Tax Cuts and Jobs Act

After being passed by the House of Representatives, this year’s reconciliation bill (H.R. 1) moved to the Senate, which passed its own version of the legislation today, July 1.  The Senate bill would preserve without significant change many tax-related items from the House bill.  There are several provisions…

Continue Reading Senate Reconciliation Bill Drops Unpopular UBTI Proposal for Transportation Fringes

Early this morning, the House of Representatives passed a reconciliation bill that would enact significant tax provisions and spending cuts.  The House Bill (H.R. 1) now heads to the Senate, where changes are likely before passage.  This article is one of a series of articles discussing various proposals in the legislation that touch on tax withholding, reporting, and fringe benefits.

The House Bill expands two credits designed to help employers cover the cost of employer-provided child care and paid family and medical leave.Continue Reading House Reconciliation Bill Would Extend Tax Credits for Family and Medical Leave and Child Care

The House of Representatives continues work on a reconciliation bill that would enact significant tax provisions and spending cuts.  The various legislative committees have completed work on the areas of the bill within their jurisdiction, including the Ways and Means Committee, which proposed language that would enact $3.8 trillion in tax cuts over the next ten years.  Over the weekend, the House Budget Committee consolidated the legislation and the House Bill is now before the Rules Committee, where a managers’ amendment may be considered before it heads to the House floor.  This article is one of a series of articles discussing various proposals in the legislation that touch on tax withholding, reporting, and fringe benefits.

Among other changes to the Internal Revenue Code, two of the House Bill’s changes revisit measures included in the 2017 tax reform package (commonly referred to as the “Tax Cuts and Jobs Act”) addressing commuter benefits provided by employers.Continue Reading What’s Old is New Again: House Bill Would Resurrect UBTI for Tax-Exempt Organization Transportation Fringes, Make Permanent Suspension of Bicycle Commuting Reimbursement Exclusion

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

On Friday, December 18, the IRS released final regulations under section 162(m) implementing the statutory changes made in 2017 by the Tax Cuts and Jobs Act.  Section 162(m), as amended, generally limits the deduction for compensation (also referred to as applicable employee remuneration) paid to the a publicly held corporation’s principal executive officer (“PEO”), principal financial officer (“PFO”), and its three highest-paid executive officers other than the PEO and PFO.  The final regulations are largely unchanged from the proposed regulations released almost exactly one year earlier.  (See earlier coverage.) The IRS did make a small number of changes in response to taxpayer comments, but declined to make changes in a number of areas.
Continue Reading Final 162(m) Regulations Make Few Changes

Yesterday, December 9, the IRS released final regulations implementing the Section 274(a)(4) and 274(l) deduction disallowances, adopted as part of the 2017 Tax Cuts and Jobs Act.  Section 274(a)(4) disallows employer deductions for the cost of providing qualified transportation fringe (“QTF”) benefits provided to employees.  Section 274(l) provides a broader deduction disallowance for expenses paid for, or to reimburse for, employees’ trips between their residences and their places of employment.  Both deduction disallowances took effect for tax years beginning after December 31, 2017.

The final regulations largely follow the approach taken in the proposed regulations issued in June, which built on earlier guidance provided in Notice 2018-99.  Treasury Regulation § 1.274-13 addresses the deduction disallowance under section 274(a)(4) for the cost of QTFs provided under section 132(f), such as qualified parking, transit passes, and other tax-free commuting benefits.  Treasury Regulation § 1.274-14 addresses the deduction disallowance under section 274(a).
Continue Reading IRS Issues Final Regulations on Commuting Expenses Deduction Disallowances

On October 2, 2019, Treasury and the IRS issued proposed regulations relating to the repeal of section 958(b)(4) by the Tax Cuts and Jobs Act (“TCJA”).  On September 22, 2020, Treasury and the IRS issued final regulations largely following the proposed regulations, along with additional proposed regulations.
Continue Reading Regulations Addressing Section 958(b)(4) Repeal Provide Relief for U.S. Payors but Hold the Line on the Portfolio Interest Exception

On June 23, Proposed Treasury Regulations §§ 1.274-13 and 1.274-14 were published in the Federal Register addressing the disallowance of employer deductions for the cost of providing commuting and parking benefits to employees.  The proposed regulations are a mixed bag with some clarifications being helpful and others less so.  Proposed Treasury Regulation § 1.274-13 addresses the deduction disallowance under section 274(a)(4) for the cost of qualified transportation fringe benefits (QTFs) provided under section 132(f), i.e., qualified parking, transit passes, and other tax-free commuting benefits.  Proposed Treasury Regulation § 1.274-14 addresses the deduction disallowance for employee transportation costs under section 274(l).  Both deduction disallowance provisions were adopted as part of the Tax Cuts and Jobs Act (“TCJA”), and took effect for tax years beginning after December 31, 2017.
Continue Reading Proposed Regulations Regarding TCJA Disallowance for Employee Commuting and Parking Costs a Mixed Bag

Today, the IRS published proposed regulations addressing changes made by the Tax Cuts and Jobs Act of 2017 (the “TCJA”) to how an employee instructs an employer to withhold income taxes on his or her Form W-4 (Employee’s Withholding Certificate). The Form W-4 was redesigned for 2020 to reflect the TCJA changes to how income tax withholding from wages must be calculated.

The proposed regulations update existing regulations under section 3402 to reflect TCJA’s shift from relying on “withholding exemptions” to determine an employee’s income tax withholdings to the more complicated “withholding allowance” methodology that is putatively designed to neutralize the impact of other changes, such as the elimination of certain Schedule A adjustments to gross income for employees. Before settling on a final Form W-4 implementing these changes, the IRS received feedback on multiple draft form revisions that criticized the form as being complex and confusing. In addition, concerns were raised about the amount of personal information regarding an employee’s other jobs and earnings required to complete early drafts of the form. The 2020 Form W-4 addressed some of these criticisms, but still remains more complicated than the earlier form. Time will tell whether employees are able to easily adapt to the new form, or if errors in completing the form could result in employee underwithholding.

Select portions of the proposed regulations are discussed below. We will continue to update our readers on significant developments as the regulations are finalized. We discuss other effects of the TCJA elsewhere on our blog.
Continue Reading IRS Releases Proposed Regulations on the Mechanics of Income Tax Withholding

In a news release, the IRS today announced that it anticipates issuing initial withholding guidance to implement the changes under the tax reform bill in January 2018.  Employers and payroll service providers are encouraged to implement the changes in February.  In the release, the IRS indicated that the withholding guidance…
Continue Reading IRS Withholding Guidance Expected in January