The following “Expertise Beyond the Numbers” blog post from SC&H Group’s Tax Services team discusses important tax developments in the fourth quarter of 2015, and their potential impact on your tax return.
While in the past, Congress has been gridlocked on getting new laws passed, there was a flurry of activity containing tax provisions in the last quarter of 2015 that may affect you, your family, and your investments.
Below are the important tax developments you need to know:
- The Protecting Americans From Tax Hikes (PATH) Act (P.L. 114-113, 12/18/2015) retroactively extended 50 or so taxpayer-favorable tax “extenders”—temporary tax provisions routinely extended by Congress on a one- or two-year basis, that had been expired since the end of 2014.
It made permanent more than a dozen of the extenders, including:
- The enhanced child tax credit
- The American opportunity tax credit and earned income tax credit
- The parity for exclusion from income for employer-provided mass transit and parking benefits
- The deduction of State and local general sales taxes
- The research credit
- The 15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements
It also contained a delay in the Affordable Care Act’s 2.3% excise tax on medical devices and provisions on Real Estate Investment Trusts (REITs), IRS administration, the Tax Court, and numerous other rules.
- The Consolidated Appropriations Act (P.L. 114-113, 12/18/2015) included a delay of the Affordable Care Act’s 40% excise tax on high cost employer-sponsored health coverage (i.e., the so-called “Cadillac” tax) and a one-year suspension of the annual fee on health insurance providers, in addition to the extension and phase out of credits for wind facilities, the election to treat qualified facilities as energy property, the solar energy credit, and qualified solar electric and water heating property credits. It also contained a provision that gives independent oil refiners a favorable way of accounting for transportation costs in calculating their domestic production activities deduction.
- The Fixing America’s Surface Transportation (FAST) Act (P.L. 114-94, 12/4/2015) requires the Secretary of State to deny a passport (or renewal of a passport) to a seriously delinquent taxpayer (i.e., generally, a taxpayer with any outstanding debt for Federal taxes in excess of $50,000). It also requires the IRS to enter into qualified tax collection contracts with private debt collectors for the collection of inactive tax receivables and repealed a recently enacted provision that provided for a longer automatic extension of the due date for filing Form 5500.
- The Bipartisan Budget Act of 2015 (P.L. 114-74, 11/2/2015) eliminated the TEFRA unified partnership audit rules (so-called because they were introduced in the Tax Equity And Fiscal Responsibility Act of ’82) and the electing large partnership rules, and replaced them with streamlined partnership audit rules. The new rules are effective for returns filed for partnership tax years beginning after Dec. 31, 2017, but taxpayers can elect to apply them earlier.
- The Protecting Affordable Coverage for Employees Act (P.L. 114-60, 10/7/2015) revised the non-tax definition of small and large employers for purposes of the Affordable Care Act. This, however, also ended up modifying a benefits-related tax rule under Code Sec. 125(f)(3)permitting certain qualified health plans to be offered through cafeteria plans.
Check the SC&H Group blog regularly for the latest tax updates – and how they may impact you, your family, and your investments.
For more information on what steps you should implement to take advantage of favorable tax developments, and to minimize the impact of those that are unfavorable, please contact SC&H Group’s Tax Services team.