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Insights & Alerts

Temporary tax provisions called "tax extenders" have historically been extended past their expiration dates by Congress. One such provision set to expire at the end of 2016 is the Empowerment Zone tax benefit. Recently, the IRS reminded businesses that special tax benefits are still available in 40 designated Empowerment Zones.


Boeing's 777X jetliner will not receive a tax break from the State of Washington, per a ruling from the World Trade Organization (WTO). WTO made this decision after investigating a complaint from the European Union.


A federal district judge in Texas issued an injunction on November 22, 2016, banning implementation of the Department of Labor's ("DOL") new rule increasing the minimum salary level qualifying for an exemption from overtime under the Fair Labor Standards Act (FLSA).


New Jersey Governor Chris Christie has decided to leave in place a nearly 40-year-old agreement with the state of Pennsylvania, allowing commuters from both states to pay income tax only to their home state.


On November 17, 2016, the Ohio Supreme Court upheld the constitutionality of the Ohio Commercial Activity Tax's (CAT) bright-line nexus standard in three consolidated tax cases: Crutchfield, Newegg, and Mason Companies.


Our nation's veterans can provide businesses with various benefits, from leadership skills to work ethic and attention to detail. However, hiring veterans can also provide businesses with significant tax benefits through the Work Opportunity Tax Credit (WOTC).


Recent Tax Court rulings have highlighted some ways in which the IRS reviews compensation versus dividends to shareholder-employees in a corporation. The following will highlight some key areas that the IRS focuses on when determining reasonableness in the allocation of compensation versus dividends in a corporation.


Those who make buildings more energy-efficient might be missing out on an often overlooked provision of the tax code.


The Internal Revenue Service has announced new additions to the cost of living and inflation rate increases for several tax-related attributes for the 2017 year. The following summarizes adjustments announced to date.


The California Franchise Tax Board, on November 1, 2016, issued FTB Notice 2016-03. The purpose of the notice was to inform taxpayers who had claimed the Multistate Tax Compact ("MTC") election on their California returns of the state's intended course of action following the denial of the U.S. Supreme Court to hear the case back in October.


Contractors in Georgia deemed to be consumers of goods used outside the state and, therefore, liable for the states Sales and Use Tax under contractor-as-consumer rule.


The U.S. Supreme Court ("USSC") has denied certiorari in Gillette Co. v. Franchise Tax Board, where the California high court's holding required corporate taxpayers to adhere to statutorily mandated income apportionment formulas without an option to elect a three-factor formula.


The IRS has released Notice 2016-62, which outlines the adjustments to IRA and qualified benefit plan limitations for 2017, as well as the adjustment to the Social Security taxable wage base.


A taxpayer may conduct business operations, hold property, or participate in financial or business transactions through an entity wholly owned by the taxpayer that is classified as a "disregarded entity" under United States federal tax law. As a general rule, such an entity is not regarded as being separate from its owner for federal income tax purposes.


New Jersey Governor, Chris Christie, signed Assembly Bill No. 12 ("AB12") into law on October 14, 2016, repealing New Jersey's state estate tax effective January 1, 2018. This new law was enacted as part of a compromise between the Legislature and the Governor to pass an increase in New Jersey's gas tax.


On October 14, 2016, the U.S. Treasury Department issued final regulations addressing whether an interest in a corporation is to be treated as stock or indebtedness for tax purposes. Originally proposed in April, these sweeping rules were announced as part of the government's aggressive campaign to curb the use of corporate inversions and other multinational strategies that were discredited as U.S tax avoidance schemes.


In today's political climate, environmental sustainability and energy alternatives are a hot topic of debate. As such, many businesses have taken initiatives to "go green." One increasingly popular energy alternative is the installation of solar panels. Solar panels serve the dual purpose of being an easy and effective sustainable alternative while also significantly reducing energy bills.


New Jersey Governor, Chris Christie, announced that he will end an agreement between New Jersey and Pennsylvania that allows commuters to pay state income tax only to the state where they live, instead of paying tax to the state where they work.


A majority of businesses and business owners make charitable donations to qualified charities. Most taxpayers assume that these contributions result in a charitable deduction and report them as such on their tax returns. However, some taxpayers who make the effort to determine the actual business purpose for the contribution may realize a much more beneficial deduction.


The IRS has issued an official alert warning taxpayers of fake tax bill emails. In IRS Newswire IR-2016-123, reprinted below, the IRS explains how to distinguish between fake tax bills and an official correspondence. The fraudulent emails include what appears to be an official notice for a balance due. The IRS stresses that official communications are always sent to taxpayers via U.S. Postal Service.


The IRS has issued final regulations re-defining marriage to be inclusive of same-sex spouses, following the 2015 Supreme Court decision legalizing same-sex marriage in all 50 states.


The Florida Supreme Court upheld the constitutionality of the recent decision and related statutes pertaining to sales tax origin sourcing within the American Business USA Corp case which stated: "Florists located in this state are liable for sales tax on sales to retail customers regardless of where or by whom the items sold are to be delivered.


Conditions in the real estate markets can have a major impact on real estate assessments, and ultimately the tax bills property owners must pay. Commercial properties, vacant land, apartment buildings, marinas, office buildings, and even newly purchased residences and newly constructed residences are impacted by the current economic climate.


The European Union's ("EU") antitrust regulator, the European Commission ("Commission"), has changed the way the world looks at transfer pricing and tax favored regimes. Asserting that certain Member States of the European Union have gained an unfair competitive advantage because of government help, the Commission recently demanded large tax assessments against Apple, Fiat Chrysler, Starbucks, AB InBev, among others.


The IRS has issued a final regulation that eliminates the requirement for an 83(b) election to be attached to an individual's tax return for property transferred on or after January 1, 2016.


The IRS recently announced guidance regarding filing, claiming and reporting requirements related to the refundable Payroll Tax Credit provisions of the Research and Development (R&D) tax credit for Qualified Start-up Businesses.


The IRS released Notice 2016-42, outlining the proposed new Qualified Intermediary (QI) agreement under FATCA rules, in July 2016. The draft agreement highlights significant updates to recent revenue procedures, including a revision to the QI compliance review and certification procedures, the authorization of primary withholding responsibilities of the QI, and the establishment of Qualified Derivatives Dealer (QDD) rules.


This rule is popularly known as the “self-rental rule. This rule converts passive income into non-passive income. A passive activity is any activity that involves the conduct of any trade or business in which the taxpayer does not materially participate.


The Treasury and IRS recently issued proposed regulations intended to affect the valuation of closely held business interests transferred to family members.


Under current IRS rules, taxpayers must include income from the cancellation of debt ("COD"), also referred to as "discharge of indebtedness," in gross income. There are certain exceptions to the inclusion of such income, two of which are bankruptcy and insolvency.


The IRS announced today that it will "acquiesce" to the Court of Appeals for the Ninth Circuit decision that the Federal income tax home mortgage interest deduction limitations apply individually to each co-owner of a qualified residence if they are not married to each other, and not to the residence itself.


A personal service corporation ("PSC"), as the name implies, is a corporation whose main activity is the performance of personal services. The term should not be confused with professional corporations, which are corporations formed for the purpose of conducting business in a licensed profession.


The Internal Revenue Service ("IRS") released finalized regulations on Wednesday, June 29, that require certain companies to annually report information relating to income and taxes on a Country-by-Country ("CbC") basis.


Rhode Island Governor Gina Raimondo signed the State's 2017 fiscal year budget bill on June 14, 2016. The bill includes a number of updates for both businesses and individuals. All changes are effective for tax year beginning on or after January 1, 2017 unless otherwise stated.


In recent weeks, many Marcum clients and other NYC taxpayers have been in receipt of unsolicited tax refund checks.


On June 2, 2016, Connecticut ("CT") Governor Daniel Malloy signed the state's budget for the 2016-17 fiscal year into law. The legislation contained several noteworthy changes for corporate income tax, personal income tax, and sales tax purposes.


IRS issued Notice 2016-40 on Friday, which provides additional transition relief for employers claiming the Work Opportunity Credit, as extended by the Protecting Americans from Tax Hikes Act of 2015 (PATH).


New York City Appeals Tribunal - Appeals Division released on May 19, 2016, that a non-nexus banking affiliate does not have to be included in the combined tax return.


The Tax Court recently ruled that a widow could not use her deceased husband's alternative minimum tax (AMT) credit which arose from his exercise of employee stock options prior to their marriage.


On April 4, 2016, The US Treasury and the IRS proposed new regulations pursuant to IRSr Section 385. Although announced as part of the ongoing effort to curb corporate inversions, the proposed regulations focus on related-party corporate indebtedness and, if made effective without significant changes, will have far-ranging impact on corporate ownership and capital structures well beyond the inversion-focused motivation.


The deadline for filing the 2015 Report of Foreign Bank and Financial Accounts (FinCEN Form 114) (the FBAR) is quickly approaching. Since it was first introduced in the 1970s, each year's FBAR has been due on or before June 30th of the following year, with no extension available. The IRS now requires that all FBARs be electronically filed.


As of June 30, 2016, entities conducting business in the state of Nevada will be obligated to file a Commerce Tax Return for the first time. Signed into law in June 2015 by Governor Sandoval, Nevada's Commerce Tax became effective July 1, 2015, and is imposed on certain entities doing business in the state, whether or not they have a physical presence.


President Obaman signed the Protecting Americans from Tax Hikes (PATH) Act of 2015 into law this past December. Two of its provisions included an extension of bonus depreciation through 2019 and made provisions for qualified leasehold improvements (QLI), qualified retail improvements (QRET), and qualified restaurant property (QRES) permanent. Along with the extension, the concept of qualified improvement property (QIP) was introduced.


In December 2015, the Protecting Americans from Tax Hikes Act of 2015 ("Tax Extenders Bill") was signed into Law. The law includes an expansion of the rules related to the Federal Research and Development (R&D) Credit effective as of January 2016, as well as making the R&D Credit permanent.


Many of our clients serve as trustees or executors and should be aware of certain elections that may be available to them. This is especially true now, as there are distributions and elections that need to be made within the first week of March.


The Internal Revenue Service has issued new temporary regulations and proposed regulations providing that where a partnership owns 100% of the interests of a disregarded entity, a partner of the partnership cannot be treated as an employee of the disregarded entity. The Service believes that this is a clarification of the current rules.


In case taxpayers didn't already have enough reasons to keep current with their tax obligations, the Fixing America's Surface Transportation Act (FAST Act), signed into law in December, has added one more.


New York State's political leadership, led by Governor Andrew Cuomo, proudly announced at the end of March that for the sixth straight year, they have reached a budget agreement on time. As is usual, the budget includes landmark policies and provisions that will strengthen working and middle class families and the business community, while improving the lives of all New York State citizens.


The Indiana Department of Revenue (INDOR) has updated its regulations, effective for tax years beginning January 1, 2015, providing for changes to the composite and withholding compliance requirements for trusts, partnerships and corporations.


The Tax Court recently supported the IRS' decision to deny taxpayers a charitable contribution deduction for a conservation easement that was greater than $5,000. The deduction was denied after the taxpayers failed to attach an appraisal for the easement with their return. The IRS also imposed accuracy-related penalties and interest that the Tax Court also upheld.


The IRS has issued an alert advising all taxpayers to be aware of fraudulent email schemes during tax filing season. The IRS has seen a surge in email scams designed to trick taxpayers into thinking these are official communications.


Under IRC Section 754, a partnership may elect to adjust the basis of partnership property to fair market value when it distributes property or when a partnership interest is transferred.


The Internal Revenue Service has issued its final draft of Form 8971, Information Regarding Beneficiaries' Acquired Property from a Decedent, and instructions. This is in response to new section 6035 of the Internal Revenue Code, which was added by the Highway Funding Bill of 2015, imposing on certain executors the responsibility of providing information statements to IRS and to any person acquiring an interest in property from estates.


For many nonprofit organizations, a robust fundraising function is an important part of any long-term plan for success. A nonprofit's executive leadership team must, however, recognize that there are some significant risks that come with fundraising, and those risks and any related exposure for the organization must be properly managed.


For nonprofit organizations that receive contributions from private donors, there can be a variety of risks, including tracking and expending contributions as well as accounting and reporting for such funds.


As more and more companies use technology to improve products and increase efficiencies, the relevance and importance of reviewing expenditures for eligibility for the Research and Development Tax Credit becomes more critical. One industry where there has been tremendous growth in the research and development sector is the food and beverage industry.


On February 5, 2016, the IRS released an update to the Protecting Americans from Tax Hikes (PATH) Act of 2015, which was passed in December, citing new inflation adjustments effective for tax years beginning in 2016. The inflation adjustments focus on educator expenses, transportation fringe benefits, and the expensing of depreciable assets under Code Section 179.


The IRS has issued new guidance to expand non-taxable identity protection services to include those provided before a data breach occurs.


On September 17, 2015, the Internal Revenue Service (the "IRS") issued final regulations under Code Section 871(m) relating to the imposition of U.S. withholding tax on "dividend equivalent" payments on certain U.S. equity swaps and other U.S. equity-linked instruments held by foreign persons. The regulations adopt, with some changes, the 2013 proposed regulations.


The Delaware Competes Act (the "Act") was signed into law on January 27, 2016, changing the corporate income tax apportionment formula to a single sales factor apportionment formula by 2020 and making several changes to simplify the filing process for small businesses, thus providing protection against penalties for filing errors.


The Boston Bruins are center-ice in a battle with the IRS that could affect all major sports teams and many other businesses that move employees to so- called "offsite premises" to provide their services.


Death is a subject that most people dread thinking about. When a loved one passes away, the pitfalls of an inherited IRA will most likely be the last thing on your mind. Yet, proper estate planning and knowing what steps to take after a loved one dies are essential to managing your finances.


Massachusetts is in the planning phase of creating a plan to allow taxpayers to disclose uncertain tax positons to the state and obtain waiver of penalties. The plan is to complete the entire process from start to finish in four months.


Effective for tax years beginning on or after January 1, 2016, Pennsylvania has eliminated the Capital Stock and Foreign Franchise tax for all taxpayers. The complete elimination of this tax had been delayed several times in the past, but was finally confirmed by Pennsylvania Governor Tom Wolf on January 4, 2016.


Pursuant to new regulations signed by the New York State Commissioner of Taxation and Finance on December 31, 2015, and adopted on an emergency basis, the Metropolitan Transportation Business Tax Surcharge is to be computed at the rate of 28% for tax years beginning on or after January 1, 2016 and before January 1, 2017.


With the passage of the PATH Tax Act in December of 2015, Congress retroactively increased the amount of the tax exclusion cap for mass transportation and transit pass benefits.


As we have reported in previous Marcum Tax Flashes, identity theft by tax scammers has become an increasing problem. In these schemes, scammers either trick individuals into making false tax payments, or steal social security numbers in order to file fraudulent returns.


Generally, taxpayers pay tax on property they sell at a gain. A tax-deferred exchange under Section 1031 offers a great opportunity to delay capital gains taxes and build wealth. However, if not done correctly, taxpayers may be subject to tax, interest and penalties at the time of transaction. Following are some of the pitfalls and traps for the unwary.


The Illinois Department of Revenue has issued a press release announcing that the Department does not anticipate releasing individual tax refunds for the 2016 tax filing season until after March 1, 2016.


As a general rule, the United States taxes its citizens and residents on their worldwide income and imposes annual information reporting on certain foreign assets. Failure to comply with these requisite tax information filings can potentially result in severe financial penalties, prosecution and, in some cases, jail time.


Service providers in the State of Illinois who transfer items of tangible property incident to the services they sell are generally subject to the Service Occupation Tax Act (Act). The Act provides the framework for how sales and use taxes are applied to service providers who transfer property.


The Internal Revenue Service ("IRS") released proposed regulations on December 21 that would require certain companies to annually report information relating to income and taxes on a country-by-country (CbC) basis.


The U.S. Department of the Treasury and the Internal Revenue Service have announced a limited extension of time for the filing of the 2015 information reporting requirements for employers and insurers under the Affordable Care Act (ACA).


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