Tracking legislation that may impact your business, your estate, your retirement or your wallet.
Tariffs on imported metals, Chinese imports.
The federal government has officially imposed excise taxes of 25% on foreign steel and 10% on imported aluminum. Some nations are initially exempt from these tariffs. Testifying before the Senate Finance Committee on March 22, U.S. Trade Representative Robert Lighthizer said steel and aluminum from Canada, Mexico, Argentina, Brazil, Australia, and the nations of the European Union will not presently be hit with the tariffs. On the same day, the Trump administration announced tariffs on $60 billion worth of Chinese goods arriving in the U.S., across numerous product classes.1
DoL fiduciary rule reversed in three states.
To the surprise of many consumer advocates, the Fifth Circuit Court of Appeals decided 2-1 in March to vacate the new “fiduciary rule” requiring financial services industry professionals who serve as retirement advisors to adopt a fiduciary standard. The rule, which demands that advisors put the client’s interest first regarding retirement accounts, now no longer applies in Louisiana, Mississippi, and Texas. It still applies in the rest of the country, however, and some legal analysts think that a Supreme Court ruling may be needed to address the inconsistency.2
Internal Revenue Service extends filing deadline for some Hurricane Maria victims.
Residents of any of the 78 municipalities of Puerto Rico and the islands of St. Croix, St. John, and St. Thomas in the U.S. Virgin Islands now have until June 29 to file their 1040s and pay taxes due on their returns, the I.R.S. announced March 22.3
Federal Tax Law Adjustments
Congress fixes the “grain glitch.”
As part of the omnibus appropriations bill approved in March to keep the federal government funded, legislators addressed a provision in Section 199A of the TCJA that wound up delivering an advantage to farm co-ops over corporate-owned producers of feed. The “grain glitch”, as it was dubbed, let farmers who sold crops to co-ops deduct 20% of their gross sales. If they sold their crops to other types of businesses, they could only deduct 20% of net income. Corporate interests in agribusiness had been lobbying for a fix, and they got it. Now, farmers and ranchers may receive the 20% pass-through deduction for business income, as other business owners do.4
No tip pooling.
At the end of 2017, the Department of Labor proposed giving restaurateurs and other owners of businesses where employees are tipped the option to pool worker tips and dispense them as they wish, even to themselves. The omnibus appropriations bill just passed in Congress states that tip pooling is not allowed.5
A trade war on the horizon?
China has cautioned the U.S. that it will take “all necessary measures” in response to the wide-ranging $60 billion in tariffs the Trump administration imposed in late March, which will affect slightly more than 10% of its exports to America. Its response could be major indeed: the P.R.C. is America’s largest creditor, possessing more U.S. government bonds than any other nation. It is also a major buyer of U.S. crops. China could announce its own tariffs on U.S.-made goods in the coming weeks.1,6
Internal Revenue Service may audit even fewer tax returns in 2018.
Worried about being audited? Well, Joy Taylor, who covers taxes for Kiplinger.com, notes that the I.R.S. took a fine-tooth-comb to less than 1% of TY 2016 returns in 2017, and she thinks the percentage may be lower this year.7
This year, executive bonuses could be affected by tax reform. Upper-tier corporate leaders may find their compensation packages altered by the Tax Cuts & Jobs Act. Since the TCJA nullified a deduction companies once used for performance-based bonuses of more than $1 million, employers may provide their high-level employees with incentive stock options (and increased base pay) in response.8
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate, and is provided for general purposes only. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and is not intended to be used for, and cannot be used for, the purpose of avoiding US, federal, state or local tax penalties.
1 – tinyurl.com/y7fompvr [3/22/18] 2 – thestreet.com/story/14527631/1/court-ruling-puts-fiduciary-rule-and-retirement-investors-in-limbo.html [3/20/18] 3 – irs.gov/newsroom/tax-filing-deadline-postponed-until-june-29-for-victims-of-hurricane-maria-in-puerto-rico-and-the-virgin-islands [3/22/18] 4 – accountingtoday.com/news/congress-to-give-irs-320m-funding-boost-to-administer-tax-reform-while-fixing-grain-glitch [3/22/18] 5 – washingtonpost.com/news/powerpost/wp/2018/03/22/heres-what-congress-is-stuffing-into-its-1-3-trillion-spending-bill/ [3/22/18] 6 – money.cnn.com/2018/03/21/news/economy/trump-trade-china-intellectual-property-301/index.html [3/21/18] 7 – marketwatch.com/story/beware-the-irs-is-looking-for-these-red-flags-this-tax-season-2018-02-28 [3/21/18] 8 – tinyurl.com/ydxgo3eh [3/20/18]