T&K Tax Knowledge

Health Care Reform for Small Businesses

Russell Gully published an article in the March/April 2013 edition of Small Business Digest entitled “Health Care Reform: To Play or Pay?” In the article, he discusses Obamacare requirements for small businesses, including new tax penalties beginning in 2014. The article explains that “Effective next year, employers with at least 50 full-time equivalent employees – where full-time means working a minimum of 30 hours per week – must offer group health plan coverage to full-time employees (FTEs) and their dependents, or the company may be subject to an annual $2,000 per-employee tax penalty.” Gully adds that there is a second, $3,000 per-employee annual tax penalty “[i]f a company does not offer coverage that provides ‘minimum value’ and is ‘affordable.’” The article describes “affordable” coverage as when “the cost for self-only coverage does not exceed 9.5 percent of the employee’s W-2 income.” In addition to the 2014 penalties, Gully outlines several reform measures that apply to companies in 2013 involving flexible health spending plans, health plan enrollment documents, and a new fee for funding the Patient-Centered Outcomes Research Trust Fund. Gully concludes that while smaller employers may be able to rely on major health insurance companies to market insurance products that comply with these requirements, “meeting these requirements may require some additional education for business owners and a thorough employee communications effort, especially for smaller businesses that have never ‘played’ in this arena.”

If you would like to know more about this issue, please contact Russell or one of the other tax attorneys at Thompson & Knight.

-Russell Gully, Thompson & Knight LLP

The Tenth Circuit Rules That Bankruptcy Stay Does Not Apply to Appeals From Tax Court

Bankruptcy law provides that judicial or administrative proceedings by creditors are automatically halted when a bankruptcy petition is filed with respect to the debtor.  The automatic stay applies to proceedings in Tax Court, but not necessarily to appeals from a Tax Court decision.  On March 28th, the Tenth Circuit issued its decision in Schoppe v. Commissioner, allowing the appeal of a Tax Court case to go forward.  The Tenth Circuit became the sixth Circuit to rule on the issue.

New Employer Health Care Mandate: Free CLE Webinar

Beginning in 2014, an employer with 50 or more full-time equivalent employees must either offer affordable health plan coverage, providing minimum value to its full time employees and their dependents, or pay a penalty. Russell Gully and Jessica Morrison are presenting a free CLE Webinar on Thursday, May 23, that discusses the potential penalties and the requirements an employer’s health care plan must satisfy to avoid them.

For more information, click here.  To RSVP for the webinar, click here.

-Russell Gully, Thompson & Knight LLP
-Jessica Morrison, Thompson & Knight LLP

Senate Passes the Marketplace Fairness Act of 2013

This Tuesday, the Senate passed the Marketplace Fairness Act of 2013 (the “Act”), which represents a significant departure from existing law by granting states the authority to impose sales tax collection responsibilities on remote sellers with little to no connection with the taxing state.  However, the House of Representatives has yet to vote on the Act, so its prospects for becoming law remain unclear.  

Six T&K Tax Partners Named “Best Lawyers in Dallas” by D Magazine

Six Thompson & Knight tax partners were selected for inclusion in D Magazine’s “Best Lawyers in Dallas 2013” list.  The following are featured in the magazine’s May issue:

Barbara B. Ferguson (Tax: Trusts & Estates)
Sharon M. Fountain (Tax: ERISA/Employee Benefits)
Todd D. Keator (Tax: General)
Mary A. McNulty (Tax: Litigation)
Emily A. Parker (Tax: Litigation)
R. David Wheat (Tax: General)

D Magazine based its selection on an extensive peer review process, relying on the expertise of local lawyers to determine who is ranked. The publication asked lawyers to base their selections on personal experience with their nominees. D Magazine presented the tallied results to an anonymous panel of lawyers for review and evaluation.  The finalists were ultimately selected by the panel and the D Magazine editorial staff based on the final number of votes in each practice area.

A Proposed Legislative Fix to the Midco Tax Shelter

The Administration’s budget, released this month, includes a special provision to combat midco transaction tax shelters.  Because of the government’s difficulties in combatting these shelters (see here, here and here), there has been discussion recently that a legislative response might be needed (see here).  The budget provision is described in the Treasury Department’s “Greenbook,” available here (see pages 184-185), and is estimated to bring in $4.9 billion over the next ten years.

Obama’s 2014 Federal Budget Targets Oil and Gas Industry Tax Breaks

On April 10, 2013, President Barack Obama released the proposed federal budget for the 2014 fiscal year.  The budget contains proposals that would repeal various oil and gas industry tax preferences.  Similar provisions have appeared in the last four budget proposals.

Tax Court Pro Bono Program

Bob Probasco published an article in the Winter 2013 Texas Tax Lawyer about the Tax Court Pro Bono program.  Bob is the Chair of the Pro Bono Committee of the State Bar of Texas Tax Section and administers the program.  Volunteer attorneys attend Tax Court trial sessions and help unrepresented taxpayers evaluate their cases, negotiate with IRS attorneys, and prepare for trial.   Several other Thompson & Knight tax attorneys, including Lee Meyercord, Nancy Allred, and Mary McNulty, also volunteer in the program. 

If you would like to know more about the program, please contact Bob or one of the other volunteers at Thompson & Knight.

- Bob Probasco, Thompson & Knight LLP

Another Blow for CARDS Transactions: The Sixth Circuit Rules That CARDS Transaction Lacked Economic Substance.

On Monday, the Sixth Circuit affirmed the Tax Court’s decision in Kerman v. Commissioner that a custom adjustable rate debt structure (“CARDS”) transaction lacked economic substance, disallowing a $4.25 million loss and imposing a 40% gross valuation misstatement penalty.  The Sixth Circuit is the third circuit to find that a CARDS transaction lacked economic substance, joining the Third Circuit’s decision in Crispin v. Commissioner and the Eleventh Circuit’s decision in Gustashaw v. Commissioner.

More information on CARDS transactions and the Third Circuit’s decision can be found in our previous blog post.  For more information about this case and how it might affect you, please contact the undersigned or one of the Tax lawyers at T&K.

- Lee Meyercord, Thompson & Knight LLP
- Bob Probasco, Thompson & Knight LLP
- Mary McNulty, Thompson & Knight LLP

Contingency Fees for Refund Claims – Circular 230 Issues

On March 29th, the District Court for the District of Columbia issued an opinion in Ryan LLC v. Lew, in which the plaintiffs challenged a provision of Circular 230 that prohibits tax professionals from preparing and filing refund claims on a contingent fee basis.  Circular 230 regulates practice before the IRS by attorneys, CPAs, and others.  The plaintiffs asserted three different arguments, two constitutional and one statutory, that the provision was not a valid exercise of Treasury’s regulatory authority.  The court ruled for the government and dismissed the portions of the complaint based on the two constitutional arguments.  The third argument, based on the Administrative Procedure Act (“APA”), was not addressed and that part of the case will proceed.