Magazine article The CPA Journal

Tax & Accounting Update

Magazine article The CPA Journal

Tax & Accounting Update

Article excerpt

Tax & Accounting Update is provided by Thomson Reuters and based on material published on Checkpoint, its online news and research platform. The Update is a quick-reference guide to the most pressing issues coming down the regulatory pipeline. Visit https://tax.thomsonreuters.com/daify-newsstand/ for further information and daily updates.

Tax News

* 1RS cautions against "dumping" employees on health insurance exchanges. The 1RS has published a Q&A on its website that addresses the consequences of an employer reimbursing its employees for the premiums they pay for health insurance, rather than establishing its own plan. The IRS's guidance concluded that such arrangements are considered to be group health plans and subject to the Patient Protection and Affordable Care Act (ACA); therefore, employers will be subject to penalties-as high as $100 per day per employee excise tax-for failure to meet ACA provisions.

* 1RS okays midyear amendments to reflect DOMA. In Notice 2014-37, the 1RS has stated that 401(k) and 401(m) safe harbor plans will not be affected by a plan sponsor's adoption of a midyear amendment pursuant to recent 1RS guidance that required amendments to plans to reflect the Supreme Court's striking down of Defense of Marriage Act (DOMA) provisions.

* Final regulation outlines trust/estate expenses that escape 2% income floor. The 1RS has issued final regulations, under which costs incurred by estates and nongrantor trusts are subject to a 2% floor for miscellaneous itemized deductions. The final regulations largely follow, but also expand upon, proposed regulations issued in 2011. Among the notable clarifications is a limitation on tax preparation lees that are not subject to the 2% Hoot, including estate and generation-skipping transfer tax returns, fiduciary income tax returns, and a decedent's final individual income tax returns.

SEC News

* Regulatory agenda will turn to IFRS. The SEC is ready to revive its debate about what to do with IFRS for the U.S. financial markets. SEC Chair Mary Jo White explained in a May 20 speech before the Financial Accounting Foundation: "Today, over 500 companies representing trillions of dollars in aggregate market capitalization report to us under IFRS with no reconciliation. And the SEC staff enforces those standards. By any measure, we have thus demonstrated a major commitment to the use of IFRS in our markets. But, the question remains-what about domestic issuers?" White indicated that considering whether to further incorporate IFRS into the U.S. financial reporting system continues to be a priority and that the SEC intends to make a statement on this issue in file near future.

* Credit rating agency reforms revisited. The SEC is returning to a three-year-old proposal to toughen regulation of credit rating agencies and would like to finish the rule by year-end. Before it does, the SEC will have to address concerns raised by rating agencies who say that the proposed rules impose too many restrictions and by investors who say that the rules don't go far enough. The proposal would standardize the way rating agencies calculate and present information about changes to ratings and how often a rated company or product subsequently defaulted. …

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