Tax Law

By Michael T. Lahti

2017 Tax Reform for Economic Growth and American Jobs
The Biggest Individual and Business Tax Cut in American History

Goals For Tax Reform

• Grow the economy and create millions of jobs
• Simplify our burdensome tax code
• Provide tax relief to American families — especially middle-income families
• Lower the business tax rate from one of the highest in the world to one of the lowest

By Michael T. Lahti

As reported in Tax Notes, a series of bills proposed by Rhode Island Rep. Robert A. Nardolillo III (R) would reduce the state sales tax rate, repeal the estate tax, and eliminate the tangible personal property tax — all by July 1, 2017.  The first bill (H. 6005), filed March 24, would cut the state’s current 7 percent sales tax rate to 3 percent. The second bill (H. 6029), filed March 30, would eliminate Rhode Island’s estate and transfer taxes. The third bill, which Nardolillo has yet to formally introduce, would repeal the tangible personal property tax.

By Michael T. Lahti

We thought our clients would appreciate a summary of some of the federal legislation that may affect them.

Tax Overhaul

Legislative Purpose

Congressional tax-writers want a revamp of the tax code.

Bill Status

House: A blueprint for tax reform released in June 2016 calls for a 20 percent corporate tax rate; a shift to territorial taxes on overseas income under destination-based taxes; a border adjustability provision that would tax imported goods but exempt exports; three tax brackets at 12 percent, 25 percent and 33 percent for individuals; a 25 percent tax rate for pass-throughs; and a repeal of the estate tax and alternative minimum tax.  Senate: Senate Finance Committee Chairman Orrin G. Hatch (R-Utah) had been working on a dividends-paid corporate integration idea as a way to eliminate double taxes on corporate income. However, he hasn't released the plan and has said he is now focused on a broader tax reform effort.   White House: The Trump administration's reform plan will be released within weeks, a White House official said Feb. 9. 

By Michael T. Lahti

If you are a user of “virtual” currency such as Bitcoin, be careful.  The IRS recently issued a summons to Coinbase (a major player in the virtual currently world), and is looking for people who use Bitcoin to evade taxes.  The summons requested records of all customers who bought virtual currency from the company, from 2013 to 2015.  The IRS thinks, probably correctly, that many people are using the virtual currency to avoid taxes.

Read more . . .

By Michael T. Lahti

The Massachusetts Department of Revenue has issued a technical information release announcing the expansion of its simplified process for tax return filing extensions.  This will include individuals, fiduciaries, partnerships, and estates, beginning with tax returns due on or after December 5, 2016.

Read more . . .

By Michael T. Lahti

It seems as if the perfect storm for some serious tax reform has arrived.  Consider this; for a long time political gridlock has made tax reform impossible. But now, with Donald Trump as president-elect, and with majorities in both the House and Senate, the chance for substantive tax change is almost a certainty.  That is not to say that passage of a sweeping tax reform will be easy, with two noteworthy nettlesome issues, they being a lack of money, and special interest politics.

By Michael T. Lahti

Tax Analysts reported that in addition to buying Slurpees, cigarettes, and snacks at 4 a.m., taxpayers will now be able to pay their tax bills in cash at one of 7,000 7-Eleven stores across the United States.

"We continue to look for new ways to provide services for our taxpayers," IRS Commissioner John Koskinen said. "Taxpayers have many options to pay their tax bills by direct debit, a check or a credit card, but this provides a new way for people who can only pay their taxes in cash, without having to travel to an IRS Taxpayer Assistance Center."

By Michael T. Lahti

Tax Analysts reported that Nevada and Wyoming are among the 21 jurisdictions identified as offshore tax havens in the so-called Panama Papers exposé that's based on 11.5 million files leaked from the internal database of Mossack Fonseca & Co. in Panama, the fourth largest offshore law firm in the world.

Specifically, Nevada was listed as the eighth most popular tax haven used by the firm for incorporating entities, ranking above Hong Kong and the United Kingdom, according to initial charts released by the International Consortium of Investigative Journalists (ICIJ).

By Michael T. Lahti

Governor Baker of Massachusetts has proposed legislation that would significantly impact how families can protect their residences in the event of an extended nursing home stay.  The governor is proposing “expanded estate recovery.”   Expanded estate recovery would allow MassHealth to recover benefits paid on behalf of a deceased MassHealth beneficiary, by allowing for the recovery of non-probate assets.  If enacted, this would target existing forms of ownership that families use (such as joint ownership, life estates, and irrevocable trusts) to protect their houses upon death.

By Michael T. Lahti

Florida HB 277, signed into law as Chapter 121, specifies how a county or municipality may determine a homestead's just value for purposes of the homestead tax exemption for eligible persons age 65 or older; potentially increasing the homestead exemption $50,000.

The change amends s. 196.075, F.S.; revising the homestead tax exemption that may be adopted by a county or municipality by ordinance for the assessed value of property with a just value less than $250,000 which is owned by persons age 65 or older who meet certain residence and income requirements; specifying that just value shall be determined in the first tax year that the owner applies and is eligible for the exemption; providing for a refund of overpaid taxes in prior years; providing retroactive applicability; providing a contingent effective date.

By Michael T. Lahti

Whether a “Millionaire’s” tax should be imposed in Massachusetts is causing heated debate.  As reported in Tax Notes, opposing sides of an initiative petition in Massachusetts to impose a millionaire's tax recently squared off as the proposal received its first legislative hearing by the Joint Committee on Revenue.  At issue is a petition to amend the state's constitution to levy a 4 percent surtax on taxpayers with annual taxable income of more than $1 million.  Massachusetts’ constitution requires an income tax to be levied "at a uniform rate . . . upon incomes derived from the same class of property," thus it would have to be amended. To amend the constitution to allow for the surtax, legislative approval from at least 25 percent of lawmakers in two successive legislative sessions would be required, and then have voters would have to approve it at the ballot.