IRS Issues Q&A on Net Investment Income

November 14, 2013

On August 8, 2013, the Internal Revenue Service published a series of Questions and Answers (the Q&A) explaining the basics of the new 3.8 percent net investment income tax (the NII tax), which took effect on January 1, 2013. The NII tax is imposed under Section 1411 of the Internal Revenue Code, a new provision added to the IRC by Section 1402 of Title X of the Patient Protection and Affordable Care Act. The IRS previously published proposed regulations with detailed explanations in December 2012, but the Q&A provides a more concise description of: (1) who must pay NII tax, (2) what’s included in NII, and (3) how the tax is reported and paid.

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