IRS Issues Guidance on Withholding on Unclaimed Payments
from Qualified Plans
The IRS issued Revenue Ruling 2020-24, which provides that a
qualified retirement plan must withhold federal income tax from
retirement payments it makes to a state unclaimed property fund and
that it must report the payments on Form 1099-R (Distributions From
Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs,
Insurance Contracts, etc.).
IRS Issues Guidance on IRA Rollovers
The IRS issued Revenue Procedure 2020-46, which provides that
a distribution made to a state unclaimed property fund is a basis
for a taxpayer to self-certify eligibility for a waiver of the
60-day rollover requirement for certain eligible retirement
plans.
IRS Issues Draft 2020 Form 1065 Instructions
The IRS issued draft 2020 Form 1065 instructions that include
revised instructions for partnerships required to report capital
accounts to partners on Schedule K-1.
IRS Announces Stricter Offer to Settle Micro-Captive
Insurance Audits
The IRS announced a new stricter settlement offer for
certain taxpayers who participated in abusive micro-captive
insurance transactions. (See our prior coverage here.)
IRS Revises FATCA QI/WP/WT External Reviewer Independence
Standard
The IRS has revised its Foreign Account Tax Compliance Act (FATCA)
FAQs to provide that the independence standard for an external
reviewer of a Qualified Intermediary's, Withholding Foreign
Partnership's, or Withholding Foreign Trust's
documentation, withholding, reporting, and other obligations now
applies to all review years. Previously, it had applied only to
pre-2019 years.
New Jersey Extension of Corporation Business Tax
Surtax
The New Jersey Division of Taxation is
advising corporate business taxpayers that a 2.5% temporary
surtax on taxpayers with a New Jersey allocated taxable net income
over $1 million is imposed for tax periods beginning on or after
Jan. 1, 2018 through Dec. 31, 2023. The surtax rate for 2020 and
2021 was scheduled to be 1.5%, and the surtax was scheduled to
expire in 2022. The surtax applies to all taxpayers with a
corporation business tax liability but does not apply to public
utilities or New Jersey S Corporations. The surtax is imposed on
allocated taxable net income and is in addition to the annual
corporation franchise tax. However, if the federal corporate tax
rate is increased to a rate of at least 35% of taxable income (the
pre-2017 Tax Cuts and Jobs Act rate), the surtax will be suspended
following the conclusion of the tax period corresponding with the
increase to the federal corporate income tax rate. For tax year
2020, penalties or interest will not be imposed on an underpayment
that results from the change in the surtax rate.
California FTB Updates its COVID-19 FAQs
The California Franchise Tax Board (FTB) has updated its COVID-19 Frequently Asked Questions (FAQs) by
adding to the section on "Teleworking and the 'Stay at
Home' Executive Order," providing guidance as to the
possible California franchise tax implications to corporations that
previously had no connections with California but now have an
employee indefinitely teleworking from California due to the
governor's executive order that requires all California
residents to stay at home to prevent the spread of the coronavirus
(COVID-19).
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