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Justin Hepworth

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Justin Hepworth is a partner in the Tax and Estate Planning Practice Group in the firm's Orange County office.

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On July 16, 2021, Governor Newsom signed California Assembly Bill 150 into law, allowing certain owners of passthrough entities to find a way around the current $10,000 federal cap on state and local tax (SALT) deductions for individuals.  The new law, applicable to tax years beginning on or after January 1, 2021 and ending before January 1, 2026, allows for many partnerships, limited liability companies taxed as partnerships, and S-Corporations to pay an entity level tax based on electing individual owners’ share of income, and then grants the owners a credit against California personal income tax for the full amount of tax paid at the entity level on their distributive share of California taxable income.
Continue Reading California Passes “Workaround” To Federal Limit on State Tax Deduction For Certain Owners of Pass-Through Entities

All states but one that impose a sales and use tax now have laws requiring out-of-state companies to collect tax if they have a significant economic presence in a state.  The Governor of Missouri, the last remaining state, is expected to sign a similar law this month.  The change stems from a 2018 United States Supreme Court case, the impact of which is far broader than many realize.
Continue Reading The Expanded Reach of States for Sales & Use Tax Purposes – More Than Just e-Commerce Retailers are Impacted

On April 29, 2021 Governor Newsom signed California A.B. 80, largely conforming to Federal rules relating to deductibility of expenses paid with funds from forgiven Paycheck Protection Program (PPP) loans.  The $150,000 limitation in prior versions of A.B. 80 was removed, and replaced with a requirement that only non-publicly traded companies who reported losses of at least 25% in gross receipts during one quarter of 2020 can deduct such expenses.  That 25% decrease in gross receipts was also a condition for receiving a PPP loan in the second round of loans made available in late 2020.  Publicly traded companies cannot deduct any amount of expenses paid with funds from forgiven PPP loans.
Continue Reading California Largely (But Not Fully) Conforms to Deductibility of Expenses Paid with Forgiven PPP Loans

As reported in our earlier blog post The CARES ACT – Tax Relief, the federal CARES Act provides for forgiveness of indebtedness for eligible recipients of Paycheck Protection Program (“PPP”) loans in an amount equal to the sum of the recipient’s payroll costs, interest on mortgage obligations, rent obligations and utility payments (subject to certain conditions and limitations).  Under federal law, any amount of covered loans forgiven under the CARES Act is excluded from gross income for federal income tax purposes.
Continue Reading California Conforms To Federal Income Tax Treatment Of PPP Loan Forgiveness

As part of the federal government’s efforts to soften the economic effects from the Covid-19 pandemic, on Wednesday the IRS issued Notice 2020-17 announcing that federal income tax payments for the 2019 tax year otherwise due on April 15th may be postponed until July  15th 2020 without incurring interest or penalties on the amount due.  In addition, the Notice also postponed to July 15th the due date for quarterly estimated federal income tax payments otherwise due on April 15th.  Earlier statements by government officials had not indicated that the due date for quarterly estimated tax payments would also be extended.
Continue Reading Updated: Treasury and IRS Extend Time to both File and Pay Federal Income Taxes to July 15th; States Taking Their Own Approaches on Income and Similar Taxes

The Multistate Tax Commission (“MTC”) has implemented a limited-time voluntary disclosure initiative for online marketplace sellers (the “VDI”). The VDI creates an opportunity in many states to have a retailer’s historic liability for sales and use taxes and income taxes waived, including penalties and interest, in exchange for registration and compliance going forward.
Continue Reading Limited-Time Tax Amnesty for Marketplace Sellers