Tax news: October ’15 — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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Tax news: October ’15

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Gear up for Cadillac tax. The new “Cadillac tax” on high-cost health insurance plans takes effect in 2018, but the IRS has already issued initial guidance. (IRS Notice 2015-52) The 40% tax applies to employer-sponsored health plans costing more than $10,800 for single coverage and $27,500 for family coverage. Con­­sum­­ers will likely bear the brunt of the tax, so employers should review their existing policies.

Check worker status. Under a new Department of Labor (DOL) policy, workers will have a tougher time qualifying as independent contractors, rather than employees (DOL Admin­­is­­­­­tra­­­­tor’s Interpretation No. 2015-1, 7/15/15). Workers may be treated as employees if their work is integral to the operation even if conducted off-site. Plus, the DOL will cut less slack to workers using their own tools. This info will be shared with the IRS.

Blame it on the pro. In a new case, a taxpayer sold his family-owned business as a tax shelter deal, as his attorney advised him. When the IRS pursued the case 10 years later, the federal court said the attorney was the guilty party and the taxpayer lacked the intent for tax evasion. (BASR Part­­ner­­ship, Ct. of Fed. Claims, No. 1:10-cv-00244-SGB, 7/29/15)

Skating on thin ice. The Boston Bruins hockey team is facing off with the IRS in Tax Court over the tax treatment of business meals. Normally, a business can deduct only 50% of the cost of qualified meals, but the tax law allows several notable exceptions. One such exception provides a deduction for 100% of the costs of an eating facility furnishing meals on the business premises for the convenience of the employer. The Bruins contend that the pregame meals served to players at hotels qualify under this rule. Reason: The hotels act like the team’s base of operation on the road. If the Bruins prevail in court, it could be significant for sports franchises and entertainers. (Jacobs, TC No. 190009-15, filed 7/27/15)

New due date for FBARs. A stop-gap spending measure—the Surface Transportation and Veterans Health Care Choice Improve­­ment Act of 2015—does more than approve funding for our nation’s highways. In addition to changing federal income tax filing deadlines for partnerships and corporations, the new law lines up FBAR (Report of Foreign Bank and Finan­­cial Accounts) filings with the deadline for filing personal tax returns. Previously, FBARs had to be filed by June 30 if the balance in a foreign bank or financial account exceeded $10,000. Now, you must file the FBAR by April 15, but a six-month extension is allowed. The penalty for willfully failing to file a FBAR is the greater of $100,000 or 50% of the balance in the account plus possible prison time.

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