The IRS has posted changes to a number of forms and publications due to the December enactment of tax reform in the Tax Cuts and Jobs Act and by January enactment of the Bipartisan Budget Act of 2018, which extended certain expired provisions. Changes include the following:

  • Schedule C of Form 1040 was amended to reflect extended tax provisions by the Bipartisan Budget Act of 2018.  Changes were made on pages C-9, C-15, and C-16.
  • Form 4684 downloaded before February 23, 2018, that changes to the instructions were made. The changes reflect enactment of the Bipartisan Budget Act of 2018, Pub. L. No. 115-123, with regards to qualified disaster losses.
  • Form 982 was amended to reflect enactment of the Bipartisan Budget Act of 2018. Specifically, IRS said line 1e of Form 982 may be checked even if the discharge was not subject to an arrangement that was entered into and evidenced in writing before January 1, 2017.  The Service also reminded taxpayers of a change to a requirement for excluding principal residence indebtedness discharge in 2018, noting that in order to exclude principal residence indebtedness discharged in 2018, the 2018 discharge must be subject to an arrangement that was entered into and evidenced in writing before January 1, 2018.
  • Changes were made to Publication 972 to reflect extensions to the nonbusiness energy property credit and disaster relief provisions, made by the Bipartisan Budget Act of 2018. The Service noted that when using the 2017 Publication 972, the nonbusiness energy property credit has been extended through 2017 and taxpayers who have an amount that they claimed on Form 5695, line 30, should report the same amount in the already marked entry space under line 10 of the Chief Tax Credit Worksheet and ignore the asterisk.
  • Publication 334 was amended as a result of the enactment of the Bipartisan Budget Act to address the exclusion from gross income the discharge of qualified real property indebtedness under tax code Section 108.
  • The 2017 instructions for Form 1040NR were amended to reflect the Bipartisan Budget Act. The Service said it made changes to Line 50 and Line 51 regarding energy property and fuel vehicle credits.
  • Publication 523, related to the extension of the credit for home energy efficiency improvements and the credit for energy improvements to non-business properties was amended due to the Bipartisan Budget Act of 2018.  Effective February 9, 2018, these credits are extended through 2021. The publication was also amended to note that a taxpayer may be able to exclude forgiven mortgage debt from gross income in 2017 if such an agreement was in place before January 1, 2018, the Service explained.

End of Tax-Free Online Purchases?

The U.S. Supreme Court will soon hear arguments in a case challenging whether states have taxing jurisdiction over online purchases made from retailers that do not have a physical presence in a state.  The court announced Feb. 23 that it would hear oral arguments in the South Dakota v. Wayfair case April 17 at 10 a.m.

The case is a direct challenge to the 1992 ruling in Quill Corp. v. North Dakota that prohibits states from imposing sales and use tax collection obligations on vendors lacking an in-state physical presence.  In essence, the question is whether the physical presence test continues to have validity in the age of internet purchases.

The Supreme Court—heeding calls from traditional retailers and dozens of states—granted review Jan. 12 of South Dakota’s contention that Quill is obsolete in the e-commerce era and should be overturned.  In Quill, which involved a mail-order company, the Supreme Court invoked the so-called dormant commerce clause, a judge-created legal doctrine that bars states from interfering with interstate commerce unless authorized by Congress. The court said that clause prohibited states from imposing sales and use tax collection obligations on vendors without a physical presence in-state.

QuillState governments are desperate to find another source of revenue and numerous briefs filed with the court by states, municipalities, and traditional retailers urge that be overturned and that it is unfair for online retailers to be exempt from state and local sales taxes.

A decision in the case is expected in June.
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