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Josh Crisp

The Department of Treasury and the Internal Revenue Service have released Announcement 2024-19, which provides detailed guidance on the federal tax implications of rebates under the Department of Energy (DOE) home energy rebate programs. These programs are funded through the Inflation Reduction Act of 2022 and are designed to promote the adoption of energy-efficient technologies in residential settings. This announcement is crucial for homeowners and industry professionals, helping them understand how these rebates integrate into the broader federal tax system. To help clients, prospects, and others, Wilson Lewis has summarized the key details below. Background on DOE Home Energy Rebate Programs The DOE Home Energy Rebate Programs were launched to promote widespread energy-saving retrofits and high-efficiency home electrification projects, contributing to national energy efficiency and environmental sustainability goals.

On March 11, President Biden presented a budget proposal that seeks to enact nearly $5 trillion in tax adjustments over the next decade. Key facets of this proposal focus on modifying the tax obligations of corporations and individuals earning above $400,000 annually. Notably, the initiative revisits and expands upon elements from previous budgets, incorporating both established and new measures aimed at tax reform. While inclusion in the presidential budget does not guarantee that the provisions will be enacted, it does provide important insight into the administration’s priorities. To help clients, prospects, and others, Wilson Lewis has summarized the key details below.

Many businesses regularly conduct research and development projects to improve processes and efficiencies and to uncover ways to make new and more valuable products. Companies with dedicated research and development functions invest significant human and financial resources in the process. Others without a formal department often invest in such activities continuously with a limited scope. These activities are essential because they help to create new or improved products and uncover efficiencies and enhancements. While helpful, these activities can be pretty expensive, leaving management unable to continue efforts in the long term.

In late January, the House of Representatives passed important bi-partisan tax legislation that provides several saving opportunities for families and businesses. The Tax Relief for American Families and Workers Act of 2024 (Act) calls for the extension of several credits and incentives that expired at the end of last year. It includes an increase to the reporting threshold for Form 1099s, changes to federal Section 174 research and development (R&D) credit expense rules, an extension of bonus depreciation, and updates to the Child Care Credit. There is also a provision that calls for a ban on accepting new Employee Retention Tax Credit claims effective January 31, 2024

Last month, the IRS announced a second reporting deadline extension for auto dealerships that sold eligible electric and other clean energy vehicles (EVs) in 2023. The first extension was issued in January when there was a two-week extension to the filing deadline from January 15th to January 31st. This extension means dealers now have until February 15th to submit the required time of sale reports for 2023 transactions. The additional time is needed to help sellers navigate compliance regulations including various filing options.

There has long been concern that workers have been improperly classified as independent contractors to avoid required pay minimums, insurance benefits, overtime pay, and other employment-based protections. Earlier this month, the Department of Labor (DOL) issued Employee or Independent Contractor Classification Under the Fair Labor Standards Act (FSLA). This new guidance relies on the economic reality test supported by various reality factors. These include worker opportunity for profit or loss, nature, and degree of control over the work, permanency of the work relationship, and more. Other factors may be considered when determining economic dependence on the employer.

As the closing weeks of the year quickly approaches, there are many steps that individuals and families can take to reduce taxes. These steps can not only yield immediate savings but also set up additional opportunities in 2024 and beyond. While tax planning is most effective when conducted on an ongoing basis, there are steps to take now that can have an immediate impact. This includes optimizing gifting strategies, maximizing retirement plan contributions, prepaying university expenses, IRA conversions and tax loss harvesting. To reap the full benefit, it is essential to take action before December 31st.

As the end of the year approaches, many executives and high-net-worth individuals are focused on tax-saving strategies. While there are several options available, depending on specific circumstances, making qualified charitable distributions (QCDs) can easily reduce taxable income. Taxpayers who must take required minimum distributions (RMDs) have the option to give up to $100,000 in tax-free gifts to an eligible charity. Payment is facilitated through the transfer of funds from the plan administrator directly to the eligible charity.  

When the Inflation Reduction Act was passed last year, it called for significant investments in clean energy. It contained dozens of clean energy provisions which included 24 new tax incentives designed to accelerate clean energy investments. While many incentives were designed to benefit companies there were three new tax incentives introduced and updated that benefit individuals. Specifically, the Used Clean Vehicle and New Clean Vehicle tax deductions provide an incentive for purchasing qualified clean energy vehicles. Through the end of 2023, taxpayers interested in claiming the credit need to do so by filing Form 8936 along with the federal tax return. At the start of the new year these rules will change.

The high amount of fraud plaguing the Employee Retention Tax Credit (ERC) program reached a tipping point forcing the IRS to take action. Last month, the agency announced a moratorium on new claims processing through the end of the year. The time is needed to review existing claims more carefully and to implement programs to assist those who may have improperly filed claims. On October 19th, the IRS release Notice IR- 2023-193 which provides guidance for those who wish to withdraw a claim. Depending on the taxpayer’s situations there are different steps which must be followed. Only those that want to completely withdrawal a claim can participate.