On January 16, 2025, the IRS published proposed regulations to implement and provide guidance regarding amendments made to section 162(m) as part of the American Rescue Plan Act of 2021 (ARPA).  These proposed regulations expand the compensation deduction limitation for publicly held corporations under I.R.C. section 162(m), beginning in 2027.…

Continue Reading IRS Issues Proposed Regulations to Expand Limitation on Compensation Deduction for Publicly Held Corporations

The IRS issued Rev. Rul. 2025-4 on January 15, 2025, regarding the federal income and employment tax treatment and related reporting requirements of contributions to, and benefits paid under, a mandatory state paid family and medical leave (PFML) program. The ruling includes various tax treatment scenarios containing the IRS’ guidance with…

Continue Reading IRS Issues Ruling on Tax Treatment of Contributions and Benefits Under State Paid Family and Medical Leave Programs

On October 18, 2024, the IRS issued final regulations on withholding for qualified retirement plan payments made to United States taxpayers living outside of the country.  The final regulations come five years after the IRS issued proposed regulations on the topic and almost four decades after the IRS issued Notice…

Continue Reading IRS Issues Final Regulations Governing Withholding on Certain Retirement Plan and Commercial Annuity Distributions Made to U.S. Taxpayers Abroad

On April 16, 2024, the IRS issued fact sheet FS-2024-13 providing answers to frequently asked questions  about the tax treatment of work-life referral services provided to employees under an employer’s work-life referral program. The FAQs clarify that, under certain circumstances, the value received from work-life referral services provided to employees…

Continue Reading IRS Issues FAQs Addressing Tax Treatment of Work-Life Referral Services Provided to Employees

On March 9, 2023, the U.S. Department of Treasury released the Greenbook (formally known as the General Explanation of the Administration’s Revenue Proposals) for FY 2024 to explain revenue proposals included in the Administration’s budget.  One proposal is to increase the number of hours required to be worked by an individual for the employer to be eligible for the Work Opportunity Tax Credit (WOTC).Continue Reading Treasury Greenbook Includes Proposal to Alter Work Opportunity Tax Credit

As we have been discussing in recent blog posts, the Treasury Department released its Fiscal Year 2024 General Explanations of the Administration’s Revenue Proposals, commonly called the “Green Book,” on March 9, 2023. This year’s Green Book includes a proposal that both employers and employees are likely to embrace: an enhanced tax credit for employers that provide childcare.Continue Reading Administration Proposes Increased Childcare Tax Credit for Employers

On March 9, 2023, the U.S. Department of the Treasury released the Greenbook (formally known as the General Explanations of the Administration’s Revenue Proposals), to explain the revenue proposals included in Administration’s budget.  One proposal in the Administration’s budget would increase the additional Medicare tax rate by 1.2 percentage points for high-income taxpayers.  

Self-employment earnings and wages are subject to employment taxes under either the Self-Employment Contributions Act (SECA) or the Federal Insurance Contributions Act (FICA). Both SECA and FICA taxes apply at a rate of 12.4 percent for social security tax on self-employment earnings and wages (capped at $160,200 in 2023) and at a rate of 2.9 percent for Medicare tax on all self-employment earnings and wages (not subject to a cap).  In the case of FICA taxes, the employee and employer each pay half of the taxes imposed on wages.Continue Reading Treasury Greenbook Includes Proposal to Raise the Additional Medicare Tax Rate for High-Income Taxpayers

Last week, the Treasury Department released the “Green Book,” formally known as the General Explanations of the Administration’s Revenue Proposals.  For the second year in a row, the Green Book addresses the treatment of “on-demand” pay arrangements also known as “daily pay” or “earned wage access programs.”  These arrangements permit employees to access a portion of their earned wages in advance of the employee’s normal pay date. 

These programs raise potential tax concerns because, depending upon the program design, the employee could be considered to be in “constructive receipt” of their wages as soon as they earn them.  This creates payroll withholding and depositing obligations for employers regardless of whether the employee actually receives a wage payment.  In addition, the program can cause uncertainty regarding how to properly calculate the required FICA tax and income tax withholdings when the employee elects to receive a payment of earned wages.  For this reason, some programs (which are often app-based) are structured as loans or attempt to avoid the constructive receipt issue by requiring the payment of a small fee when the earned wages are paid.Continue Reading Treasury Reiterates Position on “On-Demand” Pay

On March 7, 2023, the IRS issued a renewed warning to employers considering an Employee Retention Credit (“ERC”) claim.  While many businesses with legitimate ERC claims have already made them, a cadre of consulting firms have come forward to, in the words of the IRS, “push[] ineligible people to file” claims. …
Continue Reading IRS Repeats Cautions Regarding Aggressive Claims for Employee Retention Credit

On February 28, 2023, the Supreme Court decided Bittner v. United States—a rare Supreme Court foray into Financial Crimes Enforcement Network or FinCEN reporting of foreign bank and financial accounts under the Bank Secrecy Act (“BSA”).  The BSA is codified under Title 31 (Money and Finance) of the United States Code rather than Title 26 (the Internal Revenue Code) so the section references in this post are to Title 31.  At issue was how to calculate penalties for nonwillful violations of the BSA’s recordkeeping and reporting obligations for foreign transactions and accounts.  By a narrow 5-4 majority, the Supreme Court held that the penalty for a nonwillful violation of the reporting requirements shall be assessed on a per-form basis rather than a per-account basis, a result favorable for those taxpayers with nonwillful failures.

Continue Reading Supreme Court Limits Penalties for Nonwillful FBAR Failures in Bittner Decision