Welcome to the IMA Tax Policy Blog. The blog format reflects our efforts to provide IMA members with timely, relevant and thought provoking information in a form that is accessible for easy reference. IMA’s Tax Policy Blog will be updated on a regular basis. Weekly news update emails will be sent out to notify subscribers of new information posted on the blog. IMA members are welcome to submit material for the blog, or request specific information. Simply email Editor Stefany Henson at shenson@ima-net.org with your information or request. Editorial submissions are subject to review. 

Thursday
Nov202014

As 2015 FATCA deadlines approach, some questions to consider

Under the Foreign Account Tax Compliance Act (Chapter 4 or FATCA), certain foreign financial institutions (FFIs) must report information on U.S. account holders to the IRS. Noncompliant taxpayers are subject to a 30 percent withholding on any “withholdable” payments made to the foreign payee. U.S. withholding agents must collect this tax and are liable for any failure to withhold and deposit the correct amount with the IRS in a timely fashion. In addition, U.S. withholding agents must report all payments subject to FATCA to the IRS.

FATCA information reporting is based on pre-FATCA withholding rules (Chapter 3 withholding) and, as such, utilizes many of the same forms. Forms W-9, W-8BEN, W-8IMY, W-8ECI, W-8EXP and 1042-S have all been updated to include FATCA-related classifications and representations. In addition, the IRS has put forth a new Form W-8BEN-E, which will be required for many foreign entities to represent their FATCA status to U.S. withholding agents.

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Thursday
Nov202014

Do the Election Results Improve the Odds of Tax Reform?

By Scott A. Hodge, The Tax Foundation

One of the most obvious questions from Tuesday’s election results is: what does this mean for tax reform?

I think it certainly enhances the prospects of Congress and the president reaching a grand bargain on overhauling the tax code, however the likelihood that it will be this Congress and this president making such a deal seem pretty remote.

Even before the election, the conventional wisdom in the tax community was that fundamental tax reform would not be enacted until 2017, after the next presidential election. But, the success or failure of that effort was highly dependent upon three factors:

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Thursday
Nov062014

Plan Now to Get Full Benefit of Saver’s Credit; Tax Credit Helps Low- and Moderate-Income Workers Save for Retirement

 Low- and moderate-income workers can take steps now to save for retirement and earn a special tax credit in 2014 and years ahead, according to the Internal Revenue Service.

The saver’s credit helps offset part of the first $2,000 workers voluntarily contribute to IRAs and 401(k) plans and similar workplace retirement programs. Also known as the retirement savings contributions credit, the saver’s credit is available in addition to any other tax savings that apply.

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Thursday
Nov062014

Illinois Ranks 31st Best on Business Taxes

Annual Release of the State Business Tax Climate Index from the Tax Foundation

Illinois has the 31st best tax climate in the U.S. according to the latest edition of the State Business Tax Climate Index, released recently by the nonpartisan Tax Foundation. The Prairie State’s rank has dropped two places from its 29th place ranking last October.

The Index, now in its 11th edition, measures how well structured each state’s code is by analyzing over 100 tax variables in five different categories: corporate, individual income, sales, property, and unemployment insurance taxes. States are punished for overly complex, burdensome, and economically harmful tax codes but are rewarded for transparent and neutral tax codes that do not distort business decisions. A state’s ranking can rise or fall significantly not only because of its own actions, but also because of changes or reforms made in other states.

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Wednesday
Oct292014

IRS Announces 2015 Pension Plan Limitations; Taxpayers May Contribute up to $18,000 to their 401(k) plans in 2015

The Internal Revenue Service recently announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2015. Many of the pension plan limitations will change for 2015 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged because the increase in the index did not meet the statutory thresholds that trigger their adjustment. Highlights include the following: The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $17,500 to $18,000.

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