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Dear Clients and Friends:
With a new administration taking shape in our nation’s capital after the elections, you can expect that significant tax reforms will be debated, and perhaps enacted, in the near future. But the greatest impact on year-end tax planning in 2016 will likely derive from what happened late last year, not what will happen next year.
In the waning days of 2015, Congress passed the Protecting Americans from Tax Hikes (PATH) Act, which was promptly signed into law. This new federal legislation reinstated dozens of favorable tax provisions that had expired, many of them retroactive to the beginning of 2015. In some cases, the new law made often-extended tax breaks permanent, with certain modifications. The changes included in the PATH Act provide both individual and business taxpayers with a clearer picture about the optimal tax moves to make before the end of this year.
The Department of Labor Overtime Rule that would have required employers to pay overtime to most salaried workers who earn less than $47,476 annually, has been blocked. Texas U.S. District Judge Amos Mazzant issued a temporary injunction blocking the Department of Labor rule, which was scheduled to take effect December 1st.
Dozens of business groups, including the U.S. Chamber of Commerce, and 21 state attorneys general, including Ohio Attorney General Mike DeWine, filed suit against the rules. The litigation will likely continue beyond inauguration day. President-elect Trump is expected to either eliminate the new rule or make substantial revisions to ease the burden on businesses.