The tax law is difficult to understand due to its numerous special rules. This is apparent on just about every news show about the House Republican/President Trump’s bill to replace/repair the Affordable Care Act (aka Obamacare). Last night, I saw a bit of a CNN town hall with HHS Secretary Tom Price. Questions were raised about the bill providing significant benefits to high income/wealthy individuals. In addition to repeal of the Net Investment Income Tax (Section 1411), a comment was made by the CNN reporter about repealing the ACA rule regarding a compensation limit on high compensation of health insurance companies.
Archive for Annette Nellen
The House Republican plan to repeal and replace the Affordable Care Act (aka Obamacare) that was released on March 6 omits something that the House Republican health reform blueprint of June 2016 said would be included. The missing item is a big one, that if modified, would make the tax law more equitable, reduce health care spending, raise revenue (that could be used to help those without insurance), and help a lot of people know what their health insurance costs.
I define the sharing economy broadly as including both sharing assets and one’s time. Four characteristics:
- Monetizing unused time and assets.
- Using technology to match those with resources to those willing to pay for them.
- Providing assets where temporary need exists (such as bike share).
- Operating in the broadest space possible (including digital services provided to a global marketplace).
The AICPA Tax Division has a nice tax reform resources website that includes comment letters and testimony from the AICPA and short update videos. I’ve got one there dated February 27 on what to tell your clients about tax reform. I hope you’ll check it out and that it helps give you some ideas of information to share with your clients to help them understand tax reform and the possible effects on them.
AB 252, a proposal in the California legislature “would prohibit the imposition by a city, city and county, or county, including a chartered city, city and county, or county, of a tax on video streaming services, including, but not limited to, any tax on the sale or use of video streaming services or any utility user tax on video streaming services.
AB 71 introduced in California for the 2016-2017 session, proposes to repeal the deduction for mortgage interest on a second home (usually a vacation home) and use the savings (and apparently other funds) for low-income housing.
In the U.S., the consumption taxes we are most familiar with are the sales tax and some excise taxes, such as on gasoline, alcohol and tobacco. We typically think of these taxes as having to be imposed at the point of purchase. There is an advantage to this because you’ll know at that time if you can afford to pay the tax. Disadvantages to this approach include that the vendor has additional compliance to collect and remit the tax (and penalties if done wrong) and the rate can’t be adjusted for the income level of the buyer (although I understand many might not view this as a disadvantage).
In 2015, Congress changed the due date for several types of entities as well as for the FBAR (for foreign financial accounts). The AICPA has a wonderful chart with all of the new dates noted.
When Congress made the changes for C corporations, they apparently had a concern with a change that would move a due date from one government fiscal year into the next fiscal year. The federal government’s fiscal year ends September 30.
There is lots of talk about federal tax reform. We are likely to see some legislative language from the House in spring, according to Speaker of the House Paul Ryan (see Jeremy Quittner, “Paul Ryan Says Tax Reform Won’t Happen Any Time Soon,” Fortune, 2/2/17).
Our tax filing systems are not perfect! How does the IRS or a state tax agency really know if the person filing a return is the true owner of the taxpayer identification number used? In IRS Publication 1345, on procedures for authorized e-file providers, the IRS states that if the preparer/e-filer does not know the client, they should get two forms of verification (ideally picture IDs that include the client’s name and address (page 11 of Pub 1345)). That should help. What else is needed?
We have a new Congress and new President – all of the same party. Tax reform discussions and hearings have been held for the past six years. In June 2016, the House Republicans released their “blueprint” for tax reform. So, will we see tax reform in 2017? If yes, what might it look like?
Sales tax law changes and discussions in 2017 are likely to look a lot like those of 2016, with one possible exception.
The repeating discussions and activities will include:
1) Expanding the sales tax base to include more services and digital goods.
2) Congressional hearings on the Marketplace Fairness Act without enactment of legislation.