2018 Worldwide ERC. 27 November :00 am (U.S. ET)

Transcription

1 2018 Worldwide ERC 27 November :00 am (U.S. ET)

2 Worldwide ERC Government Affairs Update

3 WORLDWIDE ERC WEBINAR DISCLAIMER The views, opinions, and information expressed during this webinar are those of the presenter and are not the views or opinions of Worldwide ERC. Worldwide ERC makes no representation or warranty with respect to the webinar or any information or materials presented therein. Users of webinar materials should not rely upon or construe the information or resource materials contained in this webinar as legal or other professional advice and should not act or fail to act based on the information in these materials without seeking the services of a competent legal or other professional Worldwide ERC

4 Webinar Instructions Technical difficulties? Dial , or questions to Sound Troubles? If your sound quality is poor, check your Wi-Fi strength or connect via cable. Call in using the phone number listed under the Event Info tab in the upper left-hand corner. To return to meeting room window: If you are in full screen mode, you may return to the meeting room window by clicking the View Meeting Room button located at the bottom left corner of your screen Worldwide ERC

5 Q&A Instructions Submit questions through Q&A dialogue box Box is located in lower right corner of screen Do not use the Chat Box Be specific You may submit your question at any time Q&A Dialogue Box: 2018 Worldwide ERC

6 CRP and GMS Certification If you are a CRP seeking CE credit for this webinar, you may utilize the CRP credits management portal, available online under My Account. The seminar ID is (All (S)CRPs must apply for credit and submit the $8 processing fee to receive CE credit) If you are a GMS seeking CE credit for this webinar, you must include the name/date of this webinar on your GMS Renewal Application (at the time you apply for recertification) Worldwide ERC

7 Today s Presenters Headshot here, sized to placeholder. Headshot here, sized to placeholder. Tristan North Government Affairs Adviser Worldwide ERC Peter K. Scott Tax Counsel Worldwide ERC

8 Government Affairs Update U.S. Midterm Election Analysis Moving Americans Privacy Protection Act Brexit Tax Update Presentation Outline Post Election Issues Tax Reform Issues Questions and Answers 2018 Worldwide ERC

9 Government Affairs Update U.S. Midterm Election Analysis Impact on Mobility Moving Americans Privacy Protection Act Brexit 2018 Worldwide ERC

10 Democrats Retake the House 234 Democratic Seats vs. 201 Republican Dems gain flip 42 seats, gain 39 seats Largest Dem gain since Watergate Source: Politico

11 House Leadership (116th Congress) Likely Democrats Republicans Speaker of the House Nancy Pelosi (D-CA-12) Minority Leader Kevin McCarthy (R-CA-23) Majority Leader Steny Hoyer (D-MD-05) Majority Whip Jim Clyburn (D-SC-06) Minority Whip Steve Scalise (R-LA-01) Chief Deputy Whip Patrick McHenry (R-NC-10)

12 Key House Committee Leadership (116th Congress) Energy & Commerce Financial Services Chairman Frank Pallone (D-NJ-06) Ranking Member Greg Walden (R-OR-02) Homeland Security Chairman Maxine Waters (D-CA-43) Judiciary Ranking Member: TBD Chairman Bennie Thompson (D-MS-02) Ranking Member Mike Rogers (R-AL-03) Chairman Jerry Nadler (D-NY-12) Ranking Member: TBD Steve Chabot (R-OH-01) or Doug Collins (R-GA-09)

13 Key House Committee Leadership (116th Congress) Natural Resources Science, Space & Tech Chairman Raúl Grijalva (D-AZ-03) Ranking Member Rob Bishop (R-UT-01) Transportation & Infrastructure Chairman Eddie Bernice Johnson (D-TX-30) Ways & Means Ranking Member: TBD Frank Lucas (R-OK-03) or Randy Weber (R-TX-14) Chairman Peter DiFazio (D-OR-04) Ranking Member: TBD Sam Graves (R-MO-06) or Jeff Denham (R-CA-10) Chairman Richard Neal (D-MA-01) Ranking Member Kevin Brady (R-TX-08)

14 Republicans Expand Senate Majority Source: Politico

15 Republicans Expand Senate Majority New Senators Overview Republicans have flipped 3 seats (FL, IN, MO, ND), likely gaining 3 overall Democrats flipped Nevada and Arizona Marsha Blackburn (R-TN) Mike Braun (R-IN) Kevin Cramer (R-ND) Josh Hawley (R-MO) Mitt Romney (R-UT) Jacky Rosen (D-NV) Rick Scott (R-FL) Kyrsten Sinema (D-AZ)

16 Senate Leadership (116th Congress) Republicans Democrats Majority Leader Mitch McConnell (R-KY) Minority Leader Chuck Schumer (D-NY) Majority Whip John Thune (R-SD) Republican Conference Chair John Barrasso (R-WY) Minority Whip Dick Durbin (D-IL) Assistant Minority Leader Patty Murray (D-WA)

17 Key Senate Committee Leadership (116th Congress) Banking Commerce Chairman Pat Toomey (R-PA) Ranking Member Sherrod Brown (D-OH) Energy & Natural Resources Chairman Roger Wicker (R-MS) Finance Ranking Member: TBD Pending Election Results Chairman Lisa Murkowski (R-AK) Ranking Member Maria Cantwell (D-WA) Chairman Chuck Grassley (R-IA) Ranking Member Ron Wyden (D-OR)

18 Key Senate Committee Leadership (116th Congress) Health, Education, Labor & Pensions (HELP) Homeland Security Chairman Ron Johnson (R-WI) Ranking Member: TBD Pending Election Results Judiciary Chairman Lamar Alexander (R-TN) Ranking Member Patty Murray (D-WA) Chairman Lindsay Graham (R-SC) Ranking Member Dianne Feinstein (D-CA)

19 Financial Services Republican efforts to further reform Dodd- Frank Act or Sarbanes-Oxley are now unlikely Increased oversight by House Financial Services Committee of practices of large financial institutions Possible legislation to regulate cybersecurity safeguards for financial institutions 2017 Worldwide ERC

20 Immigration Possible deal on deferred action for childhood arrives (DACA) in exchange for increased funding for wall along U.S.-Mexico Border Trump Administration expected to issue longawaited proposed rule to no longer allow spouses of H-1B visa holders to be eligible for employment in U.S. House Democrats likely to develop package on comprehensive immigration reform to include business immigration provisions 2017 Worldwide ERC

21 Cybersecurity and Data Privacy Election Security will gain attention from Democrats in 2019 Democrats will likely mirror California s action in passing legislation on data privacy Democrats will take a more aggressive approach on cyber supply chain threats 2017 Worldwide ERC

22 Trade & Tariffs Section 301 tariffs on Chinese goods and 232 tariffs on steel will not be largely impacted by the new Congress House Democrats will exert increased oversight of US Free Trade Agreements under negotiation in 2019 Congress approval of renegotiated NAFTA agreement, the United States-Mexico- Canada Trade Agreement 2017 Worldwide ERC

23 Moving Americans Privacy Protection Act U.S. Customs and Border Protection (CBP) is required to release vessel manifests which can include personally identifiable information of transferees shipping goods Information can include Social Security numbers, passport numbers and addresses Data brokers purchase information compiled by CBP and use for marketing and analysis purposes and post on websites On May 1, 2017, Senators Daines (R-MT) and Peters (D-MI) introduced the Moving Americans Privacy Protection Act (S. 998). On November 15, 2017, Representatives Denham (R-CA) and Pascrell (D-NJ) introduced House companion bill (H.R. 4403) On April 14, 2018, House passed H.R on voice vote On November 14, Worldwide ERC, American Moving & Storage Association, International Association of Movers and eight other organizations sent letter to Senate leaders urging consideration of H.R. 4403/S. 998 this year 2017 Worldwide ERC

24 Brexit On November 14, UK Prime Minister Theresa May announced an agreement reached between UK and EU on Brexit Agreement supported by her Cabinet but two ministers resigned including Brexit minister Freedom of movement would stop following transition period ending December 31, 2020 UK citizens living in the EU and EU citizens living in the UK until that date would maintain current rights UK would remain in the EU customs union until a compromise reached on maintaining an open border between Northern Ireland and the Republic of Ireland On November 26, EU leaders approved the agreement UK Parliament is scheduled to debate agreement starting on December 5 with vote on the 11 th 2017 Worldwide ERC

25 Post Election Issues Extenders Technical Corrections More Tax Cuts? Tax Reform Issues Tax Update 2018 Worldwide ERC

26 Post-Election Lame Duck session short Technical corrections to TCJA W&M Chair has over 80 Dems oppose (want hearings to discuss TCJA flaws) Senate Finance divided (issues with state/local tax deduction limit) Unlikely to move during lame duck No obvious vehicle, will not move stand alone Disaster relief possible vehicle 2017 Worldwide ERC

27 Post-Election Tax Extenders W&M Chair has draft 11/16 Repeal some, make some permanent 50 Trade Associations urge action 11/13 Senate Finance Chair wants 2-year extension Possible combination of technical corrections, IRS reform bill, pension reform Democrats will not cooperate absent concessions by Republicans Movement during lame duck possible but not likely Mobility industry cares about provision allowing taxfree debt forgiveness for up to $2 million of mortgage 2017 Worldwide ERC

28 Post-Election Tax Reform 2.0 package dead for now House passed before election Make temporary provisions of TCJA permanent But included a bill making taxpayer-favorable changes to retirement plan system, which could possibly move Democrats say they would consider raising corporate rate to 25% from 21%, roll back highincome tax cuts, to fund $1 trillion infrastructure improvement plan Trump says he would consider as vehicle for further middle class tax cuts 2017 Worldwide ERC

29 Mobile Workforce Act Pending for years, would prohibit states from taxing temporary workers until they had worked thirty days in the state Passed House (again), pending in Senate Finance with 61 co-sponsors Outgoing primary House sponsor sent letter to all Senators 11/15 urging action Probably won t happen NY Senator Schumer opposed 2017 Worldwide ERC

30 Tax Reform Issues 2018 payments for 2017 moving expenses Business/entertainment and meal expenses State conformity State workarounds for state tax deduction limitation Loss of miscellaneous itemized deductions 2017 Worldwide ERC

31 2018 payments for 2017 moving expenses Major issue early in 2018 Worldwide ERC provided analysis generally supporting exclusion, but no guidance from IRS Many companies chose conservative path and grossed up 2018 payments IRS Notice , 9/21/2018 Resolves issue in favor of exclusion Employers can go back and change under standard procedures 2017 Worldwide ERC

32 Notice Reimbursements an employer pays to an employee or a moving company in 2018 for qualified moving expenses incurred in a prior year are not subject to federal income or employment taxes. Reimbursements must be for work related moving expenses and meet the prior qualifications of Section 217 and definition of Qualified Moving Expense. See Form 3903 or Publication 521 for 2017 rules. That is, they would have been deductible in 2017 if paid directly by employee. The employee must not have deducted the expenses in Employers who have already treated the reimbursements or payments as taxable can follow the normal employment tax adjustment and refund procedures. Publication 15 Section 13, or Form 941-X and its instructions Worldwide ERC

33 Notice : Issues If company did in fact treat these amounts as taxable, it may be difficult to go back and separate them from other 2018 payments May require extensive reconstruction of records, additional programming Who will absorb those costs? States another difficult area Many companies grossed up for all states for 2018, but nearly all states permitted an exclusion in 2017 Should they try to go back and separate these costs? Does the move have to have been completed in 2017? Notice is not clear Could also apply to costs incurred in 2017 even if move not completed until Worldwide ERC

34 Business Entertainment & Meals Tax Cuts and Jobs Act (TCJA) disallows any deduction for business entertainment starting in % was deductible previously TCJA is silent on treatment of business meals associated with entertainment Not clear if buying hotdogs for client at the ballgame remains 50% deductible Notice , 10/3/2018, resolves issue Food and beverages provided during or at entertainment activity remain 50% deductible if: Purchased or billed separately from the entertainment Must substantiate separate charge (receipt for the hotdogs, or a bill for entertainment that separately lists food/beverage charges) Will require establishment of new recordkeeping processes 2017 Worldwide ERC

35 Moving Expenses: States Companies Do Not Know Whether to Treat Reimbursements/Payments as Taxable in Many States Most states follow federal law About half do so automatically (called rolling conformity), half based on a fixed date (called static conformity) In rolling conformity states, moving expense deduction/exclusion is no longer available unless they change their law to allow it In static conformity states, deduction/exclusion still in place unless state acts to update its conformity date without excluding that change 2017 Worldwide ERC

36 Moving Expenses: States Next slide has details on all states One change since data last compiled: Kentucky Revenue Department has interpreted conformity legislation to eliminate exclusion Not at all clear from actual legislation, but industry will need to follow Department s interpretation 2017 Worldwide ERC

37 Moving Expenses: States 16 Static States Have Acted: 13 now follow federal law: Georgia, Idaho, Indiana, Iowa, Kentucky, Maine, North Carolina, Ohio, Oregon, South Carolina, Vermont, West Virginia, Wisconsin. (But Iowa not effective until 2019) (Maine conformed 9/12/2018, and SC conformed 10/2/2018) 3 still allow exclusion: Arizona, Hawaii, Virginia (and Iowa for 2018) 4 Static States Haven t Acted, Moving Expense Still Excludable: Arkansas, California, Massachusetts, Minnesota One Rolling Conformity State Has Kept Exclusion New York 18 Rolling Conformity States Exclusion Currently Not Allowable: Alabama, Colorado, Connecticut, D.C., Delaware, Illinois, Kansas, Louisiana, Maryland, Michigan, Missouri, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, Rhode Island, Utah 3 Non-conformity States: New Jersey, Pennsylvania: allow exclusions; Mississippi: does not allow exclusions Current final score: 11 states allow exclusion for 2018: Arizona, Arkansas, California, Hawaii, Iowa, Massachusetts, Minnesota, New Jersey, New York, Pennsylvania, Virginia 2017 Worldwide ERC

38 State Workarounds Four states have sued U.S. to reverse the $10,000 limit on state tax deductions Three (NY, NJ, and CT) have enacted workarounds (IL, and RI considering) Establish state or local charities to which taxpayers may contribute Full charitable contribution deduction on federal return Taxpayer gets credit against state income tax or local property tax for contribution Programs mimic other state credit programs that have been allowed in the past, at least where full credits were not allowed 2017 Worldwide ERC

39 State Workarounds Treasury issued proposed regulations August 23 Allowable federal contribution deduction reduced by the credit Will affect not only new workaround programs, but numerous existing programs (eg, school choice) allowing tax credits for donations These had generally been approved in the past IRS said on September 5 that new regulations do not apply to businesses that make contributions in exchange for credits Those remain fully deductible as business expenses as long as there s a business reason for the contribution By September 21, Treasury had already received over 1,500 comments on the proposed regulations Issue will be litigated 2017 Worldwide ERC

40 Miscellaneous Itemized Deductions Previously deductible to the extent they exceeded 2% of Adjusted Gross Income Tax Reform eliminated deduction for 2018 through 2025 Impact on mobility No deduction for home office, other business expenses for remote employees Independent contractors not affected, puts additional pressure on worker classification No deduction for extra expenses incurred by employees traveling on business Probably no deduction for repayments under payback agreements Argument still deductible under claim of right provisions 2017 Worldwide ERC

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