Mazzeffi & Company

Tax Alerts

Tax Briefing(s)

Tax Reform 2.0 2018 Post-Filing Season Update Congress Approves Sweeping Tax Overhaul Tax Cuts and Jobs Act

Proposed Regs. Limit Charitable Contributions Made to Avoid SALT Deduction Limit
An individual, estate, and trust generally must reduce the amount of any charitable contribution deduction by the amount of any state and local tax (SALT) credit he or she receives or expects to the r...

Proposed Regulations Provide Guidance on GILTI Inclusion
Much-anticipated proposed regulations provide guidance for U.S. shareholders determining the amount of global intangible low-taxed income (GILTI) to include in gross income. The Tax Cuts and Jobs Act ...

Interim Guidance Provided for Exempt Organizations with Multiple Unrelated Businesses
Interim guidance and transition rules have been released regarding the special rule requiring exempt organizations that have unrelated business taxable income from operating more than one unrelated bu...

IRS Provides Guidance on What Constitutes a Covered Employee
Taxpayers can rely on new guidance related to the limitation on the deduction for employee compensation in excess of $1 million. Specifically, the guidance addresses:the definition of a covered employ...

Qualifying Relative Definition Still Uses Inflation Adjusted Exemption Amount
The IRS clarified who is a "qualifying relative" for the new $500 dependent credit and head of household filing status for tax years 2018-2025. The new rules will continue to use the inflati...

Moving Expense Reimbursements Incurred Before 2018 Are Excluded
Employer payments or reimbursements in 2018 for employees’ moving expenses incurred prior to 2018 are excluded from the employee’s wages for income and employment tax purposes.The Tax Cuts...

Six-Year Spread Applies to 481(a) Adjustments After Terminated S Corporation’s Accounting Method Change
New temporary rules clarify a six-year spread period for Code Sec. 481(a)adjustments after an eligible terminated S corporation changes from a cash to an accrual method of accounting. These rules...

North Carolina Victims of Hurricane Florence Granted Tax Relief
President Donald Trump has declared a federal disaster area in North Carolina. The disaster is due to Hurricane Florence, which began on September 7, 2018.The disaster area includes the following coun...

IRS Releases Guidance for Section 199A Pass-Through Deduction
The IRS has released long-awaited guidance on new Code Sec. 199A, commonly known as the "pass-through deduction" or the "qualified business income deduction." Taxpayers can re...

Regulations Issued on Partnership Representative Under Centralized Partnership Audit Regime
The IRS has issued final regulations regarding the designation and authority of the partnership representative under the centralized partnership audit regime. The final regulations make a number of ch...

Proposed Rules Address 100-Percent Depreciation Deduction
Proposed regulations address the new 100-percent depreciation deduction that allows businesses to write off most depreciable business assets in the year they are placed in service.BackgroundThe Tax Cu...

Regulations Proposed on Code Sec. 965 Transition Tax
Proposed regulations provide rules for determining the Code Sec. 965 inclusion amount of a U.S. shareholder of a foreign corporation with deferred foreign income. The tax imposed on the incl...

IRS Replaces Proposed Rules on Partnership Audit Regime
The IRS has released proposed regulations governing the centralized partnership audit regime. These regulations replace some existing proposed rules to reflect changes made by the Tax Technical Correc...

Short-Term Health Insurance Exemption from ACA Consumer Protections Broadened
The Departments of Health and Human Services, Labor, and Treasury have amended the definition of short-term, limited-duration individual health insurance coverage, by allowing such coverage to last up...

Hardest Hit Fund Safe Harbor Modified
The IRS has modified the safe harbor for computing deductible mortgage interest under Code Sec. 163 and real property taxes under Code Sec. 164(a)(1) by homeowners participating in...

IRS Extends Filing, Payment Deadlines for California Wildfire Victims
The IRS has extended filing and payment deadlines for certain California taxpayers affected by wildfires. Taxpayers in Shasta County may qualify for tax relief.Extended DeadlinesIndividuals and busine...

Discharge Relief Available for Private Student Loan Debtors
The IRS has provided relief to taxpayers who took out private student loans to finance attendance at a school owned by Corinthian College, Inc. (CCI) or American Career Institutes, Inc. (ACI). Under t...

Small Businesses Get Automatic Consent for Accounting Method Changes
The IRS will provide automatic consent to a small business taxpayer’s application to change to the cash method of accounting. Eligible small business taxpayers, as defined by the Tax Cuts and Jo...

Exempt Organizations May Not Need to Include Donor Information on Returns
Tax-exempt organizations, other than charities exempt under Code Sec. 501(c)(3), will soon be able to stop reporting the names and addresses of contributors on Schedule B when filing their inform...

IRS Unveils Draft Form 1040
Taxpayers will be able to file federal income taxes starting next filing season on a new postcard-sized Form 1040. The IRS officially released the draft 2018 Form 1040 on June 29.Draft Form 1040The ne...

Preparer Due Diligence Rules Include Head of Household Eligibility
The IRS has proposed amendments to the tax preparer due diligence regulations to reflect a recent law change. The Tax Cuts and Jobs Act ( P.L. 115-97) expanded the scope of the due diligence pena...

IRS Clarifies Estate and Trust Expenses Not Subject to Miscellaneous Itemized Deduction Suspension
The Treasury Department and the IRS plan to issue regulations clarifying that certain estate and nongrantor trust expenses remain deductible and are not subject to the miscellaneous itemized deduction...

Veterans Urged to Claim Refund for Tax Overpayments on Disability Severance Payments
The IRS has urged certain veterans who received disability severance payments after January 17, 1991, and included that payment as income that they should file Form 1040X, Amended U.S. Individual Inco...

IRS Highlights “Security Six” Safeguards
The IRS, along with Security Summit partners, offered important tips dubbed "Security Six"protections to help tax professionals protect their computers and email as well as safeguard sensitive ta...

AL - Town of Notasulga imposes lodgings tax
Effective December 1, 2018, the city of Notasulga imposes a local Alabama lodgings tax of 2.25%. Local Tax Notice, Alabama Department of Revenue, November 6, 2018...

AK - Municipalities exempt from refined fuel surcharge
The Alaska Department of Administration, Office of Administrative Hearings (OAH) recently determined the refined fuel surcharge may not be levied against municipalities. The OAH found the statute lang...

AZ - Publication regarding reporting by optical media issued
For personal income tax purposes, the Arizona Department of Revenue (department) has issued a publication that contains information on reporting by optical media of federal Forms W-2 and Forms W-2c. T...

AR - Sales of electronic files constituting digital-audio works taxable
A recording studio owner (taxpayer) was required to charge Arkansas state, city and county sales tax for the electronic files that constituted "digital-audio works" and were transferred via ...

CA - Taxpayers notified to disregard duplicate notices
The California Franchise Tax Board (FTB) has issued a bulletin indicating that it has erroneously mailed duplicate FTB 4686, Nonwage Withholding Credits – No Tax Return on File, Annual Notices t...

CO - Payment to participate in vehicle owners compensation program was not taxable
A vehicle buyer’s payment to a motor vehicle dealership (dealership) to participate in a motor vehicle owners compensation program (program) was not subject to Colorado sales tax because the pay...

CT - Procedures to request disclosure of tax returns and information explained
Connecticut explains the procedures followed when processing requests for disclosure of tax returns and information for all tax types administered by the Department of Revenue Services.Does a Taxpayer...

DE - Division begins accepting certification applications for angel investor tax credit
The Delaware Division of Small Business has started accepting certification applications for the Angel Investor Tax Credit (AITC) from qualified investors and high-tech small businesses. Taxpayers may...

DC - Thresholds for schedule H credit increased
The District of Columbia announced the personal income tax Schedule H maximum credit amount and upwardly revised the income thresholds.What is the Schedule H Credit Amount for 2019?The 2019 maximum am...

FL - 2018-2019 citrus fruit assessment rates announced
Florida has announced the 2018-2019 citrus fruit assessment rates.2018-2019 Citrus Fruit Assessment RatesThe assessment rates per each standard packed box of citrus fruit grown and placed into the cha...

GA - Comments sought on proposed TAVT rule changes
The Georgia Department of Revenue proposes to amend title ad valorem tax rule §560-11-14-.01 ("Definitions"). Proposed amendments would add a definition for "down payments" related to l...

HI - Proposed surcharge on investment real property declared invalid
A question on the 2018 Hawaii general election ballot proposing a potential surcharge on investment real property is invalid. The Hawaii Supreme Court ordered that any votes for or against the propert...

ID - Tax filing and payment deadline extended for victims of hurricane Michael
The Idaho State Tax Commission has issued a press release informing taxpayers that the 2017 tax filing and payment deadlines for victims of Hurricane Michael in Florida, Georgia and elsewhere have bee...

IL - Illinois adds attorney-in-fact payment regulation
Illinois added a regulation on current law that allows a corporate income tax subtraction for fees paid to an attorney-in-fact by an:interinsurer; orreciprocal reinsurer.86 Ill. Adm. Code Sec. 100.266...

IN - Tax sale purchaser was not a third-party beneficiary
For Indiana property tax purposes, the Court of Appeals affirmed the trial court’s decision that granted the motion for summary judgment to the service provider because the tax sale purchaser wa...

IA - 2019 standard deductions, income tax brackets released
Iowa has released the 2019 personal income tax:standard deduction amounts; andtax brackets.What are the 2019 Standard Deduction Amounts?The 2019 standard deductions are:$2,080 for single taxpayers;$2,...

KS - Local rate changes announced
A Kansas Department of Revenue publication reflects local sales and use tax rate changes effective January 1, 2019. In addition to the city changes noted below, a number of changes are also made to sp...

KY - Kentucky issues guidance on business inventory credit
Kentucky issued guidance on its credit for personal property tax paid on certain business inventory. Taxpayers can apply the credit against Kentucky:corporate income tax;limited liability entity tax (...

LA - Guidance provided on changes to IRC §965 repatriation income
Louisiana has issued guidance on how to report IRC §965 repatriation income for state tax purposes, and how to claim the federal income tax deduction on the income taxed at the federal level. Und...

ME - Filing relief announced for taxpayers affected by recent hurricanes
Maine tax filing relief has been announced for certain state taxpayers located in federally declared disaster areas who were affected by recent hurricanes. For such taxpayers, interest and any late fi...

MD - Earned income tax credit notice issued
The Maryland Comptroller’s Office has issued a personal income withholding Tax Alert concerning the requirement of an employer to notify employees of potential earned income tax credit (EITC) el...

MA - Massachusetts creates addbacks for TCJA deductions
Massachusetts budget legislation creates corporate excise tax addbacks for certain federal deductions enacted by the Tax Cuts and Jobs Act (TCJA).What Are the TCJA Deduction Addbacks?The addbacks cove...

MI - Tribunal’s judgment reversed because taxpayers established existence of genuine issues of material fact
For corporate income tax purposes, the Michigan Court of Appeals (court) reversed the tax tribunal's judgment because the taxpayers presented genuine issues of material fact for trial. The taxpayers, ...

MN - Local taxes announced
Starting January 1, 2019, the following Minnesota counties will have a 0.5% transit sales and use tax:Dodge;Goodhue; andSherburne.Goodhue County will also have a $20 vehicle excise tax.Where Can I Fin...

MS - Centrally assessed property regulation amended
The Mississippi Department of Revenue has amended its regulation for centrally assessed property to:remove language regarding proof for exceptions; andto make technical changes.Reg. 35.VI.2.07, Missis...

MO - Sales of processed beef via virtual platform taxable
A taxpayer’s sales of processed beef through an online marketplace did not qualify for the farmer’s market exemption from Missouri sales tax because the definition of "farmer’s ...

MT - Deferred compensation plan distributions sourced to Montana
For personal income tax purposes, a taxpayer was not permitted to deduct her distributions from her deferred compensation account in her Montana adjusted gross income because the taxpayer was a reside...

NE - Nonresident income tax withholding for personal services discussed
For corporate income tax purposes, the Nebraska Department of Revenue issued a general information letter stating that the requirement to withhold income tax from payments to nonresident individuals f...

NV - Nevada economic nexus rules in effect
Remote sellers meeting Nevada’s new economic nexus thresholds must begin collecting sales tax by November 1, 2018.Economic Nexus ThresholdsThe economic nexus thresholds are:more than $100,000 of...

NH - Governors responds further to wayfair
Following the decision in South Dakota v. Wayfair, Inc., U.S. Supreme Court, Dkt. No. 17-494, June 21, 2018, New Hampshire Governor Chris Sununu joined Attorney General Gordon MacDonald and Busin...

NJ - New Jersey provides information on sales through marketplaces
New Jersey provides information on previously enacted legislation imposing sales tax registration, collection and remittance requirements on marketplace facilitators. The provisions are effective Nove...

NM - High-wage job tax credit denied for lack of consistent documentation
A corporate income taxpayer was not entitled to the New Mexico high-wage job tax credit because it failed to provide consistent documentation to establish that it generated substantial revenue from Ne...

NY - Notices sustained as taxpayers were not eligible for certain QEZE credits
For New York personal income tax purposes, notices of deficiency issued to taxpayers were sustained because they were not entitled to certain qualified empire zone enterprise (QEZE) credits that they ...

NC - DOR announces additional counties eligible for hurricane florence tax relief
The North Carolina Department of Revenue advises taxpayers that three additional counties have been designated as "Disaster Counties" eligible for state tax relief as a result of Hurricane F...

ND - Local tax changes announced
The North Dakota cities of Bowman, Burlington, Cooperstown, Enderlin, New Salem, and Towner announced local sales and use tax changes. The changes are effective January 1, 2019. Details are provided b...

OH - Property’s current agricultural use valuation upheld
An Ohio property owner’s appeal of the property’s current agricultural use property tax valuation (CAUV) was denied.Burden of ProofThe property owner claimed that the Board of Tax Appeals ...

OK - Additional Q1 local rate change announced
The local sales and use tax rate change below takes effect in Oklahoma on January 1, 2019. The change can be viewed at https://www.ok.gov/tax/documents/copo4Q18.pdf. Other local sales and use tax...

OR - Business expense deductions denied; But S corporation’s gross receipts reduced and tax liability recalculated
A taxpayer and his S corporation were not allowed Oregon personal income tax and corporate income tax deductions respectively because they failed to substantiate their claim with proper evidence. Howe...

PA - Taxpayer required to charge local sales tax because sales originated in taxable county
A Pennsylvania taxpayer’s house cleaning services performed outside of his county were subject to local sales and use tax because local sales and use tax is a point of sale tax and all of the ta...

RI - Interest rates announced for 2019
Rhode Island tax interest rates for 2019 will be:5.25% for refunds (4.25% for 2018); and18% for delinquencies (same as for 2018).Advisory 2018-43, Rhode Island Division of Taxation, October 30, 2018...

SC - Bank cannot deduct net operating loss carryforwards for calculating tax liability
The South Carolina Administrative Law Court (Court) affirmed the Department of Revenue’s decision that the taxpayer could not deduct net operating loss (NOL) carryforwards when computing its ban...

SD - South Dakota reaches wayfair settlement
The litigants of South Dakota v. Wayfair have entered into a settlement agreement.Wayfair Settlement Agreement TermsThe parties reached a settlement that:removes the injunction; andsets Janu...

TN - Fees charged by nonprofit organization in its transportation vehicle share programme subject to tax
Membership fees, single-use fees, usage fees and other fees charged by a nonprofit organization (taxpayer) in its transportation vehicle share programme were subject to Tennessee sales tax because the...

TX - Guidance for nonprofit and exempt organizations issued
The Texas Comptroller of Public Accounts has issued a publication that identifies some qualified nonprofit and tax-exempt organizations and discusses their exemptions from limited sales and use tax, h...

UT - Subcontractor’s purchases of certain items for installation on DOT’s public freeways and highways not exempt
A subcontractor’s (taxpayer’s) purchases of certain items for installation on the Utah Department of Transportation’s (UDOT’s) public freeways and/or highways failed to qualify...

VT - Capital gain qualified for 40% exclusion because property was held for more than three years
For Vermont personal income tax purposes, a taxpayer’s capital gain on the sale of his interest in a property to his sister in tax year 2017 qualified for the 40% exclusion because the taxpayer ...

VA - Deadline for six-month filing extension is November 1
The Virginia Department of Taxation has issued a press release informing personal income taxpayers that the deadline for the six-month income tax filing extension is November 1, 2018. The release info...

WA - Assessment did not violate commerce clause
Washington business and occupation (B&O) tax assessed against an out-of-state yogurt store franchisor did not discriminate against interstate commerce.Commerce ClauseA tax on interstate commerce i...

WV - Economic nexus thresholds announced for remote sellers
In light of the U.S. Supreme Court decision in South Dakota v. Wayfair, Inc., Dkt. 17–494, June 21, 2018, certain remote sellers are required to collect and remit West Virginia sales and us...

WI - Tax relief for disaster victims announced
The Wisconsin Department of Revenue, in line with an IRS announcement, has extended time to file personal and corporate income tax returns for those affected by severe storms, tornadoes, straight-line...

WY - Wyoming updates remote seller nexus guidelines
In light of the U.S. Supreme Court’s South Dakota v. Wayfair decision, Wyoming will require remote and on-line sellers that meet certain economic thresholds to collect sales tax beginn...