Woonsocket Radio News Room

IRS Affirms Shekarchi’s Tax Cut for R.I.

 SALT deduction affirmed to help small businesses

 

STATE HOUSE – The Internal Revenue Service (IRS) has issued proposed regulations affirming a workaround initiated by House Speaker-nominee K. Joseph Shekarchi to help small-business owners who were negatively affected by the Trump administration’s 2017 tax changes.

The IRS issued a notice that it is proposing regulations that will clarify that state and local taxes paid by a partnership or S corporation on its income are allowed as a deduction by the partnership or S corporation in computing its taxable income. Therefore, the taxes would not be subject to the state and local taxes (SALT) deduction cap on the returns of the owners in the business.

In 2019, Majority Leader Shekarchi sponsored legislation (2019-H 5576), which was later enacted as part of the 2020 state budget, to provide Rhode Island business owners the workaround affirmed by this IRS regulation. Without it, owners of “pass-through” entities such as LLCs, S corporations, sole proprietors and partnerships potentially faced higher federal tax liabilities due to a $10,000 cap on the SALT deduction on federal taxes that was enacted as part of the Tax Cuts and Jobs Act pushed by President Trump and passed by Congress in December 2017.

Rhode Island’s effort was based on a similar bill enacted in Connecticut and was carefully designed to be revenue-neutral for the state.

“While we were always confident that this solution worked within the boundaries of the federal law, it’s great to have this stamp of approval from the IRS. This notice gives business owners in Rhode Island certainty and clarity that they can continue getting the full credit for the state and local taxes they are paying. The pandemic has made this year extremely challenging for businesses of all types, and they shouldn’t be saddled with higher tax liability on top of the other difficulties they are facing right now,” said Speaker-nominee Shekarchi (D-Dist. 23, Warwick).

 

The Israeli military has launched a retaliatory strike against Iran. U.S. officials confirm missiles have struck a number of locations inside Iran, with no word yet on whether there were any casualties. This all comes after Israel vowed to respond to Iran's missile and drone attack earlier this week.        Donald Trump is set to appear in court today after 12 jurors were selected for his hush money criminal trial in New York City. The judge in the case announced Thursday, "We have our jury." Now six alternates must be selected       The FAA is investigating after a Southwest flight and a JetBlue plane nearly collided at Ronald Reagan Washington National Airport outside Washington, DC. It happened Thursday morning when a plane crossed the runway as another was starting its take off.        Taylor Swift's new album has finally dropped. The first single off the "The Tortured Poets Department" is called "Fortnight," featuring Post Malone. The album is getting praise from critics, who are calling it "wildly unguarded," a "cathartic confession" and "unapologetically dramatic."        Less than one in ten young Americans think the United States is headed in the right direction. That's according to a new poll from Harvard Kennedy School's Institute of Politics. It says that just nine-percent of voters between 18-and-29 say the nation is generally going in the right direction. Meanwhile, 58-percent of respondents said the country is going the wrong way.        Prince William is returning to public duties for the first time since his wife's cancer diagnosis. William has been absent from official engagements ever since Kate Middleton revealed last month that she was undergoing chemotherapy for an unspecified type of cancer.        

Old News Archives