VIEWpoint Issue 1 | 2019
2018-2019 Tax Planning Guide
VIEWpoint Issue 2 | 2018
IRS Proposes Withholding Tax on Retirement Plan Distributions for...
Trump Signs Bipartisan IRS Reform Legislation into Law
The Tax Implications of Being a Winner
Tax reform continues to be highly touted in Congress as lawmakers from both parties call for simplification of countless complex rules, overhaul of tax rates and more. At times this year, the president and congressional republicans seem far apart on a way forward, but at similar times in the past, agreements have quickly and often surprisingly emerged, most recently in the Protecting Americans from Tax Hikes Act of 2015 (PATH Act). As we approach the November elections, lawmakers from both parties and the president have a short window to agree on tax legislation.
The scope of the PATH Act surprised many Hill observers, including Congressâ€™ vote to make permanent many tax incentives such as the state and local sales tax deduction, research tax credit and teachersâ€™ classroom expense deduction. Additionally, it made changes to the rules for IRS administration, real estate investment trusts (REITs), how the Tax Court works and more â€“ resulting in the largest tax bill since the American Tax Relief Act of 2012. The passage of the PATH Act shows that another tax bill, possibly an even larger tax reform package, could make it out of Congress before year-end.
Almost everything in the Tax Code appears to be on the table at this time. Among the provisions/ideas being discussed by legislators are:
Reforming the rules for international taxation, such as the complex rules for corporate inversions, transfer pricing and more, has been of special interest this year. One unanswered question is whether international tax reform can move forward by itself or if proponents need to add â€śsweetenersâ€ť such as expanded tax breaks for lower- and middle-income taxpayers to win support in Congress. Some lawmakers want to link international tax reform to a cut in the U.S. corporate tax rate. How to pay for any rate cuts also is generating questions and few answers. President Obama has proposed to tighten the international tax rules and use the expected revenue to pay for infrastructure projects, along with reducing the corporate tax rate.
Before Congressâ€™ summer recess, a package of energy tax breaks could be approved by the House and Senate. Many of these are temporary incentives that were not included in the PATH Act, such as the special credits for fuel-cell vehicles, and there is a bipartisan effort to make them permanent.
For more information about tax reform and what measures you may take now in anticipation of changes ahead, contact Doeren Mayhewâ€™s tax advisors today.
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