Tax

There are several new clean energy tax incentives available to construction companies in 2023 thanks to the Inflation Reduction Act. To qualify for the highest savings possible, taxpayers need to meet new prevailing wage and apprenticeship requirements. Unfortunately, the necessary guidance to allow compliance had not yet been issued. The good news is the IRS recently issued  Notice 2022-61, which provides important guidance for builders, contractors, and developers, to understand how to meet the new rules.

Soon, the IRS will allow 403(b) retirement plans to use the same approval process as other qualified plans. Depending on a plan sponsor’s employer identification number, this process can start as soon as June 1, 2023. Though there are some exceptions, most 403(b) plans will qualify in the new guidance outlined in Revenue Procedure 2022-40. A determination letter confirms a plan is operating by relevant rules and regulations.  This is welcome news for many Atlanta not-for-profit organizations which previously were not permitted to make a request.

The temporary 100 percent business meal deduction expires on December 31, 2022. The incentive allows business taxpayers to completely deduct the full cost of business-related meal and beverage purchases made in a restaurant. The deduction is especially beneficial to law firms that rely on these interactions for business development and networking activities. Starting on January 1, 2023, the eligible deduction amount will revert to 50%.

Despite the return to “normal,” many companies are still experiencing residual effects from the pandemic. While Georgia’s economy grew by 10% in March of this year, continuing supply chain issues and rising interest rates have put a damper on the encouraging news. This does not even consider the effects of the Great Resignation, which triggered a 25% increase in the number of resignations. When coupled with the concern about a looming recession, organizations need to leverage every savings opportunity available.

Cryptocurrency has become increasingly popular over the last few years. The most common cryptocurrencies include Bitcoin, Ethereum, Tether, and BnB. Despite some recent volatility, many individuals have not only used it for investment purposes, but also as an asset. In fact, many companies such as Microsoft, Home Depot, Whole Foods, and Virgin Airlines are among the major companies that accept it as a form of payment. This has only served to increase its popularity. However, accepting it as payment has opened the door to a new challenge – how to account for cryptocurrency?

Required minimum distributions (RMDs) are an important part of a beneficiary’s or heir’s tax planning since income tax is due on RMDs in the year the distribution is taken. Previous rules allowed beneficiaries to stretch payments over their lifetime or take the full distribution in later years after the account holder’s death. This approach provided for a more targeted tax plan. The SECURE Act changed how RMDs for inherited accounts work, but at the time failed to provide clear guidance. As a result, many taxpayers who were supposed to make RMDs in 2021 or 2022 did not.

Travel is an essential aspect of doing business for many Atlanta companies. The opportunity to meet face-to-face with clients, and prospects, and attend national events is an important function for many executives. Although the use of Zoom has increased substantially over the past two years, business travel still plays an important role in client management, training, and new business development efforts. The intangible impact of meeting in person simply cannot be replicated online.

Failure to file a tax or information return by its due date generally results in extra fees and penalties. It also draws extra scrutiny from the IRS and can result in significant delays in having the return processed and other matters closed. Since the end of the pandemic, the IRS has been investing significant time and resources in reviewing returns originally due in 2019 and 2020. Now, for millions of taxpayers, those extra fees will be refunded or waived for certain returns.In August, the IRS announced penalty relief which is expected to impact 1.6M taxpayers and result in $1.2 in automatic refunds (assuming eligibility requirements are met). The relief is not limited just to individuals as foreign corporations, partnerships and S-corporations are also eligible.

The recently passed Inflation Reduction Act (Act) features several tax changes and benefits that incentivize the migration to energy-efficient systems. This not only includes changes to commercial, industrial, and retail buildings but also to housing and vehicles.  Currently, there are an estimated 10M electric vehicles on the road representing less than 1% of the global auto stock. The combination of advancements in technology and the popularization of recharging stations, and other infrastructure modifications, is expected to result in increased energy-efficient vehicle sales.

Sustainable building isn’t just the way of the future; it's what’s happening now. Achieving energy-efficient design and construction is a multi-faceted approach involving engineers, architects, builders – and even federal tax incentives. The Section 179D energy efficient tax deduction is one of the main tax incentives for building owners who install qualifying energy-saving systems can leverage. The good news for Atlanta contractors is the recently enacted Inflation Reduction Act contains dozens of new incentives for eligible renewable energy upgrades and purchases.