Analysis of the Final Tax Reform Bill – Part II: Changes to Deductions and Exclusions for Employee Meals and Other Fringe Benefits, Changes to Private Retirement Plan Benefits, and New Paid Leave Credit

On December 15, the House-Senate Conference Committee released the joint explanatory statement and final legislative text (the “Final Bill”) resolving differences between the House- and Senate-passed versions of the Tax Cuts and Jobs Act (the “House Bill” and “Senate Bill,” respectively).  The provisions of the Final Bill related to health reform, equity and executive compensation, deductions and exclusions for employee meals and other fringe benefits, private retirement plan benefit, paid leave, and various reporting, withholding, and income sourcing rules, largely track the bill passed by the Senate.  Many of the changes included in the House Bill but not the Senate Bill were dropped from the Final Bill.… Read More

Analysis of the Final Tax Reform Bill – Part I: Changes to Equity and Executive Compensation Rules and Elimination of the ACA’s Individual Mandate

On December 15, the House-Senate Conference Committee released the joint explanatory statement and final legislative text (the “Final Bill”) resolving differences between the House- and Senate-passed versions of the Tax Cuts and Jobs Act (the “House Bill” and “Senate Bill,” respectively).  The provisions of the Final Bill related to health reform, equity and executive compensation, deductions and exclusions for employee meals and other fringe benefits, private retirement plan benefit, paid leave, and various reporting, withholding, and income sourcing rules, largely track the bill passed by the Senate.  Many of the changes included in the House Bill but not the Senate Bill were dropped from the Final Bill.… Read More

IRS Adds Five New FATCA FAQs Addressing QDD, QI, and WP Concerns

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December 13, 2017

The IRS updated its FATCA frequently asked questions to include five new FAQs.  The new FAQs address issues involving qualified intermediaries (QIs) that are or are seeking to become qualified derivatives dealers (QDDs), non-financial foreign entities (NFFEs) seeking to become withholding foreign partnerships (WPs), the period review requirements applicable to QIs that are QDDs, and the independence standard applicable to external reviewers of a QI, WP, or withholding foreign trust (WT).

Three FAQs were added to the “New Applications/Renewals” section, the first two of which address QIs.  In FAQ#17, the IRS clarifies that a QI that is not currently a QDD does not have to wait for its QI agreement to expire before applying for QDD status. … Read More

Employer Withholding Guidance Delayed Pending Tax Reform

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December 8, 2017

The increasingly likely prospect of a tax reform bill being enacted by the end of the year has prompted the IRS to delay annual withholding guidance, according to Scott Mezistrano of the IRS Wage and Investment Division’s Industry Stakeholder Engagement and Strategy Office.  It is expected that any tax reform bill would change tax rates, increase the standard deduction, and eliminate personal exemptions.  These changes will necessitate changes in withholding rates and withholding tables to ensure that employers withhold the appropriate amount of tax from employees’ wages.  Speaking on an IRS payroll industry monthly conference call on December 7, Mezistrano said that the guidance that will be delayed includes Form W‑4 (Employee’s Withholding Allowance Certificate), the withholding tables, Publication 15‑A (Employer’s Supplemental Tax Guide), and Publication 15‑B (Employer’s Tax Guide to Fringe Benefits). … Read More

Fate of Employer Tuition Assistance Programs Hangs in the Balance

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December 8, 2017

On December 2, the Senate passed a version of the Tax Cuts and Jobs Act that differed in key respects from the House bill passed several weeks prior.  Notably, the House bill would eliminate the exclusion of up to $5,250 from an employee’s wages for qualified educational assistance under Code section 127 (discussed here), but the Senate bill would leave the exclusion in place.  While headlines address the more high-profile differences between the bills (e.g., the new corporate tax rate and the repeal of the ACA’s individual mandate), a number of large employers, including a number of our clients, have expressed concern about the fate of tuition assistance programs, as they view it as an important benefit for their employees. … Read More

IRS Proposed Coordination of Partnership Audit Rules with Withholding and Reporting Rules under Chapters 3 and 4

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December 5, 2017

Recently, the IRS proposed regulations addressing how certain international tax rules would operate under the centralized partnership audit regime (“CPAR”), including rules relating to the withholding of tax on foreign persons and withholding of tax to enforce reporting on certain foreign accounts. CPAR was introduced in 2015 to allow for the assessment and collection of tax on audit at the partnership level rather than at the level of the individual partners.  The proposed regulations are designed to coordinate CPAR and the international tax regime, so that tax is collected only once from partnerships that have tax withholding obligations on payments to foreign partners.… Read More

Analysis of the Senate Tax Reform Bill – Part III: New Source Rules and Tax Reporting and Withholding Requirements

Early Saturday morning, the Senate voted 51-49 to approve a modified version of the Tax Cuts and Jobs Act (the “Senate Bill”). The Senate Bill differs from the House bill (discussed in an earlier series of posts here) passed last month in several respects, and a final negotiated bill will need to pass both chambers before the President can sign it into law. Given the difficulty of moving legislation through the Senate, it seems likely that any enacted legislation would likely be similar to the version passed by the Senate.

This post is the third in a series of three posts analyzing provisions of the Senate Bill.… Read More

Analysis of the Senate Tax Reform Bill – Part II: Changes to Deductions and Exclusions for Employee Meals and Other Fringe Benefits, Changes to Private Retirement Plan Benefits, and New Paid Leave Credit

Early Saturday morning, the Senate voted 51-49 to approve a modified version of the Tax Cuts and Jobs Act (the “Senate Bill”). The Senate Bill differs from the House bill (discussed in an earlier series of posts here) passed last month in several respects, and a final negotiated bill will need to pass both chambers before the President can sign it into law. Given the difficulty of moving legislation through the Senate, it seems likely that any enacted legislation would likely be similar to the version passed by the Senate.

This post is the second in a series of three posts analyzing provisions of the Senate Bill.… Read More

Analysis of the Senate Tax Reform Bill – Part I: Elimination of ACA Individual Mandate and Changes to Equity and Executive Compensation Rules

Early Saturday morning, the Senate voted 51-49 to approve a modified version of the Tax Cuts and Jobs Act (the “Senate Bill”). The Senate Bill differs from the House bill (discussed in an earlier series of posts here) passed last month in several respects, and a final negotiated bill will need to pass both chambers before the President can sign it into law. Given the difficulty of moving legislation through the Senate, it seems likely that any enacted legislation would likely be similar to the version passed by the Senate.

This post is the first in a series of three posts analyzing provisions of the Senate Bill.… Read More

First Friday FATCA Update

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December 1, 2017

Since our last monthly FATCA update, the IRS has released the Competent Authority Agreements (CAAs) implementing Intergovernmental Agreements (IGAs) between the United States and the following treaty partners:

  • Greece (Model 1A IGA signed on January 19, 2017); and
  • Saint Kitts and Nevis (Model 1B IGA signed on August 31, 2015).

Under FATCA, IGAs come in two forms: Model 1 or Model 2.  Under a Model 1 IGA, the foreign treaty partner agrees to collect information of U.S. accountholders in foreign financial institutions operating within its jurisdiction and transmit the information to the IRS.  Model 1 IGAs are drafted as either reciprocal (Model 1A) agreements or nonreciprocal (Model 1B) agreements. … Read More

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