IRS, Tax Policy

HAPPY NEW YEAR!

I apologize if on occasion I was a bit delayed in returning your calls in 2013. I resolve to do better in 2014. My excuse is a good one. It was a very busy year in the tax business in 2013.

The year started with the passage of the American Taxpayer Relief Act of 2012 (dated January 2, 2013). This law made permanent a number of “Bush tax cuts” (as amended, for many), made permanent and subject to inflation the perpetually temporarily increased alternative minimum tax exemption, permanently exempted many people from ever having to file estate tax returns and pay estate or gift taxes. It also extended for one or more years, the “extenders” – tax benefits that generally are extended for one year at a time.

The Supreme Court’s Windsor decision struck down a section of the Defense of Marriage Act that required same-sex spouses to be treated as unmarried for federal law purposes. The IRS has been hard at work trying to deal with innumerable complexities caused by the change. Many states are making similar changes.

Treasury published final (for the most part)”tangible property repair” regulations addressing the age-old problem of “capitalization versus repairs” classification. These regulations apply to any taxpayer or pass-through entity that has fixed assets; that pretty much means everybody directly or indirectly, except persons who are only wage-earners. These new regulations will narrow somewhat the arguments between the IRS and taxpayers, once everyone understands them.

Regulations and other guidance were issued that address the new taxes beginning in 2013 enacted by the Affordable Care Act (“Obamacare”), namely the 0.9% Medicare surtax on wages and self-employment income and the 3.8% surtax on net investment income.

Did I mention Obamacare? Healthcare.gov? Many businesses and individuals had to spend a lot of time in 2013 preparing for the mandatory health insurance provisions that begin to descend upon businesses and individuals in 2014.

Finally (not really, but I am tired of writing), almost all of the “extenders” expired on December 31, 2013. According to The Washington Post, the number was “about 55 different tax breaks.” (Actually, it is quite hard to get an exact count.) Many observers hope that Congress will extend these breaks for 2014 (and beyond). However, some expect little action on the subject until after the November elections. Also, there is a little problem of the $50 billion per year that these breaks cost, as estimated by the Center on Budget and Policy Priorities.

So, 2013 and the beginning of 2014 have been action-packed. I expect more of the same in 2014. On second thought, please just be a little patient when it takes me a bit of time to return calls.

-VKM

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