Tax

U.S. Dept. of Treasury, IRS Propose Changes Regarding Net Operating Losses

The U.S. Department of Treasury and the Internal Revenue Service last week proposed new regulations regarding application of certain rules under Sections 382 and 383 of the Internal Revenue Code. The new regulations would lessen the ability of companies to use net operating losses and other tax saving measures by changing the “annual limitation” on the ability of a company to apply pre-change tax attributes to offset post-change taxable income. You can read more about these changes and submit a formal comment here. The deadline for comment on these proposed changes is November 12.

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Businesses Testify to USTR Regarding Additional Trump Tariffs

Some of the nation’s business leaders recently participated in seven days of hearings with the Office of the United States Trade Representative in an effort to sway the Trump administration from imposing tariffs on an additional $300 billion in Chinese goods, The New York Times reports. The group — comprised of toymakers, telecom officials, port workers and shoemakers — joined existing detractors, arguing that additional levies would further raise costs for consumers, disrupt supply chains and could force them to lay off employees or close. The administration says that these levies are necessary to curb China’s violation of international trading rules. President Trump will meet with President Xi Jinping of China at the end of this week to discuss the tariffs and a new trade deal, but business owners remain doubtful that an agreement will be reached.

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Coffee Co. Considers Additional Taxes for Bonnaroo

Following the first sold out Bonnaroo Music and Arts Festival in seven years, questions have risen about its future in Coffee County, The Tennessean reports. The festival and municipality have long been embroiled in a love-hate relationship; however, the recent move by the Coffee County Commission to instill a 2.5 percent tax on hotel room bookings just two days prior to this year’s events —which would also be charged to onsite campers — had organizers up in arms. Bonnaroo staff eventually made a deal with the commission to exclude campers this year, but Coffee County remains resolute in obtaining additional funds to pay for road and bridge upgrades in the county. The festival nets the municipality around $1 million annually in tax money from ticket sales and on-site services, and contributes about 25 percent of the county’s annual sales tax.

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Hamilton County to Consider Tax Relief Program for Seniors

Facing a tax hike for Hamilton County residents, Commissioner David Sharpe plans to propose an initiative to soften the blow to seniors on a fixed income, the Chattanooga Times Free Press reports. The program will supplement the state’s existing Property Tax Relief Program of 2018 that aids elderly homeowners, disabled homeowners, disabled veteran homeowners and widows of disabled veteran homeowners. Early estimates show that the program will cost the county about $360,000 annually.

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Study Credits Tennessee Tax Policies for Economic Growth

A new study by the American Legislative Exchange Council, a conservative think tank comprised of legislators and business leaders, puts Tennessee in its top ten list of states with a positive economic outlook, the Chattanooga Times Free Press reports. Between 2007 and 2017, Tennessee’s GDP rose 43.1 percent, with the state growing payroll employment by 8 percent. The study credits Tennessee’s relatively low tax rates, lack of personal income tax and plans to phase out inheritance and unearned income taxes, among other reasons, for the state’s economic standing.

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IKEA in Memphis will Opt Out of PILOT Tax Breaks

Swedish furniture retailer IKEA will opt out of its 11-year payment-in-lieu-of-taxes (PILOT) break because the company failed to meet program requirements, the Daily Memphian reports. IKEA initially agreed to hire 175 employees with an average wage of $41, 011, however, currently employs 147 people with an average wage of $36,944. The company may get another year of incentives if it follows through on environmental projects such as water conservation efforts and installing a solar powered roof.

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Health Care Giant Receives $1.7 Billion Refund Despite Paying no Federal Tax in 2018

Health Care Service Corp. — the parent company for Blue Cross Blue Shield health plans in Illinois, Montana, New Mexico, Oklahoma and Texas — received a $1.7 billion tax refund despite paying no federal taxes in 2018, Axios reports. The company showed $4.1 billion profit on $35.9 billion of revenue in 2018 vs. $1.3 billion net profit on $32.6 billion of revenue in 2017, for which it paid about $467 million in federal taxes. The company credited the surplus to the repeal of the corporate alternative minimum tax as part of the Tax Cut and Jobs Act of 2017.

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New York Considers Tax on Second Homes

Lawmakers in New York are considering a singular solution to funding future NYC projects — a tax hike on multi-million-dollar second homes, The New York Times reports. The so-called “pied-à-terre tax” would institute an annual tariff on homes worth $5 million or more that do not serve as the buyer’s primary residence. The proposed hike would feature a sliding scale, with properties valued between $5 million and $6 million subject to a 0.5 percent surcharge on any valuation over $5 million, incrementally topping out at four percent for homes valued at over $25 million. Though unclear how much money the tax would raise, the New York City Comptroller's office estimated the tax would bring in a minimum of $650 million annually if enacted today and could raise $9 billion in state bonds based on expected revenue.

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U.S. Senate Democrats Support Increase, Changes to Child Tax Credits

U.S. Senate Democrats are rallying around a bill that intends to make strides in tackling child poverty, Vox.com reports. Initially introduced in 2017, the American Family Act would expand the child tax credit to $3,000 per year for income-qualifying families with a child ages six to 16, and $3,600 per year for families with a child aged from zero to five. The benefits would be distributed monthly, in advance, to help the families with budgeting concerns.

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IRS Faces Huge Backlog After Government Shutdown

The IRS is facing a considerable backlog after the shutdown, as employees returned to an estimated 5 million unanswered pieces of mail after the 35-day hiatus, Forbes reports. This is a wrench in the cog of an already hectic tax season, with the agency stretched because of changes in code from the Tax Cuts and Jobs Act and a revised 1040 form that has at least six additional schedules. The recent furlough, compounded with customer service questions on these changes, is expected to delay the agency considerably this tax season. While it’s currently back to business for the IRS, there is no guarantee of continued funding with another shutdown looming, as the government was only guaranteed budgeting for three weeks. 

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