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IRS to issue regs on workarounds adopted by states to avoid limit on State and local tax deduction
- In a Notice and accompanying News Release, IRS has informed taxpayers that it intends to propose regs addressing the federal income tax treatment of certain payments made by taxpayers to state-established "charitable funds" for which they receive a credit against their state and local taxes—essentially, a workaround adopted by a number of states to avoid the new limits on the State and local tax (SALT) deduction. In general, IRS indicated that the characterization of these payments would be determined under the Code, informed by substance-over-form principles, and not the label assigned by the state. Continue Reading
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