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Welcome to Feeley and Driscoll's tax and business updates. These short articles address current tax planning, tax services, news, and business updates.
Certain C corporations that converted to S corporations within the last 10 years may have a unique opportunity to avoid a tax called the “Built-In Gains” tax or “BIG” by accelerating certain planned asset sales from future years to 2013. This tax is at a 35% tax rate and is based on gains attributed to assets owned as of the end of the corporation’s last year as a C corporation.
This notice is to inform you of changes the IRS is making regarding in the annual election under Section 179 of the Internal Revenue Code (the “Code”), and is often referred to as the “Section 179 election” or the “Code Section 179 election.” For 2013 tax returns the allowable 179 expense election is $500,000. For 2014 the allowable 179 expense election will be reduced to $25,000.This represents a significant decrease in allowable 179 deduction available for you in 2014. This reduction should be taken into consideration for 2013 year-end planning and budgets for the subsequent 2014 year. Please consult your tax advisor regarding your specific situation and how you can plan accordingly.
On September 13, 2013, the IRS released guidance to help answer a number of questions stemming from the recent ruling. Effective September 16, 2013, all couples lawfully married in any US state, the District of Columbia or any foreign country will be treated as married for federal tax purposes. It is important to note this ruling applies only to Federal law and states are free to decide whether or not to recognize same sex marriage. Same Sex couples registered as domestic partnerships, civil unions or similar formal relationships will not be treated as married for federal tax purposes.
This article contains a chart which highlights common types of income and whether or not it is subject to the new 3.8% Medicare tax on Net Investment Income which went into effect as of 1/1/13.
The Massachusetts Legislature, and Governor Patrick repealed the much criticized computer and software services tax, after much criticism from many groups and taxpayers. Those changes were effective July 31, 2013 and have now been repealed retroactively to that date.
The Office of Management and Budget (OMB) has proposed revisions to OMB Circular A-133. OMB Circular A-133 requires institutions of higher education and nonprofit institutions that expend a specific threshold of federal funds to annually undergo a detailed, organization wide audit that complies with the criteria established in Circular A-133. On February 1, 2013, the OMB issued a proposal entitled Reform of Federal Policies Relating to Grants and Cooperative Agreements; Cost Principles and Administrative Requirements (Including Single Audit Act) for comment by the public.
According to the Internal Revenue Service (IRS) rules, a Safe Harbor 401(k) plan requires the plan sponsor/employer to provide notice to employees who are eligible under a qualified Safe Harbor 401(k) plan of their rights, obligations, and benefits under the plan.
In its May 8, 2013 technical release (2013-02), the U.S. Department of Labor (DOL) provided employers with temporary guidance regarding the notice requirement to all employees of their right to purchase health insurance coverage through the respective state Health Insurance Marketplace. The guidance requires that employers provide the notice to all employees by no later than October 1, 2013 (or for newly hired employees, within 14 days of the employee’s start date). The notice must be in writing and in a manner that can be understood by all employees. In addition, it must be provided free of charge via first class mail or electronically if the DOL’s electronic disclosure safe harbors are met.
Effective July 31, 2013, sales tax of 6.25% is now levied on the certain computer and software services. This article explores the details of the Massachusetts Transportation Bill- An Act Relative to Transportation Finance.
The IRS recently put out an update to its guidance issued in 2011 on the community health needs assessment (“CHNA”) under section 501(r) of the Internal Revenue Code, enacted as part of the Patient Protection and Affordable Care Act in 2010. Under the guidance, hospitals and health systems must perform a community needs assessment for each individual facility at least once every three years. The requirement to conduct a CHNA applies to fiscal years beginning after March 23, 2012.
The IRS has finalized regulations in connection with the 50% deduction limitations for meals, entertainment and certain other expenses. Specifically, the regulations define reimbursement or other expense allowance arrangements under 274(e)(3) (exceptions to the general disallowance of such expenses under 274(a)).
Tax laws are constantly changing and we make it a priority to stay informed on all of these changes. This article highlights some notable changes in the tax law for 2013.
Certain organizations and governmental units that expend more than $500,000 of federal awards in a year are required to undergo an audit in accordance with the provisions of OMB Circular A-133. Originally issued pursuant to the Single Audit Act of 1984, OMB-A133 provides standards for obtaining consistency and uniformity among Federal agencies for the audit of States, local governments and non-profit organizations expending Federal awards.
On Tuesday, July 9th, the IRS issued Notice 2013-45, providing formal guidance on the Obama administration’s previously announced delay of the Employer Shared Responsibility (“play or pay”) penalty provisions, as well as the associated information reporting required under the Patient Protection and Affordable Care Act (“PPACA” or “ACA”) until January 1, 2015.
Any employer-provided insurance plan with a year ending after September 30, 2012, and before January 1, 2013, is required to report and pay the fee with Form 720 by July 31, 2013.
This article highlights the most frequent problems found with pension plans during employee benefit plan audits and how you can self-audit your plan for possible compliance issues and what options you have to correct them.
Identity theft is an ever growing problem today and you should alert the IRS if you become a victim. Criminals will often submit tax returns with stolen social security numbers. If you receive a written notice of suspected identity theft from the IRS you should immediately call the number on the notice and submit an IRS Form 14039. You should also put a credit freeze and a credit alert on all credit reports.
The Massachusetts Public Health Council approved emergency medical regulations for a tax relief program aimed at businesses that create wellness programs for their workers. Under the new rules, companies with fewer than 200 workers (with preference given to those with fewer than 100 employees) can get tax credits of up to 25% of the cost of the wellness program (with the maximum yearly relief for the company capped at $10,000).
Taxpayers required to file an annual Report of Foreign Bank and Foreign Accounts (FBAR) with the Treasury Department should be reminded that the deadline for doing so this year is June 28, not June 30. The due date is slightly accelerated due to an anomaly in Treasury Department filing rules.
ERISA Section 408(b)(2), which became law effective July 1, 2012, requires the disclosure of fees and expenses charged to a participant’s 401(k) retirement plan and other “covered plans”. By providing disclosure of costs charged to participant accounts, plan fiduciaries can assess reasonableness of compensation, identify potential conflicts of interest and satisfy reporting and disclosure requirements under ERISA.
With the tax side of the fiscal cliff averted, there are a number of changes that were brought into law in 2013 with the signing of the American Taxpayer Relief Act of 2012. Most notably, the American Taxpayer Relief Act allows the Bush-era tax rates to expire for individuals earning over $400,000 (families earning over $450,000).
An emerging issue for many employers is how to treat an employee’s personal use of an employer provided cell phone. Here is where the employer needs to determine whether or not the cell phone use is considered a working condition fringe benefit. Working condition fringe benefits will help the employer to determine whether or not the benefit is excludable from the employees taxable wages.
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