Continuing with my list of ten news items and activities from 2015 that I think have particular tax policy relevance. Today, for my third item is Justice Kennedy’s concurring opinion in Direct Marketing Association v Brohl, Exec Dir, Colorado Dept of Revenue, No. 13-1032 (3/3/15). In this opinion, Justice Kennedy posits that perhaps given “changes in technology and consumer sophistication,” it is time to revisit the Court’s 1992 decision in Quill, 504 U.S. 298! He also noted that Quill was a case “questionable even when decided, [that] now harms States to a degree far greater than could have been anticipated earlier.” This is a major item for 2015. It is really an invitation to any and all states with a sales tax to send a bill to a remote (non-present) vendor and hope that the vendor will challenge the assessment all the way up the administrative and judicial review process to land on the US Supreme Court’s agenda. Read more
Archive for Tax Policy
On December 18th, President Obama, signed H.R. 2029, the tax (the “Protecting Americans from Tax Hikes Act of 2015”) and spending bills (Consolidated Appropriations Act, 2016) to fund the government for its 2016 fiscal year.
The PATH Act ITIN renewal requirements: individuals who were issued Individual Taxpayer Identification Numbers (ITINs) before 2013 to renew their ITINs on a staggered schedule between 2017 and 2020 either in person before an IRS employee or a certified acceptance agent or by mail under procedures to be developed. Documentation proving identity, foreign status and residency is required for renewal. The Act also provides that an ITIN will expire if an individual fails to file a tax return for three consecutive years.
Similar rules apply to individuals residing outside the United States such as Canadians who applied for ITINS and file U.S. tax returns reporting their net rental income from U.S. real estate. It’s important to keep in mind that the
Continuing with my list of ten news items and activities from 2015 that I think have particular tax policy relevance.
#2 – IRS Funding Challenges – Despite an aging workforce resulting in many retirements, a tax statute that is made increasingly more complicated each year, and the need to modernize operational and technology practices, the IRS budget has been cut by over $1.2 billion from FY2010 to FY2015. [See 5/18/15 TIGTA report, Center for Budget and Policy Priorities article on the cuts of 9/30/15 and USA Today article of 6/17/15.]
The May 2015 TIGTA report includes the following graphs showing the decrease in the number of collection officers and a 95% increase in computer downtime due to use of old technology (hardware and software). Read more
An important tax update was made regarding the rate increase and withholding of tax on U.S. property dispositions. On December 18th, President Obama, signed H.R. 2029, the tax (the “Protecting Americans from Tax Hikes Act of 2015”) and spending bills (Consolidated Appropriations Act, 2016) to fund the government for its 2016 fiscal year.
The December The Act increases the rate of withholding from dispositions of U.S. real property interests under §1445 from 10% to 15%, but remains at 10% for residences sold for less than $1 million.
The withholding exemption where the sale price is under $300,000US and the purchaser will acquire the property as their principal residence is still in effect.
On December 18th of 2015, President Obama signed into law a sweeping $1.14 trillion dollar funding bill that will keep the federal government operating through September 30th of 2016. In connection to the tax aspects of this comprehensive and pivotal legislation, the Protecting Americans from Tax Hikes Act of 2015 (hereinafter the “PATH Act”) accomplished considerably more than the typical tax-extenders legislation passed in previous years and truly signifies a dynamic paradigm shift as the PATH Act makes permanent over twenty leading tax incentives while extending other tax incentives over either a five year period or a two year period.
In particular, the PATH Act meaningfully enhanced the R&D Tax Credit Program (hereinafter “RTC program”) on a myriad of levels. As an overview, the RTC program was initially added to the U.S. Internal Revenue Code (hereinafter the “Code”) in 1981 through the Economic Recovery Tax Act of 1981 as a temporary provision of the Code. The RTC program had most recently expired on December 31, 2014. A tremendous paradigm shift to the RTC program was made possible through the PATH Act which not only renewed the RTC retroactively for all of calendar year 2015 but most importantly made the RTC program permanent. In addition, the enhanced RTC program has been considerably restructured to: Read more
On December 18th of 2015, President Obama discussed a Legislative Tax Update on Capitol Hill. He signed into law a sweeping $1.14 trillion dollar funding bill that will keep the federal government operating through September 30th of 2016. In connection to the tax aspects of this comprehensive and pivotal legislation, the Protecting Americans from Tax Hikes Act of 2015 (hereinafter the “PATH Act”) does considerably more than the typical tax-extenders legislation passed in previous years and truly signifies a dynamic paradigm shift as the PATH Act makes permanent over twenty leading tax incentives, including the Research & Development Tax Credit Program, the American Opportunity Tax Credit Program and the enhanced I.R.C. § 179 Expensing Program. The PATH Act further extends other key tax incentives, including the Bonus Depreciation Program and the New Markets Tax Credit Program for five years while reinstating other significant tax incentives for two years. The PATH Act also imposes a two-year suspension on the ACA Medical Device Excise Tax.
The subsequent synopsis will serve as a practical overview of just some of the many far-reaching changes enacted by the PATH Act affecting both business entities and individuals including, but certainly not limited to: Read more
For the rest of 2015, I’m going to share my list of ten items from 2015 that I think have particular tax policy relevance. It’s not a countdown so the start of this list today – #1, isn’t necessarily the biggest item of interest.
#1 – Congress can alter our tax system via a lot of non-tax bills. In 2015, we saw ten bills enacted (as of 12/11/15) with tax changes. Yet, these bills were not intended to be tax bills, they all had a different primary purpose such as enacting trade deals or funding the Highway Trust Fund. Various tax changes were added in, many of which had been around for a while. For example, the GAO has been suggesting for years that additional information be required on Form 1098 mortgage interest statement. The change in due dates for some tax forms has also been talked about for some time and was even in Congressman Camp’s H.R. 1 (113rd Congress) tax reform bill. Read more
During its previous term, in a case that definitely took a back seat to the Affordable Care Act, same-sex-marriage, and the other high-profile disputes that the Supremes attempted to resolve, the High Court might have changed the way that doctors, dentists, accountants, lawyers, and other professionals have done business for decades. In North Carolina State Board of Dental Examiners vs. Federal Trade Commission, the Court may have ended a para-state professional organization’s ability to regulate nonmembers.
It seems that an inordinate number of beige-toothed Tarheels were flocking to their local teeth-whitening clinics to get a bleach job. The state dental board decided to fly to the rescue and put an end to this nefarious practice, ostensibly because these country-fried rubes couldn’t possibly do the job right and thus put innocent Polly Pureheart consumers at risk, but really because they wanted to charge $1,000 for teeth whitening Read more
On Tuesday, December 1, 2015 we posted Have An Unpaid Tax Bill? Your Passport Could Soon be Revoked!, where we discussed that nothing has happened since our May 31, 2012 post “Tax Delinquents May Have Passports Canceled & Be Questioned at Air & Sea Ports” as it relates to the IRS being able to revoke the passports of Americans who owe substantial unpaid taxes.
However a recent bill known as the H.R. 22, Fixing America’s Surface Transportation Act (FAST Act), which It includes amendments to the tax code that would allow authorities to revoke or deny the passport of any US taxpayer who has unpaid taxes in excess of $50,000 or who have not obtained or won’t provide a Social Security number, has been approve by the conference committee. Read more
Why are our tax systems so complex? One key reason is that lawmakers keep adding to them and rarely delete anything. Also, items added for temporary purposes are often renewed (rather than dropped or made permanent). Also, we often have numerous rules serving similar purposes (such as for higher education spending or savings).
Well, on October 10, 2015, California Governor Brown, said “NO” to nine tax bills presented to him.
His reason was that they might bust the budget given other budget issues. Each of the nine would have either added or expanded an existing or expired provision or added something new. Read more
If you’re a provider of digital services to customers in Japan, please be aware that the changes being introduced on 1st October 2015 may affect you.
Under the Consumption Tax Act (Act No. 108 of 1988), a service rendered in Japan is subject to Consumption Tax which is equivalent to VAT (i.e. Value Added Tax).
The criteria for determining whether a service is rendered inside or outside Japan varies depending on the nature of the service.
Under the current rules (i.e. pre October 2015), the tax treatment relating to the provision of e-commerce services, such as e-books, online games, internet delivery of music, etc. is Read more
Welcome news for foreign investors in India!
Following is the Press release by Ministry of Finance:
“Through the amendment the Government proposes to clarify that MAT provisions will not be applicable to FIIs/FPIs not having a place of business/ permanent establishment in India, for the period prior to 01.04.2015. Pending such amendment, CBDT will convey to the field formations the decision of the Government to accept the recommendation.
The Report of the Committee is available on the website of the Finance Ministry and the Read more