With U.S. student loan debt totaling $1.5 trillion, employers are seeking ways to ease the burden of repayment for their employees and prospective employees. These have included signing bonuses and direct repayment of outstanding loans. Now, employers appear able to make matching-type contributions to retirement plans based on student loan repayments instead of on salary deferrals alone. On Aug. 17, the IRS publicly released a private letter ruling, allowing an employer ... Keep Reading »
Good News for Federal Contractors With Affordable Care Act Concerns
Federal contractors subject to the Service Contract Act might appreciate knowing that the IRS understands that they must generally offer a cash payment to employees who decline coverage. While that would ordinarily be treated as making coverage less affordable and more likely to violate the Affordable Care Act’s affordability requirements, the IRS will not necessarily treat it this way; particularly in light of the 2017 executive order directing the IRS to exercise ... Keep Reading »
Cost-Sharing Regulations Revived By Ninth Circuit
The Ninth Circuit Court of Appeals reversed the Tax Court in Altera Corp. in the latest chapter of the dispute over the validity of cost-sharing regulations. The decision, issued on July 24, revives certain regulatory provisions previously invalidated by the Tax Court. (See Altera Corp. v. Commissioner, Dkt. Nos. 16-70597 & 16-70497 (9th Cir. 2018) rev’g 145 T.C. 91 (2015)). These regulations govern the allocation of stock-based compensation costs to a foreign ... Keep Reading »
Retirement Plans Can Solve the Million-Dollar Problem for Entities at Risk of Excise Taxes on Compensation
All entities, including governmental entities, are now potentially liable for penalties[1] due to overpaying employees. For-profit companies have been at risk for losing their tax deduction for excessive salaries, with publicly-traded companies subject to a specific $1 million limit that the Tax Cuts & Jobs Act (Act) just made easier to exceed,[2] and certain nonprofit organizations have been at risk for “intermediate sanctions,”[3] but the Act also created a new ... Keep Reading »
The Hidden Cost of Settling a Qui Tam Claim
Historically, taxpayers who made settlement payments to the government or relator under False Claims Act actions could offset those often considerable costs by deducting all or part of the payment for federal income tax purposes. But the Tax Cuts and Jobs Act, enacted in December, dramatically shifted the tax treatment of such payments, resulting in the potential loss of valuable tax benefits. Now more than ever, companies must carefully consider the tax treatment of ... Keep Reading »
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