With the passage of the Patient Protection and Affordable Care Act, which provided for an increase in the Medicare tax rate for certain high earners who are members of the ERISA “top hat” group, and recent discussions about the status of Social Security and Medicare funding, it is appropriate to review the rules in Sec. 3121(v)(2) governing FICA taxation.
Advertisement
Topics
Reporting & Filing Requirements
Unexpected Consequences of Changes in Entity Classifications
When entities change their classification, several income tax issues that are not immediately apparent may come into play. When these issues are discovered, they may require amending tax returns and could result in tax penalties as well.
Automatic Recognition of Consolidated Return Filing Status Permitted
An affiliated group of corporations that did not file a consolidated return for the immediately preceding tax year may file a consolidated return in lieu of separate returns for the tax year under certain conditions.
Bringing Clarity to Fuel Excise Taxes and Credits
The federal excise taxes, tax credits, and exemptions for various types of fuel constitute a confusing area of the tax law. This item is intended to clear up much of the confusion faced by taxpayers and advisers alike when attempting to claim these tax credits.
Final Rules Issued on Employment Tax Responsibilities of Designated Payer Agents
Final regulations contain rules on the liability for employment taxes when an employer designates an agent under a “service agreement” to pay its employees and to satisfy its employment tax obligations instead of following normal IRS procedures to designate an agent.
New Procedure Permits Automatic Recognition of Consolidated Return Filing Status
The IRS announced that it will permit an affiliated group of corporations that did not file the required Form 1122 for all of its subsidiaries to be treated as if its subsidiaries had filed Form 1122.
Heightened Emphasis on Worker Classification
Worker classification has been a major concern for many years. While it is clear that government agencies recognize that worker misclassification is a significant problem, how to classify workers remains unclear.
Chief Counsel Provides Guidance on Allocating Acquisition-Related Costs
This item summarizes some of the relevant rules that govern the tax years of subsidiaries that join or leave a consolidated group.
ATRA Allows Taxpayers to Continue to Accelerate Certain AMT Credits
Under the provisions of ATRA, corporations or consolidated groups with AMT credits from pre-2006 tax years may continue to accelerate the use of these credits instead of claiming bonus depreciation for eligible qualified property.
Options for Compliance With Worker Classification Rules
Determining proper classification of workers, either as independent contractors or employees, can be subjective and a challenge for employers.
Schedule UTP: Update on IRS Findings
This item provides an overview of the IRS’s statistics on 2010 and 2011 Schedules UTP, Uncertain Tax Position Statement.
Opportunity to Eliminate Certain Intercompany Gain
Groups can effectively eliminate the intercompany gain in certain circumstances, thereby reducing the possibility of inadvertently triggering intercompany gain and freeing taxpayers from the need to plan transactions so as to avoid a trigger.
Timing of Deductions for Subsidiaries Joining a New Consolidated Return
Under the consolidated return rules, special considerations apply when a subsidiary member (Sub) joins or leaves a consolidated group during the tax year.
Bankruptcy and the Trust Fund Recovery Penalty
When a corporation fails to remit the withheld taxes to the government, the IRS looks through the corporation to the individual or individuals who are responsible for the failure.
Employment Tax Liability of Third-Party Agents Subject of Prop. Regs.
The IRS released proposed regulations under Sec. 3504 that would govern the liability for employment taxes when an employer designates an agent under a “service agreement” to pay its employees and to satisfy all employment tax obligations.
IRS Releases Final Regulations and Interim Guidance on Medical Device Excise Tax
Treasury published final regulations and additional interim guidance relating to the medical device excise tax.
Rev. Proc. Updates Guidance on Adequate Disclosure of Return Positions
The IRS released its annual update identifying when a taxpayer’s disclosure of an item or position in an income tax return is adequate for purposes of reducing the understatement of tax penalty and the tax return preparer penalty for understatement due to unreasonable positions.
Schedule UTP: IRS Findings
Recent data show what the IRS has found regarding Schedule UTP filings by corporations with $100 million or more of total assets on their tax return balance sheets, and what the IRS is doing with that information.
Application of the Consolidated Tax Return Rules to Insolvent Members
The tax treatment of an insolvent debtor realizing discharge of indebtedness income under the U.S. consolidated income tax return rules can vary considerably depending on the particular circumstances.
Preparing for the Medical Device Excise Tax
Taxpayers may face a number of unresolved issues in preparing to comply with the new excise tax on sales of medical devices.
TAX PRACTICE MANAGEMENT
2025 tax software survey
AICPA members in tax practice assess how their return preparation software performed during tax season and offer insights into their procedures.
