As part of its comprehensive 2017 tax reform bill, Congress repealed deductions for Qualified Transportation Fringes including for employer-provided parking, while also requiring that tax-exempt organizations increase their unrelated business taxable income by the nondeductible parking expenses. Recently released IRS Notice 2018-99 addresses some of the year-end tax filing and tax planning concerns for affected employers with rules of special interest to tax-exempt employers.
Samantha Souza focuses her practice on matters involving employee fringe benefits, payroll taxes, information reporting, and executive compensation. She regularly assists clients with navigating through Internal Revenue Service audits and appeals. Sam’s practice also includes tax litigation on a variety of employment tax and tax refund matters. Previously, Sam served as a law clerk to the Honorable Ronald L. Buch at the United States Tax Court. Read Samantha Souza's full bio.
The IRS released guidance in April on the new credit for paid family and medical leave. In FAQ form, this guidance helps employers gauge whether their current policies are sufficient, or whether implementation of conforming paid leave policies may be necessary.
US tax reform is changing the game with respect to many of the popular benefits employers have traditionally provided to their employees. These new rules have produced a great deal of questions. However, while the Internal Revenue Service (IRS) is formulating guidance, employers are left to navigate these changes on their own in order to determine the impact on both themselves and their employees. Employers are also reevaluating their benefit offerings in light of the new rules. These issues and more were addressed during the 2018 McDermott Tax Symposium on April 24, 2018.
The McDermott panel left the audience with these core takeaways:
- Due to the suspension of their employees’ ability to take many itemized deductions, employers should consider the feasibility of restructuring their compensation arrangements to save income taxes and FICA taxes.
- Certain employers that are public employers, private employers with public debt or non-U.S. employers with ADRs traded on a U.S. market should evaluate their executive pay arrangements to determine whether the grandfathering rules under section 162(m) apply to any compensation and further ensure compliance with the new rules under section 162(m).
- Employers should consider whether they will continue to provide popular benefits such as qualified transportation fringes and employer-provided meals. If employers choose to continue to provide these benefits, they will need to confirm that their systems are updated to reflect the changes in deductibility.
- Employers should begin using the updated Form W-4, if they are not already.
- Employers should encourage their employees to utilize the IRS’ updated withholding calculator to verify that the proper tax amounts are being withheld.
For additional information on these topics and other items addressed by McDermott tax professionals during the symposium, please see the compilation of slides. For additional tax reform resources, please visit McDermott’s Take on Tax Reform.
In a recent 2-1 decision, the Fifth Court vacated the US Department of Labor’s controversial expansion of the ERISA fiduciary regulations (the New Fiduciary Rule). If the DOL does not seek a rehearing, the Fifth Circuit will enter a mandate revoking the New Fiduciary Rule nationwide. However, given recent fiduciary regulations proposed by the Securities and Exchange Commission, the DOL may be less likely to appeal the ruling and no longer seek to enforce the New Fiduciary Rule.