Overview
Today Notice 2018-54 was issued, informing taxpayers that Treasury and the IRS intend to propose regulations addressing the federal income tax treatment of certain payments made by taxpayers for which taxpayers receive a credit against their state and local taxes. The proposed regulations will address the federal income tax treatment of transfers to funds controlled by state and local governments (or other state-specified transferees) that the transferor can treat in whole or in part as satisfying state and local tax obligations. The notice indicates that the proposed regulations will clarify the requirements of the Internal Revenue Code, informed by substance-over-form principles, governing the federal income tax treatment of such transfers and assist taxpayers in understanding the relationship between the federal charitable contribution deduction and the new statutory limitation on the deduction for state and local tax payments imposed by Pub. L. No. 115-97 (the December 2017 Tax Act).