- Final regulations provide guidance with regard to discounting insurance companies’ unpaid losses and estimated salvage recoverable for federal income tax purposes.
- Final regulations expand the class of permissible potential current beneficiaries of an electing small business trust (ESBT) to include nonresident aliens.
- Final regulations concerning health reimbursement arrangements (HRAs) permit employers to offer a new “individual coverage HRA” as an alternative to traditional group health plan coverage, subject to certain conditions. These individual coverage HRAs can be used to reimburse premiums for individual health insurance chosen by the employee.
- Final regulations concern the availability of charitable contribution deductions under section 170 when a taxpayer receives or expects to receive a corresponding state or local tax credit. A notice from the IRS (Notice 2019-12) provides “safe harbor” relief.
- The U.S. Court of Appeals for the District of Columbia affirmed a decision of the U.S. Tax Court—an opinion that rejected the IRS’s position in Rev. Rul. 91-32 that a foreign partner’s capital gain from the sale of an interest in a partnership that is engaged in a U.S. trade or business is treated as gain that is effectively connected to a U.S. trade or business and therefore subject to U.S. federal income tax. The Tax Court case was cited in the legislative history to the 2017 U.S. tax law that enacted clarifying measures.
- OMB’s Office of Information and Regulatory Affairs (OIRA) completed its review of final regulations concerning health reimbursement arrangements (HRAs). These regulations are now pending release (the exact timing of the release is not known).
- Guidance from the tax authorities of Arizona, Illinois, New York, Tennessee, and Vermont concerns the tax treatment of remote sales as a response to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. (state sales tax implications of remote or online sales).
- Legislation in Arizona updates the state’s conformity to the Internal Revenue Code. Provisions of the federal tax law that is often referred to as the “Tax Cuts and Jobs Act” (Pub. L. No. 115-97) are incorporated into Arizona law for the 2018 tax year.
- Pending legislation in Connecticut includes measures that would revise the definition of tangible personal property (that is, property subject to sales and use tax at a general rate of 6.35%) to include digital goods and canned or prewritten software that is electronically accessed or transferred (other than when purchased by a business for its own use). The bill also increases the rate of sales and use tax imposed on meals and drinks sold at eating establishments and bars by 1% so that these sales would be taxed at a rate of 7.35%.
- In Illinois, enacted legislation provides new, graduated income tax rates for individuals, trusts, and estates (increasing the flat 4.95% rate to 7.99% on all income over $1 million, subject to approval by voters) and a contingent corporate income tax increase to 7.99%, so that with the 2.5% replacement tax added in, the Illinois corporate income tax rate is increased to 10.49%.
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- The U.S. House of Representatives passed a revised version of an IRS administration bill—H.R. 3151, the “Taxpayer First Act.” Unlike a prior version of the bill, this one does not include a “free file” measure for income tax returns.
Read TaxNewsFlash-Legislative Updates