roadmap calls for a cross-program effort to engage with affected communities.  “EPA will meet with affected communities in each EPA Region to hear how PFAS contamination impacts their lives and livelihoods.” Knowledge gained from these community engagements will inform EPA’s implementation of all the other actions called for in the Roadmap.

In addition to the cross-program effort, the actions by the media-specific offices to implement the Roadmap will likewise include E.J.-focused efforts. The Office of Water anticipates addressing E.J. matters in implementing the proposed Fifth Unregulated Contaminant Monitoring Rule (UCMR 5) under the SDWA, gathering data on 29 PFAS from a significantly expanded number of drinking water systems to improve EPA’s ability to conduct contamination assessments, “including analyses of potential E.J. impacts.” Similarly, the air program would use tools such as EJSCREEN to determine whether PFAS air pollution disproportionately affects E.J. communities. Likewise, the Office of Research and Development will focus on characterizing cumulative exposures to assess impacts on environmental justice communities.

In preparing the PFAS Roadmap, EPA has made a conscious effort to ensure that E.J. considerations are woven directly into the plan’s DNA, and should be expected at each stage of implementation.

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About the Author

Kevin Desharnais, an environmental litigator and counselor with over two decades of experience, practices out of the firm’s Chicago office. He can be reached at or 312-782-6660, and his biography can be accessed here.

IRS Independent Office of Appeals

When dealing with the Internal Revenue Service during the initial stages of a tax case, whether it involves an audit, collection issue, request for penalty relief, or a proposed plan of resolution such as an Offer In Compromise, taxpayers as well as tax professionals often overlook the right to resolution through the use of the IRS Independent Office of Appeals.  The Office of Appeals is available in most cases to resolve disputes, without litigation, in a way that is fair and impartial to the taxpayer.  The origin of cases reviewed by the Office of Appeals include:

  • Examination Appeals, which involve the review and resolution of general docketed and non-docketed audit cases generated from the IRS audit deficiency determinations.
  • Collection Appeals, which involve the review and resolution of cases involving Collection Due Process, Offers in Compromise, Trust Fund Recovery Penalties, Jeopardy Levies, Collection Appeals Program (CAP), and other such cases in which a taxpayer has been assessed a liability in which they are attempting to amicably resolve.
  • Claim for Refund or Request for Abatement of Penalty Appeals, which involve the review and resolution of cases involving a taxpayer’s claim for a refund of an overpayment of tax or request for an abatement of certain taxes, interest, penalties, fees, or additions to tax.
  • Specialized Examination Programs & Referrals, which involve the review and resolution of a variety of specialized programs such as international issues, estate and gift issues, tax-exempt and governmental entity issues, tax computations, innocent spouse, TEFRA, art appraisal services and penalty appeals.

The Office of Appeals has the independent authority and jurisdiction over most cases it reviews, with the ability to compromise or concede issues that the IRS has previously decided against a taxpayer.  The Office of Appeals ultimately settles, to the satisfaction of the taxpayer, approximately 80% or more of the cases it reviews.  Being aware of the process and procedure involved in this resolution tool, including how to stage a case for the potential for such an appeal while it is under audit or in its initial investigation stage and how to present a case to the Office of Appeals once an appeal is elected, is key to a favorably and cost saving resolution in most cases.

Prior to joining Dickinson Wright, James Mauro served as legal counsel for the IRS, as a Senior Tax Attorney with the Office of Chief Counsel, and as a Special Assistant United States Attorney with the Department of Justice, where he developed an expertise in tax appeals, audits, collections, and litigation.  Since moving into the private sector and practicing law at Dickinson Wright, his unique expertise and extensive experience has proved to be invaluable in assisting individuals, small businesses, and major corporations in such cases.  You may contact him at 517-487-4701 or for more information or assistance regarding tax cases that involve the IRS.

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About the Author:

James Mauro is a Member with Dickinson Wright’s Tax Group. He can be reached at 517-487-4701 or, and his biography can be accessed here.

Bill C-208: Intergenerational Business Transfers

On June 29, 2021, Bill C-208 was granted Royal Assent and became law in Canada.  Bill C-208 amended the Income Tax Act (Canada) (the “Act”) to provide tax relief to families wishing to transfer shares of small business corporations, family farms, or fishing corporations to the next generation: their children and grandchildren.

Ordinarily, the Act provides that sales of small business corporation shares result in a capital gain, of which 50% is a taxable capital gain and included in the income of the seller and taxed at ordinary marginal rates.  Accordingly, a corporate business owner may seek to sell his or her shares of a corporation and realize a capital gain. But, before the introduction of Bill C-208, when a parent wished to sell his or her shares of a business to a family member’s corporation (i.e., a non-arm’s length child or grandchild’s holding company) what would normally be a capital gain was recharacterized as a dividend, and taxed at higher dividend tax rates, due to the application of an anti-avoidance rule in the Act.  Depending on the province in Canada, this resulted in an additional tax burden of over 20%.

Before the introduction of Bill C-208, the alternatives available for parents were a third-party (or “arm’s length sale”), or a disposition of the business assets directly to the child or grandchild; not always an acceptable option for a parent wishing to transition his or her business to a child or grandchild.

Bill C-208 attempts to exempt certain intergenerational transfers from the anti-avoidance rule described above by allowing for sales of shares of a small business corporation, family farm, or fishing corporation, where certain conditions are met.  In order for a parent to receive capital gains treatment on his or her sales of shares to a child or grandchild’s corporation, rather than have those proceeds recharacterized as dividends, the shares of the small business corporation must qualify as a “Qualified Small Business Corporation,” a family farm or fishing corporation.  A proper and independent valuation of the corporation must be undertaken in advance of the sale, and the corporation purchasing the shares must be controlled by the parent’s child(ren) or grandchild(ren), and must not dispose of the shares within 60 months of acquiring them (for any reason other than death).

In a press release earlier this summer, the Department of Finance acknowledged that Bill C-208 is law and indicated that legislative amendments would be forthcoming to make sure that provisions of the Act facilitate genuine intergenerational transfers and are not used instead for “surplus stripping” or artificial tax planning.  These amendments will be brought forward for consultation and, once completed, will apply either November 1, 2021 or the date of publication of the final draft of the legislation, whichever is later.

If you have any questions or would like further information, please contact Jennifer C. Leve in the Toronto, Canada office of Dickinson Wright at 416-777-4043.

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About the Author:

Jennifer Leve is a Partner with Dickinson Wright’s Tax Group. She can be reached at 416-777-4043 or, and her biography can be accessed here.

The SALT Cap and State Taxation of Pass-Through Entities

Among the many significant changes in the 2017 Tax Cut and Jobs Act (TCJA), individual taxpayers’ deductions for state and local taxes (SALT deductions) on federal Form 1040 Schedule A were capped at $10,000 ($5,000 for married taxpayers filing separately).  The “SALT cap” results in reduced itemized tax deductions for individual taxpayers, particularly impacting homeowners paying property taxes on their residences and wage and income earners subject to state and local income taxes.

Of course, the expanded “standard deduction” benefitted many taxpayers, but possibly did not produce enough of a net benefit, particularly for taxpayers residing or working in high tax states.

In the aftermath of TCJA, several states immediately began looking at ways that would provide a workaround to avoid the federal return SALT cap limitation.

To date, over a dozen states have changed their tax laws to replace the state income taxation of individuals on their business income (subject to the SALT cap) with a corresponding income tax imposed on pass-through business entities (i.e., partnerships, limited liability companies taxed as partnerships and S corporations), which tax is paid and deducted at the entity level and therefore not subject to the SALT cap.

The Internal Revenue Service effectively sanctioned the workaround, for appropriately designed pass-through entity (PTE) taxes, in IRS Notice 2020-75.

As always, tax laws vary in each state following their specific statutes. Relevant provisions include:

  • Whether the PTE tax in a state is elective (most states) or mandatory (e.g., Connecticut);
  • When the election is made (and whether it may be revoked); and
  • Whether or when estimated PTE taxes must be paid, among other issues.

Most importantly, taxpayers must carefully determine whether the federal after-tax benefit outweighs the specific state PTE tax (a PTE tax might be imposed at the highest income tax marginal rate or deny a partner’s or S shareholder owner’s unreimbursed business expenses).

Finally, most states provide that their PTE tax is not available when the federal SALT cap sunsets under the TCJA in 2025 or if the federal tax laws are changed before 2026, which may increasingly become a possibility, further complicating business owners’ tax planning and compliance.

For more information, please contact Tom Hammerschmidt in the firm’s Ann Arbor office at 734-623-1602, or any of the firm’s tax specialists located in our Dickinson Wright U.S. offices.

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About the Author:

Tom Hammerschmidt is a Member with Dickinson Wright’s Tax Group. He can be reached at 734-623-1602 or, and his biography can be accessed here.

Coronavirus Tax Relief: Treatment of Amounts Paid to Section 170(C) Organizations Under Employer Leave-Based Donation Programs to Aid Victims of the COVID-19 Pandemic

The Department of the Treasury and the Internal Revenue Service have extended the treatment provided in Notice 2020-46 to leave-based donation programs and cash payments in connection with such programs that are made to section 170(c) organizations after December 31, 2020 and before January 1, 2022. See Notice 2021-42.

Under Notice 2020-46, as modified by Notice 2021-42, where employers have adopted leave-based donation programs, employees can elect to forgo vacation, sick, or personal leave in exchange for cash payments that the employer makes to charitable organizations described in section 170(c) of the Code (section 170(c) organizations). Cash payments an employer makes to section 170(c) organizations in exchange for vacation, sick, or personal leave that its employees elect to forgo will not be treated as compensation to the employees or otherwise be included in the gross income of the employees if the payments are:

  1. made to the section 170(c) organizations for the relief of victims of the COVID-19 pandemic; and
  2. paid to the section 170(c) organizations before January 1, 2022.

Employees electing to forgo leave will not be treated as having constructively received gross income or wages. The amount of cash payments to which this guidance applies should not be included in Box 1, 3 (if applicable), or 5 of the Form W-2. Furthermore, employees may not claim a charitable contribution deduction under section 170 concerning the value of forgone leave. Only the employer may deduct these cash payments under section 170 or section 162 rules, if the employer otherwise meets the respective requirements of either section.

If you have questions regarding the tax treatment of leave-based donation programs, please contact Emily L. Burdick at 313-223-3127, or any one of the attorneys in our Tax Group.

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Tax Credits Available for Employers Granting Paid Leave Related to COVID-19 Vaccinations

The American Rescue Plan Act of 2021 (ARP) allows certain businesses (generally, employers with fewer than 500 employees and non-federal governmental employers) to claim refundable tax credits as a reimbursement for the cost of providing paid sick and family leave from April 1, 2021 through September 30, 2021 to their employees due to COVID-19, including leave taken by employees to receive or recover from COVID-19 vaccinations. Self-employed individuals are eligible for similar tax credits.

The paid leave credits under the ARP are tax credits against the employer’s share of the Medicare tax and are refundable (allowing the employer to reimbursement of the full amount of the credits if it exceeds the employer’s share of the Medicare tax).

The credit is available to employers who qualify and voluntarily provide employees with Emergency Paid Sick Leave and/or Expanded Family, and Medical Leave through September 30, 2021. Employers must be aware of the new requirements under the ARP to qualify for the extended credit:

  • Employers may voluntarily provide a new bank of up to 80 hours of Emergency Paid Sick Leave, for which the tax credit will apply starting April 1.
  • Employers must expand their list of reasons for leave to include getting a COVID-19 vaccine, recovering from adverse reactions to the vaccine, and awaiting the results of a COVID diagnosis or test after having close contact with a person with COVID-19 or at the employer’s request.
  • The first ten days of Expanded Family and Medical Leave must be paid.
  • Employers who choose to provide the qualifying paid leave and want to qualify for the tax credit are prohibited from discriminating in favor of highly compensated employees, full-time employees, or based on employment tenure.

The tax credit for paid sick leave wages is equal to the sick leave wages paid for COVID-19 related reasons for up to two weeks (80 hours), limited to $511 per day and $5,110 in the aggregate, at 100 percent of the employee’s regular rate of pay. The tax credit for paid family leave wages is equal to the family leave wages paid for up to twelve weeks, limited to $200 per day and $12,000 in the aggregate, at two-thirds of the employee’s regular pay rate. Allocable health plan expenses and contributions for certain collectively bargained benefits, as well as the employer’s share of social security and Medicare taxes paid on the wages (up to the respective daily and total caps) increase the amount of the tax credit.

Employers can claim the credit on Form 941. Furthermore, employers may anticipate claiming the credits on Form 941 by retaining the federal employment taxes that they otherwise would have deposited, including federal income tax withheld from employees, the employees’ share of social security and Medicare taxes, and the eligible employer’s share of social security and Medicare taxes for all employees up to the amount of credit for which they are eligible. An employer may request an advance of the credits by filing Form 7200 if the employer does not have enough federal employment taxes set aside for deposit to cover amounts provided as paid sick and family leave wages.

For a specific explanation on how to calculate the credit, please see the instructions for Form 941.

If you have any questions regarding these credits, please contact Emily L. Burdick at 313-223-3127, or any one of the attorneys in our Tax Group.


Release of the 2021 Canadian Budget

On April 19, 2021, Canada’s Deputy Prime Minister and Minister of Finance, Chrystia Freeland, released the first official budget in the past two years, titled, Federal Budget 2021: A Recovery Plan for Jobs, Growth, and Resilience (the “Budget”).  The Budget proposed over $100 billion in spending, and, among the more significant measures, the Budget proposes to extend the Canada Emergency Wage Subsidy (CEWS), the Canada Emergency Rent Subsidy (CERS), and Lockdown Support through September, 2021.  The Budget also introduces a new Canada Recovery Hiring Program.

In summary, the Budget:

  • Puts limitations on interest deductibility by corporations, trusts, and partnerships to a percentage of tax-basis EBITDA;
  • Enhances Canada’s mandatory reportable transaction disclosure rules (subject to a public consultation) and introduces a new “notifiable transaction” regime;
  • Proposes to consult on the transfer pricing rules;
  • Imposes new rules to target hybrid mismatch arrangements;
  • Reduces corporate tax rates on eligible zero-emission technology manufacturing and processing income;
  • Amends the capital cost allowance system by providing for temporary immediate expensing of up to $1.5 million per taxation year of capital property acquisitions to Canadian-controlled private corporations (CCPCs);
  • Provides further details of a proposed digital services tax, to be effective January, 2022;
  • Proposes amendments to the measures announced in the Fall 2020 Economic Statement regarding the new GST/HST rules targeting e-commerce coming into effect July 1, 2021;
  • Proposes a new tax on luxury items (namely, automobiles, planes, and boats) over a certain price threshold; and
  • Proposes a new tax on the unproductive use of Canadian housing owned by foreigners.

If you have any questions regarding the above, please contact Jennifer Leve in our Toronto office at 416-777-4043.

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Jennifer Leve (Partner, Toronto) is a member of Dickinson Wright’s Tax practice group, focusing her practice primarily on personal and corporate tax planning, corporate reorganizations, wealth management, and trust and estate planning matters. She can be reached at 416-777-4043 or

Tax Treatment of Unemployment Benefits

The federal American Rescue Plan Act signed by President Biden in March 2021 provides that up to $10,200 of state unemployment benefits received by individuals during 2020 are excluded from gross income. Taxpayers are eligible for the exclusion only if federal adjusted gross income is less than $150,000.

The mid-March legislation created some initial confusion regarding filing 2020 individual tax returns, particularly for those individuals that had previously filed their returns. The IRS ultimately advised taxpayers that had previously filed a return that an amended return was not required, rather, the IRS will process previously filed returns and issue tax refunds resulting from the exclusion from gross income.

Those individuals who still need to file their 2020 tax returns by the extended May 17, 2021 due date should report their unemployment benefits on Schedule 1, line 7 of Form 1040, and claim the excludable benefits, up to $10,200, as a subtraction on Schedule 1, line 8.

The Michigan Department of Treasury recently issued guidance for individuals filing Michigan tax returns, essentially following federal tax law. The Department has not yet issued guidance for individuals that already filed before the new law. Michigan is coordinating with the IRS to determine whether a Michigan return can be processed and a refund issued without the need for an amended Michigan return.

The laws of other states may vary on the treatment of these issues.

For more information, please contact Tom Hammerschmidt in the Firm’s Ann Arbor office at (734) 623-1602 or any of the Firm’s tax specialists located in our Dickinson Wright U.S. offices.

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Tom Hammerschmidt (Member, Ann Arbor) is a certified public accountant and member in the firm’s Taxation practice group. You can access his biography here, and contact him via phone or email at

May I Have a Deduction, Please?

Recently released final regulations under section 162(f) of the Internal Revenue Code of 1986, as amended (the “Code”), make it a necessity to properly draft settlement agreements and court orders between a taxpayer and the government (federal, state or local or any of their agencies) to put the taxpayer in the best tax position possible.  Code Section 162(f) was amended by the Tax Cuts and Jobs Act in 2017 to limit the deductibility of payments made to the government with respect to violations of law or the investigation or inquiry by the government into a potential violation of law by a taxpayer (“Government Payments”).

Government Payments may consist of fines, penalties, restitution, remediation and other damages paid as a result of SEC, EPA, and Stark and False Claims Act violations just to name a few.  The general rule is that no portion of a Government Payment may be deducted by a taxpayer.  Fortunately, there is the proverbial exception.  Government Payments made for restitution, remediation or to bring a taxpayer into compliance with the law may be deducted so long as the taxpayer properly “identifies” and “establishes” the amount paid for one of the aforementioned items.  The recently released final regulations under Code Section 162(f) address the procedures a taxpayer must follow to satisfy the identification and establishment requirements for deductibility and settlement agreements, and court orders play an important role in those procedural requirements.  Absent proper identification and establishment in settlement documentation, no portion of a Government Payment will be deductible by a taxpayer.

If you need help understanding the deductibility requirements with respect to Government Payments, please contact Emily Dorisio or any one of the attorneys in our Tax Group.


Emily Dorisio is Of Counsel in Dickinson Wright’s Lexington office. She can be reached at 859-899-8714 or

Canadian Fall Economic Statement Regarding Tax Treatment of Employee Stock Options

In the 2019 federal budget, the Canadian federal government announced changes to the taxation of employee stock options. On November 30, 2020, in its Fall Economic Statement, the federal government announced it was moving forward with plans to amend the tax treatment of employee stock options and released further information. Beginning July 1, 2021, stock options granted on or after this date will be impacted by these new rules.

Under the current rules, when an employer (a corporation, either Canadian or foreign, or a mutual fund trust) grants an employee a stock option, which the employee exercises, a taxable employment benefit will arise equal to the difference between the exercise price and the fair market value (or market price) of the shares on the date of the acquisition of the options. Where certain conditions are met, employees are entitled to a 50 percent deduction against the taxable employment benefit. In effect, only half the benefit is included in income of the employee and subject to tax at marginal rates. While normally the benefit (either 100 percent or 50 percent of the taxable employment benefit, if qualifying) is included in the employee’s income on the date of exercising the stock options, if the employee exercises a stock option of a Canadian-controlled private corporation (“CCPC”), the taxable employment benefit is deferred until the employee disposes of the shares acquired on exercising the options.

For an employee who is granted stock options from an employer impacted by the new rules, a $200,000 annual vesting limit (based on the value of an option’s underlying shares at the date of grant) is imposed for options that can qualify for the 50 percent employee stock option deduction. The amount of the benefit arising from the exercise of the stock options over the $200,000 vesting limit will not be entitled to the 50 percent deduction and will be fully included in income.

For employee stock options in excess of the $200,000 limit, the employer will be entitled to an income tax deduction in respect of the stock option benefit fully included in the employee’s income. An employer may also elect to claim a deduction for stock options below the $200,000 limit but the employee will not be entitled to the 50 percent reduction against the taxable employment benefit in respect of the amount claimed as a deduction by the employer.

Corporations that are CCPCs, or not CCPCs but it, or the consolidated group of which it is part, have annual gross revenues of less than $500 million, are exempt from these new rules. This may include American employer corporations with Canadian employees, so those will existing stock option plans, or those considering the set-up of a new plan, may wish to consult their tax advisors.

If you have any questions or would like further information, please contact Jennifer C. Leve in the Toronto, Canada office of Dickinson Wright at 416-777-4043.