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Industrial

The Impact of the Supreme Court’s Decision on Manufacturing and Distribution

After years of lower court decisions unfavorable to the Internal Revenue Service (“IRS”), the U.S. Supreme Court (“the Court”) ultimately sided with the IRS regarding severance pay considered as wages. As a result of the Court’s ruling, severance pay is now considered wages and subject to FICA tax. Let’s explore the impact of this decision and tax planning strategies for employers. Background of the Decision Previously, severance pay was not considered as wages. Thus, severance pay was not subject to FICA withholding. Now, due to the United States vs. Quality Stores ruling, both the employee and employer must pay FICA,. Read More.

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Implications of the Mobile Workforce State Income Tax Simplification Act of 2013

An issue currently moving its way through federal legislation is uniform treatment of multistate employees subject to state withholding of income tax, known as the “Mobile Workforce State Income Tax Simplification Act of 2013”. In this article, we will examine the issue of multistate employment tax withholding and the implications of this proposed legislation. Current Practices Currently, most manufacturing or distribution firms don’t proactively address or track employees working in multiple states. For instance, if an employee lives in Georgia but is assigned to work on a project in North Carolina, the state income taxes should be withheld for North. Read More.

Permanent Tax Extender Bills to Lower Federal Revenues

Earlier this week, The Committee on Ways and Means approved six bills that are expected to lower federal revenues by $310 billion over the next ten years. Referred to as ‘tax extenders’, the bills permanently extend several expired business tax provisions and specifically address the following: Research and experimentation tax credit (H.R. 4438); ‘Look-through’ treatment for controlled foreign corporations (H.R. 4464); Subpart F exceptions for active financing income (H.R. 4429); Increased Section 179 ‘small business’ expensing limits (H.R. 4457); A reduced recognition period for S corporation built-in gains (H.R. 4453); and Basis adjustments to stock of S corporations that provide. Read More.