Employee Benefit Plans and the Voluntary Fiduciary Correction Program

The Voluntary Fiduciary Correction Program (“VFCP”), sponsored by the Employee Benefits Security Administration of the Department of Labor, provides relief from civil liability and an exemption from excise taxes under the Internal Revenue Code (“IRC”). VFCP is designed to encourage self-correction of certain violations and fiduciary breaches of the Employee Retirement Income Security Act of More

Correcting Retirement Plan Errors: 2015 IRS Guidance Favors Employers

The Internal Revenue Service (IRS) has modified the Employee Plans Compliance Resolution System (EPCRS), which is the IRS correction program for retirement plans. In general, EPCRS allows retirement plan sponsors to correct plan mistakes and continue to provide retirement benefits on a tax-favored basis. It includes self-correction without IRS involvement, voluntary correction with IRS approval, More

U.S. Supreme Court Declares Maryland Income Tax Provision Unconstitutional

On May 18, 2015, the United States Supreme Court declared a provision of Maryland’s State Income Tax unconstitutional as discriminatory against interstate commerce, and thereby in violation of Article I, Section 8 of the United States Constitution. The case is Comptroller v. Wynne. The specific and technical issue is that Maryland’s personal income tax has (as More

An IRS Tax Audit of Your Business – The Basics

A tax audit is an accounting procedure where the IRS examines your business financial records to make sure you filed your tax return accurately.  If you receive an IRS audit notice, here are the basic steps you can take to assist in resolving the situation. 1. Determine Why Your Return Was Selected For An Audit. It More

Minister’s Housing Allowance Survives Challenge

In a big win for churches and other religious organizations, the United States Court of Appeals for the Seventh Circuit has reversed a District Court decision which had declared the Minister’s Housing Allowance to be unconstitutional. The decision (issued on November 13, 2014) preserves the annual $700 million tax break given to religious organizations and More

Charitable Contributions to Individual Missionaries

In general, a contribution is deductible only if it is made “to or for the use of” a charitable organization, not a designated individual.  IRC §170(a).  Direct contributions to missionaries, or any other individual, are not tax deductible, even if they are used for religious or charitable purposes.  However, contributions to designated individuals in the More

Charitable Contributions to Foreign Organizations and/or Designated to Foreign Organizations

In general, the United States does not permit individuals to claim an income tax deduction for direct contributions to foreign charities.  IRC Section 170(c)(2)(a) specifically limits the tax deduction to corporations, funds or foundations created or organized in the United States or under the laws of the United States.  To that end, the IRS will More

Changes to Maryland’s Estate Tax

On March 21, 2014, for the first time in twelve years, Maryland has adjusted its estate tax.  Maryland General Assembly passed House Bill 739 / Senate Bill 602 which changes the “unified credit” amount, i.e. the threshold of assets above which the estate tax applies, from the current $1 million to the federal credit amount.  More

IRS Changes Health FSA “Use or Lose” Rule

On October 31, 2013, the Internal Revenue Service (IRS) released Notice 2013-71 (Notice), which modifies the “use or lose” rule for health flexible spending accounts (Health FSAs). Flexible spending accounts (FSAs) are popular benefits offered by many employers as part of their employee’s health-care package.  Health FSAs are accounts that allow employers to reimburse employees More