Proposed regulations to implement the changes to bonus depreciation made by the Tax Cuts and Jobs Act have been released by the IRS in REG-104397-18. 

The preamble provides that taxpayers may rely upon the proposed regulations until final regulations are issued:

Pending the issuance of the final regulations, a taxpayer may choose to apply these proposed regulations to qualified property acquired and placed in service or planted or grafted, as applicable, after September 27, 2017, by the taxpayer during taxable years ending on or after September 28, 2017.

Some of the key features of the proposed regulations are discussed below.

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The IRS has now issued guidance on how businesses may obtain automatic consent to change accounting methods to use the new “small business” methods contained in the Tax Cuts and Jobs Act in Revenue Procedure 2018-40.

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Reports today from various sources have noted that a majority of states that impose a sales tax have now put in place requirements for out of state sellers to collect and pay over sales taxes.  The dates for beginning enforcement have ranged from July 1 (which means sellers may already be in violation) to January 1, with a number of states looking to begin collection requirements on October 1, 2018.

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The state of Minnesota in a news release announced that it will being enforcing its remote seller sales tax collection statute effective October 1, 2018, as well as its statute requiring certain marketplace providers to collect and remit sales tax.

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Yet another U.S. District Court has decided that the IRS must follow the terms of its own regulations and limit the maximum penalty for a willful violation of the FBAR rules to $100,000.  In the case of Wadhan v. United States, US DC Colorado, Case No. 1:17-cv-01287, the IRS was limited in the amount of penalty that could be assessed for the same reasons cited by the U.S. District Court for the Western District of Texas in United States v. Colliot.

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The latest state to act to force out of state sellers to collect sales tax is Utah.  In a special session, the Utah Legislature passed SB 2001 which conforms the state’s rules requiring out of state sellers to file with Utah with the provisions found in South Dakota’s law.

Utah’s triggers for filing by an out of state seller will conform to South Dakota’s, effective on January 1, 2019.  As well, the previous rule that allowed sellers who voluntarily collected Utah tax to retain 18% of the tax collected will be repealed effective on the same date.

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While most conversations since the Wayfair decision regarding state and local taxes have revolved around an expansion of a state’s ability to impose taxes, the high courts in two states have moved to reduce the state’s ability to impose taxes on income from trusts, finding that the state’s attempts to tax trust income are in violation of the U.S. Constitution.

The North Carolina Supreme Court in the case of Kimberley Rice Kaestner 1992 Family Trust v. Dep’t of Revenue, No. 307PA15-2 and the Minnesota Supreme Court in the case of Fielding v. Comm’r of Revenue, A17-1177 each ruled the respective states had inappropriately attempted to tax the income of the trusts in question.

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In Program Manager Technical Advice 2018-015 the IRS analyzes how to handle the implications to the employee of an examination of an employer where it is determined the employer failed to properly classify fringe benefits received by an individual as taxable wages.  Specifically, the guidance looks at whether the employer’s payment of the federal income taxes and FICA not withheld creates income for the employee.

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In Revenue Procedure 2018-38 the IRS announced that tax exempt organizations, other than §501(c)(3) organizations, will no longer be required be required to report the names and addresses of certain donors on Schedule B of Form 990, but will be required to have such information available should the IRS request it.  The new rules will take effect for taxable years ending on or after December 31, 2018.

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North Dakota, the first state to post an announcement that it planned to force out of state sellers to collect sales tax on the afternoon of the decision in South Dakota v. Wayfair has now officially announced the date for the start of collections.  In a release dated July 11, State Tax Commissioner Ryan Rauschenberger indicated that the sellers will be required to collect beginning on October 1, 2018.

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South Carolina has joined the growing list of states that have announced they plan to begin requiring out of state sellers to collect and remit sales taxes following the Supreme Court’s decision in the case of South Dakota v. Wayfair. In a July 9 letter to members of the General Assembly, the South Carolina Department of Revenue Director Hartley Powell indicated South Carolina was moving forward to force out of state vendors to collect and remit the sales taxes imposed by the state.

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Following up on an earlier memorandum and answer from the governor’s office that Wisconsin aimed to begin expanded out of state seller sales tax collection October 1, 2018, the Wisconsin Department of Revenue has announced in a July 5 release that the minimum sales level at which it will force collection will be the same levels as those Justice Kennedy commented favorably on in the case of South Dakota v. Wayfair.

This notice was followed up by a formal Statement of Scope (SS 079-18) which provided official notice that that Wisconsin Department of Revenue was drafting rules to implement this decision.  This would have the effect of adding the South Dakota trigger amounts to Wisconsin law by an administrative rule rather than by an act of the state legislature.

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The IRS has again cautioned tax professional to take steps to protect taxpayer date in News Release IR-2018-147, Tax Security 101 – IRS, Security Summit partners launch new awareness campaign; Urge tax professionals to step up protections for client data.  The release cautions that “[d]ata thefts at tax practitioners’ offices continue to rise and result in fraudulent tax returns that can be especially difficult for the IRS and states to detect.”  As well, the IRS modifies its guidance to take into some of the latest thinking in the technology security world.

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