Insights

In the Southeast Middle-Market M&A Newsletter for Q1 2022, Bennett Thrasher’s Transaction Advisory Services leaders provide data and highlights for Southeast (Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, South Carolina and Tennessee) middle-market (total transaction value < $USD 500mm) M&A transactions, including volume, value and enterprise value multiples.

Under the current law, Required Minimum Distributions (RMDs) are the minimum amounts that an Individual Retirement Account (IRA) owner must withdraw annually starting after the year that he or she reaches age 72. IRA owners are responsible for taking the correct RMD each year from their IRA.

As the 2022 legislative session came to a close, Georgia lawmakers finalized legislation (H.B. 1437) that will provide an anticipated $1 billion in individual taxpayer savings. The bill includes a change from Georgia’s current graduated income tax, where rates increase from 1 to 5.75 percent as income increases, to a flat tax rate that declines from 5.49 to 4.99 percent in 2029.

Thanks to a record state surplus, the holidays have come early for many individuals who file and pay Georgia income taxes. Georgia’s recently enacted Act 582 provides a one-time individual income tax refund for those taxpayers who filed income tax returns for tax years 2020 and 2021. The Georgia Department of Revenue will automatically issue a refund up to $250 for all single or married filing separately taxpayers, $375 for head of household filers and $500 for married filing jointly filers.

On March 28th, the Treasury Department released details of the administration’s tax related budget recommendations for FY2023, commonly referred to as the “Green Book”. They contain recommendations from the administration to Congress for forthcoming tax legislation.

Effective for tax years beginning after December 31, 2021, the Tax Cuts and Jobs Act (“TCJA”) of 2017 changed the treatment of Internal Revenue Code (“IRC”) Section 174 costs requiring that Research and Development (R&D) costs be capitalized and amortized over a period of 5-years for domestic expenses and 15-years for offshore expenses. Although many hoped that this unfavorable provision from the TCJA would be postponed or removed prior to December 31, 2021, the change remains in effect in 2022.

On March 21, 2022, the US District Court for the Eastern District of Tennessee ruled in favor of CIC Services, LLC (“CIC”) in their case against the IRS regarding Notice 2016-66 (the “Notice”). In CIC Services, LLC v. IRS (“CIC Services”), the ruling stated that IRS did not comply with the mandatory notice-and-comment requirements under the Administrative Procedures Act (“APA”) and the IRS’ issuance of the Notice was arbitrary and capricious as set forth under the APA.

On March 21, 2022, the US District Court for the Eastern District of Tennessee ruled in favor of CIC Services, LLC (“CIC”) in their case against the IRS regarding Notice 2016-66 (the “Notice”). In CIC Services, LLC v. IRS (“CIC Services”), the ruling stated that IRS did not comply with the mandatory notice-and-comment requirements under the Administrative Procedures Act (“APA”) and the IRS’ issuance of the Notice was arbitrary and capricious as set forth under the APA.

In November 2021, the IRS issued Revenue Procedure 2021-45, which provided inflation adjustments for tax provisions that will be applicable for the 2022 tax year. The IRS calculates these adjustments annually based on changes in the Chained Consumer Price Index.

Each year, the IRS assesses thousands of tax penalties for filing tax returns, required forms and making payments late. Taxpayers frequently fail to challenge these penalties and in many cases, the taxpayer didn’t understand that a penalty had been asserted or the IRS mailed the penalty notice to the wrong address.