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Final regs. govern partnership representatives under centralized audit regime

In T.D. 9839, effective Aug. 9, 2018, the IRS issued final regulations under Sec. 6223 addressing partnership representatives and their authority under the centralized partnership audit regime. The regulations revised 2017 proposed regulations, based on comments received. One such revision was to allow a disregarded entity, or the partnership itself, to serve as a partnership representative, but only if the partnership appoints a designated individual to act on behalf of the partnership or disregarded entity, and the designated individual, as well as the partnership or disregarded entity, has a substantial presence in the United States. The regulations also modified proposed rules for representatives' resignation or revocation and for when a partnership has not made a valid representative designation.

New paid family and medical leave credit guidance

The IRS issued guidance in the form of questions and answers on the new Sec. 45S general business credit that is available for employers who provide paid family and medical leave for their employees. Notice 2018-71 discusses what employers are eligible, what constitutes family and medical leave, the minimum paid leave requirements to be eligible for the credit, and how to calculate and claim the credit. Sec. 45S was added by P.L. 115-97, known as the Tax Cuts and Jobs Act. It allows employers who pay employees while they are on family or medical leave to claim a credit equal to a percentage of the wages paid during the leave. Employers must meet certain requirements to be eligible to claim the credit, including that they have a written family and medical leave policy. For more, see "New Tax Credit for Paid Family and Medical Leave," on page 20.

Guidance issued on new rules for deductible corporate compensation

In Notice 2018-68, the IRS issued guidance on Sec. 162(m), as amended by P.L. 115-97, known as the Tax Cuts and Jobs Act. As amended, Sec. 162(m) disallows a deduction by any publicly held corporation for the portion of remuneration paid to any covered employee that exceeds $1 million for the tax year. The amendments change the definition of covered employee, broaden the range of corporations subject to the limit, and eliminate exceptions for commissions and qualified performance-based compensation. They also grandfather written binding employment contracts in effect on Nov. 2, 2017, and not subsequently modified in any material respect. The notice covers the definition of a covered employee and the operation of the grandfather rule, including how to determine whether a contract is written and binding and whether it has been materially modified.


Get your clients ready for tax season

Upon its enactment in March, the American Rescue Plan Act (ARPA) introduced many new tax changes, some of which retroactively affected 2020 returns. Making the right moves now can help you mitigate any surprises heading into 2022.


Black CPA Centennial, 1921–2021

With 2021 marking the 100th anniversary of the first Black licensed CPA in the United States, a yearlong campaign kicked off to recognize the nation’s Black CPAs and encourage greater progress in diversity, inclusion, and equity in the CPA profession.