Tax Law Insights Blog | Burr & Forman LLP

New Internal Revenue Code Section 199A: The 20% Deduction for "Pass-Through" Businesses

Erik P. Doerring — Sat, 15 Dec 2018 09:00:01 -0500

Aside from corporate tax reductions, one of the most important aspects of the new Tax Cuts and Jobs Act beginning this year is the new 20% deduction for "pass-through" businesses - i.e. businesses that are not corporations. With the corporate tax rate being reduced to a flat 21%, the 20% deduction for other forms of businesses was designed to give a reduction to these businesses approximating the lower corporate tax rate. However, this 20% deduction, found in new Internal Revenue Code § 199A, is saddled with exclusions, phase-outs, technical issues, and uncertainties so that many ...

The New 20% Pass-Through Deduction: Can Real Estate Owners Claim It?

Erik P. Doerring — Sat, 15 Dec 2018 09:00:02 -0500

The new 20% deduction for "pass-through" business owners under the Tax Cuts and Jobs Act is raising many questions from owners of real estate-related businesses. Can these owners qualify for this important deduction, and under what conditions?

For most pass-through business owners (such as owners of LLCs, Subchapter S corporations, and partnerships), the deduction is the lessor of (1) the "combined qualified business income" of the taxpayer, or (2) 20% of the excess of taxable income over the sum of any net capital gain. The term "combined qualified business income" is then defined ...

IRS Releases New Guidance on Voluntary Tax Disclosures

Erik P. Doerring — Fri, 30 Nov 2018 09:00:03 -0500

A bedrock of IRS administrative practice has been the voluntary disclosure. Where an individual or business has not filed tax returns or believes they may have criminal tax exposure for prior actions, IRS procedures have long-sanctioned a form of "criminal tax amnesty" if the taxpayer voluntarily comes forward before being contacted by the IRS, discloses his tax misdeeds, fully cooperates to correct the back tax issues, and then becomes compliant going forward. In exchange for this "voluntary disclosure," while criminal tax prosecution may not be recommended, the taxpayer will ...

New Internal Revenue Code Section 199A: The 20% Deduction for "Pass-Through" Businesses

Erik P. Doerring — Thu, 15 Nov 2018 09:00:04 -0500

Criminal Tax Restitution: Who Can Tell Me What I Owe the IRS?

Erik P. Doerring — Tue, 13 Nov 2018 09:00:05 -0500

Individuals who are the unfortunate subjects of federal criminal tax prosecution face prison terms, probation, fines, restrictions on travel and other punishment. Conviction of felony tax offenses results in certain Constitution rights being lost, such as the right to vote and bear arms.

As part of a conviction for federal criminal tax offenses, an individual will most likely also be sentenced to pay "restitution" to the federal government. Payment of restitution in a criminal tax case is designed to compensate the IRS for the loss caused by the defendant's wrongdoing.

In federal ...

A Taxonomy of Health Wellness Programs - Part II

Fri, 09 Nov 2018 09:00:06 -0500

A health wellness program is broadly defined as any program of health promotion or disease prevention. My recent article entitled "Taxonomy of Health Wellness Programs - Part I" reviewed the classification of health wellness programs (hereinafter referred to as "Wellness Programs") under the Health Insurance Portability and Accountability Act ("HIPAA"). In this article, I am going to review an alternative way of classifying Wellness Programs that is contained in the "2018 Employer Guide: FINDING FIT: IMPLEMENTING WELLNESS PROGRAMS SUCCESSFULLY" (the "Guide").

In February ...

Unpaid Federal Employment Taxes: The Government's Chief Enforcement Priority

Erik P. Doerring — Mon, 29 Oct 2018 09:00:07 -0400

Businesses that have employees must pay wages and salaries to their employees, and the employer must collect federal employee income taxes and the employee's share of social security (FICA) from these wages and salaries, add the employer's "matching share" of FICA, and then deposit these taxes with the IRS. The Employer must file a quarterly return with the IRS (Form 941) reporting all wages and salaries paid, all tax deposits made during the quarter, and pay any balance due with the quarterly return.

The Recession took a heavy toll on businesses throughout the country, with many ...

The New Section 199A 20% Profit Deduction for Pass-Through Businesses: A Case Study: Court Reporters

Erik P. Doerring — Tue, 23 Oct 2018 09:00:08 -0400

Congress enacted the new Section 199A 20% profit deduction for the owners of pass-through businesses, and which include Subchapter S corporations, LLCs, sole proprietorships, and even certain trusts. Section 199A is intended to provide a deduction to owners of these pass-through business entities who do not otherwise benefit from the new 21% flat tax Congress has given to corporations under the new tax law. While Section 199A is intended to benefit these generally smaller types of business entities and their owners, the new tax law is riddled with complexity and exceptions, and so ...

Opportunity Zone Regulations: First Impressions

George E. Morrison — Mon, 22 Oct 2018 09:00:09 -0400

After months of eager anticipation, today the Department of the Treasury released regulations defining and refining certain requirements set forth in the "Opportunity Zone" law.

While the Opportunity Zone statute provided a framework for tax-deferred investments, most projects have been on hold pending the regulatory framework. The regulations released today answer many questions, while others remain unaddressed. According to today's release, more guidance will be forthcoming by the end of the year.

Some highlights of the proposed regulations include:

Substantial ...

South Carolina Department of Revenue Issues Final Guidance for Remote Sellers

Jeffrey T. Allen — Thu, 20 Sep 2018 09:00:10 -0400

The Policy Division of the South Carolina Department of Revenue has issued a final revenue ruling, SC Revenue Ruling #18-14, addressing retailers without a physical presence in South Carolina. The ruling comes on the heels of the United States Supreme Court decision in South Dakota v. Wayfair, Inc., 585 U.S. ___, 138 S. Ct. 2080 (2018), which found that retailers without a physical presence in a state can be required to collect and remit sales and use tax. The Department of Revenue has also posted a series of frequently asked questions to its website.

Prior to issuing SC Revenue Ruling ...