Tax News & Views Retention Credit Health Expenses Roundup

May 8, 2020

Treasury Will Change Course on Retention Credit Health Expenses – Stephanie Cumings, Tax Notes ($). “Treasury will revisit guidance on the new employee retention tax credit regarding health plan expenses, according to a letter sent to a top taxwriter.”

“This decision will encourage employers to help employees keep their health insurance while temporarily furloughed due to the shutdown,” Grassley said in a statement praising the decision. “The decision also aligns Treasury’s policy with the original congressional intent behind the employee retention tax credit.”

In a previous FAQ, the IRS stated that employers would not be able to treat health care plan expenses as qualified wages if the employer was not paying the employee wages because “no portion of the health plan expenses would be allocable to wages paid to its employees.”

More about the employee retention credit here.

Restoring The Three Martini Lunch Tax Deduction Won’t Feed The COVID-19 Economy – Howard Gleckman, TaxVox. “What good will it do to subsidize business meals and entertainment when almost no one is traveling or meeting in person? Or while hotels, restaurants, golf courses, and the like largely remain shuttered? And when those that do reopen are operating are far below capacity? Until the pandemic is controlled, who will do business over lunch?”

Those Stimulus Checks To The Dead And Incarcerated? The IRS Wants Its Money Back – Sarah Hansen, Forbes. "The IRS issued new guidance on Wednesday clarifying that a “payment made to someone who died before receipt of the payment should be returned” and provided instructions for sending back checks that were received in error."

Gov. Hogan Vetoes Maryland Digital Advertising Tax Legislation – Jared Walczak, Tax Foundation. “This afternoon, Gov. Larry Hogan (R) vetoed a proposed first-in-the-nation digital advertising tax that would have imposed rates of up to 10 percent on digital advertising served to Marylanders” 

The proposed tax, imposed at rates ranging from 2.5 to 10 percent on gross revenue from advertising into Maryland, faces serious legal headwinds. The applicable rate is based on the gross revenues of the advertising company, not their in-state activity, just one of several ways the law likely runs afoul of U.S. constitutional requirements. The bill also appears to run headlong into the federal Internet Tax Freedom Act, which prohibits imposing taxes that single out e-commerce. A tax on all advertising, including digital advertising, would not violate that federal law, but singling out digital advertising without imposing a tax on similar offline activity, almost certainly does.


Bitcoin Vs. Gold: Which Is More Tax Efficient Investment? – Shehan Chandrasekera, Forbes. “There are several benefits of bitcoin over gold as an investment. Often overlooked however, are the significant tax savings associated with investing in bitcoin compared to gold. The result? For a savvy investor, considerably higher post-tax returns.”

Bitcoin - What Should You Know

Tax 101 Revisited: Three Key Taxwriters Protest IRS Position on Deduction of PPP Expenses, State the Ruling Is Contrary to Both Congressional Intent and Controlling Authorities – Ed Zollars, CPA, Current Federal Tax Developments.

Key members of the Congressional tax-writing committees have, for the second straight day, sent a letter to Treasury Secretary Mnuchin, voicing their displeasure with IRS guidance on a CARES Act issue and requesting that the agency reverse this guidance.[1]  This time the letter, signed by Senate Finance Committee Chair Chuck Grassley (R-IA), Ranking Member Ron Wyden (D-OR) and House Ways & Means Committee Chair Richard Neal (D-MA), raises issues with the guidance in Notice 2020-23.


Treasury Expected to Extend Deadlines to Claim Energy Credits – Jad Chamseddine, Tax Notes ($). “In a May 7 letter to Senate Finance Committee Chair Chuck Grassley, R-Iowa, Frederick W. Vaughan, principal deputy assistant secretary in the Treasury Office of Legislative Affairs, said the department would modify the relevant rules to provide safe harbor for the production tax credit (PTC) and energy investment tax credit (ITC).”

AICPA proposes broad range of tax relief to aid economic recovery, Alistar M. Nevius, J.D., Journal of Accountancy. “the AICPA says the pandemic has “highlighted the antiquated nature” of certain tax provisions and it calls for modernizing and future-proofing the tax system, particularly with regard to small businesses.”

Among the general small business recommendations are a repeal of the alternative minimum tax (AMT) for individuals, trusts, and estates; allowing the deduction of all state and local taxes (SALT) associated with business income when computing businesses’ adjusted gross income, to remove the disparate effect of the $10,000 SALT deduction cap on small businesses; repealing the syndicate rules; removing the strict business-use requirement for the home office deduction; and repealing the specified trade or business rules under Sec. 199A, among many others.


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