Tax

As the 2024 presidential election approaches, tax policy remains a pivotal issue in the platforms of both major candidates: former President Donald Trump and President Joe Biden. Each has outlined distinct visions that promise to reshape the nation’s fiscal outlook, impacting individual taxpayers and the business community. Trump advocates for deeper tax cuts, while Biden proposes increased rates for higher earners and corporations, making understanding these policies crucial for effective financial planning and strategy.

The 2024 legislative session in Georgia concluded on March 28th, marking a significant period of legislative activity that promises to reshape the state’s financial landscape. During this session, the General Assembly passed several tax bills, including a substantial $500 million in tax cuts for both individual and corporate taxpayers in Georgia. Additionally, several constitutional referendums will be placed on ballots, giving voters a direct say in the state’s tax policies.

The Department of Treasury and the Internal Revenue Service have released Announcement 2024-19, which provides detailed guidance on the federal tax implications of rebates under the Department of Energy (DOE) home energy rebate programs. These programs are funded through the Inflation Reduction Act of 2022 and are designed to promote the adoption of energy-efficient technologies in residential settings. This announcement is crucial for homeowners and industry professionals, helping them understand how these rebates integrate into the broader federal tax system. To help clients, prospects, and others, Wilson Lewis has summarized the key details below. Background on DOE Home Energy Rebate Programs The DOE Home Energy Rebate Programs were launched to promote widespread energy-saving retrofits and high-efficiency home electrification projects, contributing to national energy efficiency and environmental sustainability goals.

On March 11, President Biden presented a budget proposal that seeks to enact nearly $5 trillion in tax adjustments over the next decade. Key facets of this proposal focus on modifying the tax obligations of corporations and individuals earning above $400,000 annually. Notably, the initiative revisits and expands upon elements from previous budgets, incorporating both established and new measures aimed at tax reform. While inclusion in the presidential budget does not guarantee that the provisions will be enacted, it does provide important insight into the administration’s priorities. To help clients, prospects, and others, Wilson Lewis has summarized the key details below.

Many businesses regularly conduct research and development projects to improve processes and efficiencies and to uncover ways to make new and more valuable products. Companies with dedicated research and development functions invest significant human and financial resources in the process. Others without a formal department often invest in such activities continuously with a limited scope. These activities are essential because they help to create new or improved products and uncover efficiencies and enhancements. While helpful, these activities can be pretty expensive, leaving management unable to continue efforts in the long term.

In late November, the IRS announced a delay in the $600 reporting threshold requirement for payment apps and online marketplaces. The decision was made due to feedback received from tax professionals and payment processors and general taxpayer confusion. The 2023 tax year will serve as another transition year leaving prior threshold reporting requirements in place. This means only payees who made gross payments of more than $20,000 or more than 200 transactions will remain. The delay is welcome news for businesses that would otherwise be required to prepare and submit Form 1099-K.

In late January, the House of Representatives passed important bi-partisan tax legislation that provides several saving opportunities for families and businesses. The Tax Relief for American Families and Workers Act of 2024 (Act) calls for the extension of several credits and incentives that expired at the end of last year. It includes an increase to the reporting threshold for Form 1099s, changes to federal Section 174 research and development (R&D) credit expense rules, an extension of bonus depreciation, and updates to the Child Care Credit. There is also a provision that calls for a ban on accepting new Employee Retention Tax Credit claims effective January 31, 2024

There has long been concern that workers have been improperly classified as independent contractors to avoid required pay minimums, insurance benefits, overtime pay, and other employment-based protections. Earlier this month, the Department of Labor (DOL) issued Employee or Independent Contractor Classification Under the Fair Labor Standards Act (FSLA). This new guidance relies on the economic reality test supported by various reality factors. These include worker opportunity for profit or loss, nature, and degree of control over the work, permanency of the work relationship, and more. Other factors may be considered when determining economic dependence on the employer.

For those companies that had already received payment, the IRS indicated there would be a voluntary disclosure program to help. Earlier this month, the details of the program were announced in IRS Announcement 2024-3 outlining how the program will work. Not only does it provide a way to resolve civil tax liabilities, but includes information on eligibility, program terms, repayment options, and more.

Starting in 2024, many businesses will be required to report certain information about company ownership to the Financial Crimes Enforcement Network (FinCEN). The new requirement is mandated by the Corporate Transparency Act which passed in 2021. The purpose of the legislation is to make it easier for the federal government to fight tax fraud, money laundering, and terrorist activities financed through domestic companies. Under new rules, new and existing small businesses and limited liability companies are required to disclose information about their beneficial owners. This includes the name, date of birth, and address of each owner along with a unique identifying number from a passport or driver’s license is required.