It has been a busy week in Washington! Below are a few items we wish to share with you.
TAX REFORM UPDATE:
The U.S. House of Representatives, Committee on Ways and Means, issued a bill titled “The Tax Cuts & Jobs Act” which aims to simplify the tax code. The proposed bill includes a reduction in the number of tax brackets, an increase in the standard deduction, changes to many itemized deductions, and the repeal of personal exemptions. It also states an increase in the child tax credit, creates a new family tax credit, and proposes changes to education incentives. The home sale exclusion would be tightened and phased out at higher income levels and AMT would be repealed. The Act also contains extensive changes to corporate and business taxes, foreign income and persons, and exempt organizations. It expands Sec 179 and the use of cash accounting including the removal of the need to track and report inventories.
Below is the full bill for your reference, but remember, this is simply a proposed bill and is likely to change! Stay tuned for more updates in the weeks to come.
Attached is Notice 2017-67 which issues guidance on the requirements for providing a qualified small employer health reimbursement arrangement (QSEHRA) under section 9831(d) which was added to the Internal Revenue Code by 21st Century Cures Act, the tax consequences of the arrangement, and the requirements for providing written notice of the arrangement to eligible employees. We encourage you to read this carefully and discuss the details with your client should they desire to reimburse health care premiums. A client wishing to set up a QSEHRA may need to hire a firm to help set up and administer the plan. Remember, if the client fails to follow the requirements they could be subject to the $100 a day penalty!
E-FILE SHUT DOWN:
Also, as a reminder, the IRS Modernized e-file system that processes electronically-filed individual returns will shut down after November 18th so that the IRS can perform annual maintenance and reprogram the system for the upcoming 2018 tax filing season. While most individuals have already filed their 2016 federal tax returns, certain taxpayers may qualify for an extension until Jan. 31, 2018. This includes taxpayers who live in a federally declared disaster area, have a U.S. tax filing obligation, and had previously obtained a valid 6-month extension of time to file their federal tax return. The federally declared disaster areas include hurricane and tropical storm victims in Georgia, Florida, Puerto Rico, the Virgin Islands and parts of Texas, Louisiana and South Carolina, as well as wildfire victims in parts of California.