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 »
Get Ready: IRS to End OVDP
Recently, I discussed the impact of so-called “soft letters” sent by the IRS to various groups of taxpayers with offshore asset disclosure compliance issues (see this generic example of an IRS soft letter). As my prior piece predicted, the IRS announced the Offshore Voluntary Disclosure Program (OVDP) will close to new applicants on September 28, 2018. Now that the IRS has set a date certain for the OVDP to close, non-compliant taxpayers wishing to enter the OVDP should ... Keep Reading »
Tax Reform: Insurance Company Provisions
Recent tax legislation, informally known as the Tax Cuts and Jobs Act (the “Act”) contains several changes that affect the insurance industry. A centerpiece of the Act lowers the corporate income tax rate to 21 percent, which generally applies to all corporations. Other reforms not specific to the insurance industry will also significantly affect many insurance companies. These include eliminating the corporate alternative minimum tax, a reduction of the general ... Keep Reading »
Virtual Currency Tax Consequences
A growing number of startups are offering virtual currencies to investors through initial coin offerings (ICOs) as a way to raise capital, often with little or no awareness of the tax consequences of their actions. Many startups sell specially created cryptocurrencies to initial project backers who expect the currency to increase in value if the startup succeeds. These cryptocurrencies, or tokens, are initially issued in fixed, limited amounts which generally can be used ... Keep Reading »
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