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Yahoo
a day ago
- Business
- Yahoo
AICPA opposes limitations on tax deductions
The American Institute of CPAs (AICPA) has reiterated its stance against the proposed limitations on state and local tax (SALT) deductions for specified service trades or businesses (SSTBs) in the One Big Beautiful Bill Act. The body sent a second letter to the Senate Finance and House Ways & Means Committees highlighting the need for modifications to the 'troubling' tax proposals. In the letter, the AICPA said: 'We are sensitive to the challenges in drafting a budget reconciliation bill that permanently extends tax provisions, enhances tax administrability, and balances the interests of individual and business taxpayers. 'While we support portions of the legislation, we do have significant concerns regarding several provisions in the bill, including one which threatens to severely limit the deductibility of SALT by certain businesses. This outcome is contrary to the intentions of the One Big Beautiful Bill Act, which is to strengthen small businesses and enhance small business relief.' The AICPA called for an allowance for business entities, including SSTBs, to deduct SALT paid or accrued in trade or business activities. This move aligns with the Tax Cuts & Jobs Act's original intent and has been sanctioned by the Internal Revenue Service. The current House version of the bill is criticised for unfairly targeting SSTBs by restricting their SALT deduction capabilities. The AICPA also addressed the risks of contingent fee arrangements in tax preparation, suggesting they could lead to abuse. They recommended removing an amendment that could permanently disallow business losses without offsetting business income. The letter warned against laws that financially harm businesses and discourage professional service-based business formation. The AICPA supported provisions in the bill, such as using section 529 plan funds for credential expenses, tax relief for natural disaster-affected individuals and businesses, and making the qualified business income deduction permanent. They also advocated for the preservation of the cash method of accounting and increasing the Form 1099-K reporting threshold. In addition, the AICPA endorsed permanent extensions of international tax rates and provisions that offer greater certainty and clarity. It also shared a list of endorsed legislation, principles of good tax policy, and a compendium of proposals for simplifying and technically amending the Internal Revenue Code. AICPA Tax Policy & Advocacy vice-president Melanie Lauridsen said: 'While we are grateful to Congress for many provisions in this bill, the unfair targeting of certain types of businesses creates inefficiencies in business decision-making and could result in negative, long-lasting impacts on the economy. 'We hope that Congress will consider our recommendations and make the necessary changes that will create parity between all businesses.' Earlier in May 2025, the AICPA submitted comments to the US Department of the Treasury and the Internal Revenue Service on proposed regulations concerning previously taxed earnings and profits and related basis adjustments. "AICPA opposes limitations on tax deductions" was originally created and published by The Accountant, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Boston Globe
21-05-2025
- Business
- Boston Globe
The Senate passed Trump's No Tax on Tips Act. Here's what it could mean.
Bill S. 129, or the No Tax on Tips Act, creates a federal income tax deduction of up to $25,000 a year for certain types of cash tips for eligible employees. Sen. Ted Cruz (R-Texas) introduced the bill in January. Sen. Jacky Rosen (D-Nevada), who co-sponsored the bill, brought it up Tuesday for 'unanimous consent' - a type of vote usually reserved for routine congressional matters. Democrats and Republicans praised the speedy passage of the bill and framed it as an example of successful bipartisanship. The legislation will now to go the House. Advertisement What's in the bill? The 'No Tax on Tips Act' proposes amending the Internal Revenue Code to exempt 'cash tips' - which include tips given in cash, credit and debit card, and checks - from federal income tax. Eligible employees will be allowed to claim a 100 percent deduction in their tax filings for amounts of up to $25,000 per tax year. Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up The exemption would only apply to tips 'received by an individual … in an occupation which traditionally and customarily received tips on or before December 31, 2023,' according to the text of the legislation, which states that the treasury secretary must publish a list of eligible occupations no later than 90 days after the bill's passage. In a statement, Senate Minority Leader Charles E. Schumer (D-New York) cited waiters, bartenders and delivery drivers as examples of the types of employees who could become eligible for the tax exemption. Advertisement Only employees who were compensated less than $160,000 in the 2024-2025 tax year - an amount that would be adjusted annually for inflation - would be eligible for the exemption, and they would have to report their tips to their employers for purposes of withholding payroll taxes, according to the legislation. Schumer said in his statement that 'working Americans' who receive tips 'work hard for every dollar they earn and are the ones who deserve tax relief, not the ultra-rich.' Cruz said in a statement the bill 'will have a lasting impact on millions of Americans by protecting the hard-earned dollars of blue-collar workers, the very people who are living paycheck-to-paycheck.' The bill would also expand the business tax credit 'for the portion of payroll taxes that an employer pays on certain tips to include payroll taxes paid on tips received in connection with barbering and hair care, nail care, esthetics, and body and spa treatments,' according to its Senate description page.
Yahoo
21-05-2025
- Business
- Yahoo
No Tax on Tips Act: What to know about the bill and what comes next
The Senate on Tuesday passed a bill that would eliminate federal taxes on tips, advancing a key campaign promise of President Trump's, with the help of Senate Democrats. Sen. Jacky Rosen (D-Nev.) brought the No Tax on Tips Act to the floor with the expectation that it would be blocked, but Sen. Ted Cruz (R-Texas), the sponsor of the bill, declined to do so. The bill passed via unanimous consent, a move typically reserved for routine legislative matters. The legislation now heads to the House of Representatives. Here's what to know about the bill: Trump debuted his proposal to exempt tips from federal taxes at a rally in Nevada in June, and the issue became a key talking point on the trail as a way of courting working-class voters. Polling suggests the proposal has nationwide support, but the policy gained significant traction in Nevada, which has the most per-capita tipped workers of any state in the nation. Roughly 25 percent of Nevada workers rely on tips, according to the state's senators, Rosen and Sen. Catherine Cortez Masto (D-Nev.), who are co-sponsors of the legislation. Trump has pointed to the policy's popularity among service and hospitality workers as a big factor in his November victory in Nevada, which flipped red for the first time in decades. In January, Trump took a victory lap in the battleground state and thanked Nevada voters for delivering the state to him, promising to uphold his commitment to eliminating taxes on tips. 'In the coming weeks, I'll be working with Congress to get a bill on my desk that cuts taxes for workers, families, small businesses, and, very importantly, keeps my promise for a thing called …. no tax on tips,' Trump said to a crowd, in his first visit to Nevada since taking office. 'So if you're a restaurant worker, a server, a valet, a bellhop, a bartender, or one of my caddies — I go through caddies like candy, if I play badly, I always blame my caddy — or any other worker who relies on tipped income, your tips will be 100 percent yours,' he continued. The bill amends the Internal Revenue Code to create a federal income tax deduction for cash tips — including those given by credit/debit card or by check. Employees would be able to claim a 100 percent income tax deduction for amounts of up to $25,000 each year, but only tips reported to the employer would be eligible for the deduction. The exemption would apply to tips given to workers 'in an occupation which traditionally and customarily received tips on or before December 31, 2023,' according to the legislation. The Treasury secretary would be required to produce a list of occupations that fit that description within 90 days of the bill's passage. The deduction only applies to individuals earning less than $160,000 per year, adjusted annually for inflation. The bill, if passed in the House and signed into law in its current form, would take effect for all taxable years after 2024. The bill needs to be approved by the House, which is focused on negotiating Trump's massive legislative package, the One Big Beautiful Bill Act. That tax and spending bill includes a provision of the No Tax on Tips Act, but it's unclear whether it will remain a provision in the larger bill when the final version is produced. House Republicans could also take up the legislation as a standalone bill, which would be more likely to garner bipartisan support. Democrats have pushed for the legislation to be decoupled from the larger bill, which still faces significant hurdles as some GOP holdouts continue to push against particular issues. That bill also faces a tough road ahead in the Senate. Rosen called on Republicans to pass the bill in the House 'as soon as possible, without any poison pills.' 'The problem is that House Republicans have included a version of the No Tax on Tips Act in their bigger budget bill, a bill that cuts Medicaid, SNAP, and other programs families rely on to give more tax breaks for billionaires and the ultra-wealthy,' she said in a statement. 'We shouldn't be forcing working families to choose between keeping their health care or keeping their tips, which is why we want this bipartisan bill on its own — on its own — not part of a harmful, extreme budget bill,' she added. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Yahoo
21-05-2025
- Business
- Yahoo
AICPA submits comments on PTEP basis adjustments regulations
The American Institute of CPAs (AICPA) has submitted comments to the US Department of the Treasury and the Internal Revenue Service (IRS) on proposed regulations concerning Previously Taxed Earnings and Profits (PTEP) and related basis adjustments. The regulations under Sections 959 and 961 of the Internal Revenue Code are designed to prevent double taxation of US shareholders with income from controlled foreign corporations (CFCs). The proposed regulations aim to clarify the rules governing the PTEP regime, including stock basis adjustments, foreign currency gains or losses, and the allocation of foreign tax credits. The AICPA's recommendations seek to improve these regulations for taxpayers. One key suggestion from the AICPA is to explicitly allow taxpayers to rely on the proposed regulations until they are finalised. Additionally, the AICPA recommends extending the model for PTEP distributed through partnerships to foreign nongrantor trusts under Section 959. The AICPA also proposes to coordinate the rules of subchapter J with subpart F by treating PTEP as distributed from the CFC to the foreign nongrantor trust. Subsequent distributions to beneficiaries should be considered recoveries of that PTEP. If the above recommendation is not adopted, the AICPA suggests that distributions of excludable PTEP to beneficiaries be treated similarly to tax-exempt income or trust principal, which would not trigger current taxation under the distributable net income model or the throwback anti-deferral regime. Furthermore, under Section 961, the AICPA advises extending the concept of derived basis to foreign nongrantor trusts, allowing these entities to have a derived basis in CFC shares. AICPA Tax Policy & Advocacy senior manager Reema Patel said: 'There is some uncertainty regarding taxpayer's continued reliance on Notice 2019-01 and the portions of the proposed regulations that apply the 2019 Notice provisions.' 'The lack of an express statement in the proposed regulations creates uncertainty among taxpayers about which aspects of the proposed regulations may be viewed as a reasonable interpretation of the statute and existing final regulations. Therefore, we recommend that Treasury and the IRS expressly allow taxpayers to rely on the proposed regulations in their entirety until they are finalised.' Meanwhile, in a recent move, AICPA named Rahul Gupta as the chairman of its Financial Reporting Executive Committee. "AICPA submits comments on PTEP basis adjustments regulations" was originally created and published by The Accountant, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
The Hill
21-05-2025
- Business
- The Hill
No Tax on Tips Act: What to know about the bill and what comes next
The Senate on Tuesday passed a bill that would eliminate federal taxes on tips, advancing a key campaign promise of President Trump's, with the help of Senate Democrats. Sen. Jacky Rosen (D-Nev.) brought the 'No Tax on Tips Act' to the floor with the expectation that it would be blocked, but Sen. Ted Cruz (R-Texas), the sponsor of the bill, declined to do so. The bill passed via unanimous consent, a move typically reserved for routine legislative matters. The legislation now heads to the House of Representatives. Here's what to know about the bill: Trump debuted his proposal to exempt tips from federal taxes at a rally in Nevada in June 2024, and the issue became a key talking point on the trail as a way of courting working-class voters. Polling suggests that the proposal has nationwide support, but the policy gained significant traction in Nevada, which has the most per-capita tipped workers of any state in the nation. Roughly 25 percent of Nevada workers rely on tips, according to the state's senators, Rosen and Sen. Catherine Cortez Masto (D-Nev.), who are co-sponsors of the legislation. Trump has pointed to the policy's popularity among service and hospitality workers as a big factor in his November victory in Nevada, which flipped red for the first time in decades. In January, Trump took a victory lap in the battleground state and thanked Nevada voters for delivering the state to him, promising to uphold his commitment to eliminating taxes on tips. 'In the coming weeks, I'll be working with Congress to get a bill on my desk that cuts taxes for workers, families, small businesses, and, very importantly, keeps my promise for a thing called …. No tax on tips,' Trump said to a crowd, in his first visit to Nevada since taking office. 'So if you're a restaurant worker, a server, a valet, a bellhop, a bartender, or one of my caddies — I go through caddies like candy, if I play badly, I always blame my caddy — or any other worker who relies on tipped income, your tips will be 100 percent yours,' he continued. The bill amends the Internal Revenue Code to create a federal income tax deduction for cash tips — including those given by credit/debit card or by check. Employees would be able to claim a 100 percent income tax deduction for amounts of up to $25,000 each year, but only tips reported to the employer would be eligible for the deduction. The exemption would apply to tips given to workers 'in an occupation which traditionally and customarily received tips on or before December 31, 2023,' according to the legislation. The Treasury secretary would be required to produce a list of occupations that fit that description within 90 days of the bill's passage. The deduction only applies to individuals earning less than $160,000 a year, adjusted annually for inflation. The bill, if passed in the House and signed into law in its current form, would take effect for all taxable years after 2024. The bill needs to be approved by the House, which is focused on negotiating Trump's massive legislative package, the One Big Beautiful Bill Act. That tax and spending bill includes a provision of the No Tax on Tips Act, but it's unclear whether it will remain a provision in the larger bill when the final version is produced. House Republicans could also take up the legislation as a standalone bill, which would be more likely to garner bipartisan support. Democrats have pushed for the legislation to be decoupled from the larger bill, which still faces significant hurdles as some GOP holdouts continue to push against particular issues. That bill also faces a tough road ahead in the Senate. Rosen called on Republicans to pass the bill in the House 'as soon as possible, without any poison pills.' 'The problem is that House Republicans have included a version of the No Tax on Tips Act in their bigger budget bill, a bill that cuts Medicaid, SNAP, and other programs families rely on to give more tax breaks for billionaires and the ultra-wealthy,' she said in a statement. 'We shouldn't be forcing working families to choose between keeping their health care or keeping their tips, which is why we want this bipartisan bill on its own — on its own — not part of a harmful, extreme budget bill,' she added.
