Tax Law Insights Blog | Burr & Forman LLP

Cadillac Tax: Delayed and Deductible

Mon, 28 Dec 2015 09:00:01 -0500

Beginning in 2018, certain employers were going to be liable for a 40% federal excise tax on the value of excess benefits provided through their health plan. Health plans providing high cost benefits are referred to as "Cadillac" plans, and the new federal excise tax on high cost plans has come to be known as the "Cadillac tax".

On December 18, 2015, President Obama signed into law the Consolidated Appropriations Act, 2016, H.R. 2029 (the "2016 Appropriations Act"). The 2016 Appropriations Act includes the following three provisions relating to the Cadillac tax:

I. Cadillac Tax ...

Economic Development-Based Alternative Allocation or Apportionment Agreements for Companies Investing in South Carolina

Jeffrey T. Allen — Wed, 23 Dec 2015 09:00:02 -0500

South Carolina offers multi-state companies an alternative method of allocating and apportioning their income as an incentive for planning new facilities or expanding existing facilities in the State. Generally, a company that transacts or conducts business partly within and partly outside South Carolina is subject to income tax based on the portion of its business carried on in the State. The portion of a company's income carried on in South Carolina is determined by allocation and apportionment. The law requires that certain classes of income, less related expenses, be ...

South Carolina Tax Assessments: Think You're in the Clear? Think Again.

Erik P. Doerring — Thu, 17 Dec 2015 09:00:03 -0500

South Carolina generally follows federal law for purposes of the assessment of tax, including time limits on which taxes may be assessed (statutes of limitation). The South Carolina Department of Revenue (SCDOR) generally has 36 months from the date an original return was filed or due to be filed (whichever is later) in which to assess additional taxes. S.C. Code Ann. § 12-54-85(A). An important exception concerns substantial understatements of tax, however.

For federal purposes, an extended 6-year statute of limitations exists for substantial omissions of income - where a ...

Not So Fast! South Carolina's Position on Discharging Sales and Use Taxes in Bankruptcy

Erik P. Doerring — Tue, 15 Dec 2015 09:00:04 -0500

South Carolina imposes a sales and complimentary use tax on the retail sale or use of tangible personal property in the state. The taxes are assessed by the South Carolina Department of Revenue (DOR). Retailers are generally required to collect and remit the sales tax to the DOR, while purchasers are required to directly pay the use tax. There are significant exclusions and exemptions to both taxes. If a business retailer or purchaser does not pay the sales or use tax, the DOR may have the ability to make a "responsible person" assessment of the tax (including penalties and interest ...

Minimize South Carolina Income Taxes by Contributing to a 529 Plan

Jeffrey T. Allen — Wed, 09 Dec 2015 09:00:05 -0500

Federal and South Carolina law provide income tax incentives to make it easier to save for college. Contributions made to a 529 plan (technically known as a "qualified tuition program" or "QTP") may be deductible for South Carolina income tax purposes. Earnings on contributions made to a 529 plan are not subject to federal or South Carolina income tax if they are used for qualified education expenses.

A 529 plan is a plan operated by a state designed to help families set aside funds for future college costs. Each state can establish its own 529 plan and plans differ from state to state. South ...

South Carolina's Investment Tax Credit

Erik P. Doerring — Fri, 04 Dec 2015 09:00:06 -0500

The South Carolina Economic Impact Zone Community Development Act of 1995 established an income tax credit for qualified manufacturing and production facilities. The credit is designed to encourage capital investment in the state through the formation of new businesses and the retention and expansion of existing businesses. Known as the "investment tax credit", the credit was initially limited to businesses making qualified investments in 27 designated counties in South Carolina, but has been expanded statewide.

The credit applies for qualified manufacturing and ...

Health Coverage Includable in "Cadillac Tax" Calculations

Thu, 19 Nov 2015 09:00:07 -0500

Beginning in 2018, certain employers will be liable for a new 40% federal excise tax on the value of excess benefits provided through their health plans. Health plans providing high cost benefits are referred as "Cadillac" plans, and the new federal excise tax on high cost plans has come to be known as the "Cadillac tax".

Under the Cadillac tax, if the aggregate cost of "applicable employer-sponsored coverage" provided to an employee exceeds a statutory dollar limit (revised annually), the excess is subject to a 40% excise tax.

In a prior post, I reviewed who is liable for and who must ...

Net Investment Income Tax: Another Consideration in Tax Planning

George E. Morrison — Thu, 12 Nov 2015 09:00:08 -0500

Internal Revenue Code Sec. 1411, passed by Congress in 2012, introduced a new tax on passive income that went into effect on Jan. 1, 2013, the tax on "net investment income" (NII).

The new tax was created to help pay for health care reforms that were enacted in 2010. The rate is 3.8% of the lower of net investment income or the amount of modified adjusted gross income (MAGI) over specific thresholds. Modified adjusted gross income is adjusted gross income increased by the foreign earned income exclusion (but also adjusted for certain deductions related to the foreign earned income). For ...

South Carolina's Motion Picture Project and Production Facility Credit

Erik P. Doerring — Fri, 06 Nov 2015 09:00:09 -0500

South Carolina provides an income tax credit to a taxpayer who invests in motion picture related projects. Specifically, the state provides a credit equal to 20% of the cash invested by a person in a company that: (1) develops or produces a qualified South Carolina motion picture project or (2) constructs, converts, or equips a motion picture production facility or post-production facility in South Carolina. Key requirements of each credit are:

Motion Picture Project Credit
- The credit is earned when cash only is spent. This credit, when combined with a taxpayer's other South ...

South Carolina's Corporate Headquarters Tax Credit

Erik P. Doerring — Tue, 27 Oct 2015 09:00:10 -0400

South Carolina provides a tax credit to corporations against the state corporate income, or state corporate license fees, equal to 20% of the qualifying costs of establishing a corporate headquarters in South Carolina, or expanding or adding to an existing corporate headquarters. The credit is made up of two parts, the real property costs and the personal property costs. Key Features of the credit are:

A corporation may qualify for only the real property portion of the credit, or may qualify for both the real and personal property portions of the credit.

Any unused credit may be carried ...