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Posted by Martha Zackin on May 13, 2013

Five Years in the Making - IRS Releases Findings from Colleges and Universities Compliance Project

By Tyrone P. Thomas

The IRS announced it is nearing completion of a five year long compliance project involving tax-exempt colleges and universities.  The project, which began with questionnaires to 400 randomly-selected institutions, focused on reporting of executive compensation and unrelated business income.  The IRS’s findings provide warning to all non-profit colleges and universities regarding their process to establish and report executive compensation.

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Posted by Martha Zackin on January 17, 2013

Update on Fiscal Cliff Commuter Tax Benefits

By Patricia A. Moran

On January 4 and 14, we blogged about the American Taxpayer Relief Act of 2012’s (ATRA) increases in the pre-tax contribution that commuters may make towards van pools as well as transit passes.

Prior to the enactment of ATRA, the maximum pre-tax contribution for these modes of transportation was $125 for 2012 and 2013.  ATRA increased this amount for 2012 to $240 and for 2013 to $245.

On January 16, the IRS issued Notice 2013-8, establishing special administrative procedures for employers to reimburse employees for taxes paid on transit expenses between $125 and $240 paid during 2012.  The Notice also offers instructions on how to adjust Forms 941 and W-2.  Employers are urged to consult with their payroll providers in order to determine how Notice 2013-8 applies to them.

Posted by Martha Zackin on January 14, 2013

Update on Fiscal Cliff Commuter Tax Benefits

By Patricia A. Moran

On January 4, we blogged about the American Taxpayer Relief Act of 2012’s (the “Act”) increases in the pre-tax contribution that commuters may make towards van pools as well as transit passes.

On January 11, 2013, the IRS released Revenue Procedure 2013-15, which clarifies that the 2013 limit for van pools and transit passes is $245, effective January 1, 2013.

The IRS still has yet to announce how to apply the increase retroactive to January 1, 2012, given that the 2012 tax year has come to a close.  We will keep you informed of additional developments. 

For more information, please see the IRS website here.

Posted by Martha Zackin on January 04, 2013

Fiscal Cliff Bill Includes Commuter Tax Benefits

By Patricia A. Moran

The American Taxpayer Relief Act of 2012 (the “Act”), signed on January 3, increases the pre-tax contribution that commuters may make towards van pools as well as transit passes.

The IRS allows employees to pay for parking, transit pass (e.g. for subway, bus or ferry), and commuter highway vehicle (generally, vanpool) expenses on a pre-tax basis, up to a monthly limit.  That monthly limit in 2012 was $240 for parking expenses, but only $125 for vanpool or transit passes.  The Act increases the monthly limits for vanpool and transit passes, effective January 1, 2012, to the same limits that apply to parking.  

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Posted by Martha Zackin on October 30, 2012

Section 409A Document Correction Relief: Take the Final Bite of the Apple before December 31st

My colleagues, Tom Greene and Jessica Catlow, have published an alert pertaining to Section 409A of the Internal Revenue Code (Section 409A), which regulates the payment of non-qualified deferred compensation (including that provided through severance agreements) and imposes penalties for non-compliance.  In January 2010,  the IRS issued Notice 2010-6, which provided an opportunity to correct certain documentary violations in order to reduce or avoid the adverse tax consequences under Section 409A.  The relief provided under Notice 2010-6, which was extended under IRS Notice 2010-80, is set to expire on December 31, 2012.  To read the full alert, click here.

Posted by Martha Zackin on September 14, 2012

Second Circuit Confirms That Title VII Discrimination Awards are Taxable

By Michael S. Arnold and Christophe R. Difo

Recently, the Second Circuit Court of Appeals confirmed that awards of back pay and front pay under Title VII constitute “wages” under the Internal Revenue Code and are therefore subject to statutory withholding requirements.  Reasoning that both front and back pay awards are compensation for what the victim would have earned and paid taxes on but for the discrimination, the Court, in Noel v. New York State Office of Mental Health, held that an employer must withhold taxes (Federal, state and local) from judgments paid to an employee relative to claims for discrimination.  Indeed, an employer who fails to do so can be held personally liable for the amount it should have withheld.

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Posted by Martha Zackin on September 19, 2011

Department of Labor Teams with IRS to Combat Misclassification

At a signing ceremony held this morning at the offices of the Department of Labor in Washington, D.C., the DOL and the IRS signed a memorandum of understanding that will likely result in increased DOL and IRS enforcement proceedings against employers accused of misclassifying employees as independent contractors.  Seven states also signed similar agreements, including Connecticut, Maryland, Massachusetts, Minnesota, Missouri, Utah, and Washington.  Hawaii, Illinois, Montana, and New York are expected to follow shortly.

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