The IRS announced that the $10,000 cap on state and local tax (SALT) deductions, imposed as part of the Tax Cuts and Jobs Act, do not apply to partnerships and S corporations as they do to other taxpayers.

The notice said that "certain jurisdictions ... have enacted, or are contemplating the enactment of, tax laws that impose either a mandatory or elective entity-level income tax on partnerships and S corporations that do business in the jurisdiction or have income derived from or connected with sources within the jurisdiction. In certain instances, the jurisdiction’s tax law provides a corresponding or offsetting, owner-level tax benefit, such as a full or partial credit, deduction, or exclusion." The IRS said this is due to confusion over whether entity-level payments should be taken into account when applying the SALT deduction cap at the owner level.

The proposed regulations will clarify that state and local income taxes imposed on and paid by a partnership or S corporation on its income are allowed as a deduction by the partnership or S corporation in computing its non-separately stated taxable income or loss for the taxable year of payment, and therefore are not subject to the state and local tax deduction limitation for partners and shareholders who itemize deductions.

In other IRS news, the agency has declared today, Nov. 10, to be "National EIP Registration Day." The IRS urges everyone who does not normally file taxes, and who has not yet received a $1,200 stimulus check, to register with the IRS before the Nov. 21 deadline to receive their Economic Impact Payment this year.