T&K Tax Knowledge

Bypass Trust Planning in a High Exemption Environment

Posted by Bill Mureiko and Sarah Woodberry

            

After President Trump signed the Tax Cuts and Jobs Act tax reform bill (the “Tax Bill”) into law at the end of 2017, many clients may have been lulled into thinking that no update to their existing estate plan is required, given the increased estate and gift tax exemption amount.  In fact, the Tax Bill introduces uncertainty that should be considered by virtually all those who have existing estate plans.  We have prepared a client alert that is relevant for clients with sizeable estates, but generally not estates in excess of $22 million for married couples.  If you have any questions, please contact the T&K tax attorney with whom you regularly work or any of the T&K tax attorneys listed in the client alert.

President of Mexico Passes Decree Including Tax Amendments

Posted by Mario Barrera

     

On June 1, 2018, Mexican President Enrique Peña Nieto published a decree in the Federal Register amending several provisions of different statutes, including the Federal Fiscal Code (Código Fiscal de la Federación).  The most relevant amendments to the Code are the following:

Lee Meyercord Quoted on New Partnership Audit Rules

Posted by Lee Meyercord and Mary McNulty

          

Lee Meyercord was on several panels last week regarding the new partnership audit rules at the Federal Tax Workshop in Dallas. The panels discussed calculating and modifying the imputed underpayment, the push-out election (including the proposed regulations issued last December that allow the push-out election through tiers), and various other procedural issues.

IRS Extends Effective Period of 2017 Forms W-4

Posted by Neely Munnerlyn

In Notice 2018-14, the IRS extended the effective period of Forms W-4, Employee’s Withholding Allowance Certificate, for 2017 until February 28, 2018.  A Form W-4 that claims an exemption from withholding for a year typically expires on February 15 of the following year, but this period has been extended for 2017 Forms W-4 since the 2018 Form W-4 has not yet been released.  Notice 2018-14 also temporarily permits employees to claim exemption from withholding for 2018 by using the 2017 Form W-4 and temporarily suspends the requirement for an employee to provide a new Form W-4 to his or her employer within 10 days of a change in status that reduces the employee’s permissible withholding allowances.  In addition, Notice 2018-14 provides that the optional withholding rate on supplemental wage payments is 22% for 2018 through 2025.  The IRS has also released a new version of Publication 15 (Circular E), Employer’s Tax Guide for 2018 which provides additional information regarding an employer’s tax withholding obligations.   Click here for Notice 2018-14 and here for the new version of Publication 15 (Circular E).  Please contact the above author or the Thompson & Knight attorney with whom you regularly work if you have any questions regarding these developments.

IRS Updates Withholding Tables for 2018

Posted by Neely Munnerlyn

 
 

The Internal Revenue Service recently released Notice 1036, which updates the income tax withholding tables for 2018 to reflect changes made by the tax reform legislation enacted last month. The updated tables reflect the increased standard deduction, repeal of personal exemptions and adjusted tax rates included in the new tax law. Employers should begin using the new withholding tables as soon as possible but no later than February 15, 2018. The IRS also published a list of Frequently Asked Questions to provide additional guidance to employers. Click here for Notice 1036 and here for the list of Frequently Asked Questions. Please contact the above author or the Thompson & Knight attorney with whom you regularly work if you would like to discuss the new tables.

New Tax Law Includes Significant Changes Affecting Tax-Exempt Organizations

Posted by David Rosenberg, Tyree Collier, Lee Meyercord, Katie Gerber, and Jackson Oliver

     

The new tax bill enacted in December (the “Tax Bill”) includes many changes affecting tax-exempt organizations, including changes to excise taxes imposed on private foundations and universities, the charitable donations deduction, tax-exempt bonds, and the treatment of unrelated business taxable income (“UBTI”). The changes are effective January 1, 2018. The following summarizes the key changes in the Tax Bill for tax-exempt organizations.

Foreign Financial Institutions Receive Some Relief from FATCA TIN Reporting Requirement

Posted by Joe Rudberg, John Cohn, and Jana Benson

                   

On September 25, 2017, the IRS released Notice 2017-46 providing much anticipated official relief to foreign financial institutions (FFIs) facing requirements to obtain and report taxpayer identification numbers (TINs).  Earlier this year, regulations were released under the Foreign Account Tax Compliance Act (FATCA) that require certain FFIs to report TINs to the IRS for foreign financial accounts held by U.S. taxpayers and foreign entities with U.S. owners.  Under the regulations, each FFI was required to report this information to its taxing authority, which then must exchange the information with the IRS.  Beginning with the 2017 tax year, the regulations stated that a FFI that did not include a reportable person’s TIN would be considered in significant non-compliance with FATCA and trigger a notice to the foreign taxing authority concerning such non-compliance.  If the FFI did not remedy the lack of a TIN after such notice, the U.S. could treat the FFI as a “nonparticipating FFI” subject to 30% withholding under FATCA.

 

2018 Cost-of-Living Adjustments for Employee Benefit Plans

Posted by Sharon Fountain, Russell Gully, Jason Loden, Jessica Morrison, Neely Munnerlyn, and Shelly Youree

                             

The Internal Revenue Service recently announced the 2018 calendar year cost-of-living adjustments for limitations applicable to employee benefit plans qualified under the Internal Revenue Code.  Thompson & Knight's employee benefits group has produced a client alert explaining the new thresholds and limitations.  Please contact the Thompson & Knight attorney with whom you regularly work or any of the Thompson & Knight employee benefits attorneys to discuss this development.

Lee Meyercord Quoted on New Partnership Audit Rules

Posted by Lee Meyercord and Mary McNulty

             

Lee Meyercord was recently quoted in a Tax Notes Today article (subscription required) and a Bloomberg Law article (subscription required) on her testimony at the IRS hearing on the proposed partnership audit regulations.  Meyercord testified at the IRS hearing on behalf of the Tax Section of the State Bar of Texas as a coauthor of the Tax Section’s comments letter on the proposed partnership audit regulations.  Mary A. McNulty, Past Chair of the Tax Section and member of the Past Chair Advisory Board, reviewed the letter and provided substantive comments. 

Tax Court Holds Microcaptive's Policies Not Insurance

Posted by Todd Keator and Murtuza Hussain

            

In a recent case, Benjamin Avrahami v. Commissioner, 149 T.C. No. 7 (August 21, 2017), the Tax Court held that payments, including those to a microcaptive, were not for insurance and therefore were not deductible under Section 162. Furthermore, since less than half of the attempted microcaptive’s business was from issuing insurance contracts, it was not an insurance company and an election under Section 831(b) was not available.