Democratic lawmakers on the House Ways and Means Committee have advanced legislation containing the tax elements of President Biden’s Build Back Better agenda. The draft legislation could be modified by the House Rules Committee before moving to the House floor and may differ from what Senators are preparing. Outlined below is a high-level overview of some key tax provisions affecting businesses and individuals:
Tax provisions affecting individuals
- Individual Tax Rate – the proposal would increase the top marginal individual rate to 39.6% from 37%. If enacted, the new rate would be applied to tax years beginning after December 31, 2021.
- Capital gain and qualified dividend tax rate – tax rate on long term capital gains realized and qualified dividends received after September 13, 2021 would be increased to 25% from 20%.
- 3% surcharge – Individuals with modified adjusted gross income in excess of $5M ($2.5M for MFS) will be imposed to a new 3% surcharge. If enacted, the new surcharge applies to tax year beginning after December 31, 2021.
- Estate and gift tax exemption – the unified credit would be reduced back to $5M from $10M (indexed for inflation) for estate and gift transfer made after December 31, 2021.
Tax provisions affecting businesses
- Corporate tax rate – The proposal would introduce a graduated federal tax rate for corporations: 18% applies to first $400,000 of income, 21% applies to income in excess of $400,000 and up to $5M, 26.5% applies to income in excess of $5M. A surcharge of lesser of 3% of the excess or $287,000 applies if the corporation has more than $10M of income. If enacted, rate increase is effective January 1, 2022.
- FDII deduction decrease – the proposal would reduce the section 250 deduction for FDII from 37.5% to 21.875% and the section 250 deduction for GILTI from 50% to 37.5%. If enacted, the change is effective for tax years beginning after December 31, 2021.
- GILTI inclusion – the bill would provide for country-by-county application of the GILTI and reduce qualified business asset investment deduction from 10% to 5%.
Additionally, the proposal contains provisions substantially changing the Foreign Tax Credit and Subpart F inclusion regime. The proposal must be approved by the Congress and taxpayers should continually monitor legislative process.
New Employee Retention Credit Guidance
IRS 는 Notice 2021-49 를 통해 Employee Retention Credit (ERC) 프로그램에 대한 추가 규정을 발표했다. 이는 2021년도 3분기와 4분기에 적용되는 American Rescue Plan Act of 2021 (ARP) 의 개정된 ERC 규정들을 다루고있다. 새로운 규정 중에 눈여겨봐야할 사항은 자격을 갖춘 고용주의 정의를 “recovery startup businesses” 를 포함하도록 확장되었다는 점이다.
과거 규정에 따르면, 자격을 갖춘 고용주란 COVID-19 으로 인한 정부의 명령으로 사업장이 폐쇄된 경우나 전년 동기 대비 매출액이 감소했을 경우에 해당되었다. 개정된 규정은 이에 추가로 2021년도 3분기와 4분기동안 recovery startup business 자격을 갖춘 고용주도 해당 분기에 대해 ERC 혜택을 받을 수 있도록 바뀌었다.
고용주는 다음 세가지 조건을 충족시킬 경우 recovery startup business 의 자격을 갖추게 된다.
- 과거 규정에 따른 사업장이 폐쇄됐거나 매출액이 감소된 경우에 해당되지 않는 고용주.
- 2020년 2월 15일 이후에 사업을 시작한 고용주.
- ERC 를 청구하는 분기 이전의 3개 과세 연도에 대한 평균 연간 매출액이 100만 달러를 초과하지 않는 경우.
기본 ERC 금액은 자격을 갖춘 고용주가 자격을 갖춘 직원에게 지급하는 임금의 첫 $10,000 의 70% 로 계산된다 (즉, 분기당 직원 1인당 최대 $7,000). 또한, recovery startup business 에 해당되는 고용주는 $10,000 임금 제한 적용 후 분기당 최대 $50,000 의 총 ERC 금액으로 제한된다. Recovery startup business 의 자격은 분기별로 결정된다.
2020년도에 사업을 시작한 고용주 중, 과거 ERC 규정의 조건에 해당되지 않았을 경우, recovery startup business 자격을 통해 ERC 혜택을 받을 수 있는 기회가 될 것이다.
개정된 규정은 2020년도와 2021년도에 대한 ERC 계산에 적용되는 여러가지 문제에 대한 지침을 제공한다. 자세한 사항은 Notice 2021-49 에서 확인할 수 있다.
New Employee Retention Credit Guidance
IRS issued further guidance on the employee retention credit (ERC) program via Notice 2021-49. The new notice addresses changes made by the American Rescue Plan Act of 2021 (ARP) to the ERC that are applicable to the third and fourth quarters of 2021. Those changes include, among other things, expanding the definition of eligible employer to include “recovery startup businesses”.
According to the previous guidance, employers are eligible to claim the ERC for a quarter during 2020 or 2021 if their business operations were fully or partially suspended due to a government order relating to COVID-19 or they experienced a decline in gross receipts. Under the new guidance, employers that qualify as a recovery startup business during the third and fourth quarters of 2021 are also eligible to claim the ERC for such quarters.
Employers qualify as a recovery startup business by meeting all three of the following:
- An employer is not otherwise eligible employer via the business suspension test or gross receipt test.
- An employer began carrying on a trade or business after February 15, 2020.
- Average annual gross receipts do not exceed $1 million for the three tax years preceding the quarter in which it claims the ERC.
The basic ERC amount for all eligible employers during 2021 is calculated as 70% of up to $10,000 of an employee’s qualified wages per eligible quarter. Additionally, employers eligible as a recovery startup business are also subject to an overall credit limitation of $50,000 per quarter (after application of the $10,000 wage limit). Eligibility as a recovery startup business is made separately for each quarter.
If an employer started business in 2020 and did not meet the conditions of the previous ERC guidance, it would be an opportunity to be qualified as a recovery startup business to receive ERC benefits.
The new notice also provides guidance on several miscellaneous issues applicable to all ERC calculations for 2020 and 2021. Refer to Notice 2021-49 for more details.