Do any of you have clients who are W2 mortgage brokers or mortgage loan originators who have been drastically affected by TCJA elimination of Employee Business Expenses in 2018 and 2019? The extensive marketing expenses required for this job are not reimbursed by the employers, yet these clients are forced to be W2 employees by federal requirements. I am looking for talk within the industry of the IRS allowing these types of employees to fit within the Statutory Employee definition. There was case law on this subject before TCJA related to minimum tax, but I've found nothing applicable since.
Have they been drastically affected by TCJA, or have they been drastically affected by employers who refuse to put them on an accountable plan like normal businesses do?
I doubt that it's individual borrowers who cause most of the marketing expenses. It's the others in the real-estate food chain who are being
bribed induced to send business their way.
No, it's more complicated than that. They have been drastically affected by TCJA because their employers have barely come to terms with the fact that they must W-2 the work force who were previously independent contractors, much less develop accountable plans. Accountable plans are not normal to this industry. Everything settled down for awhile when Employee Business Expenses were still allowed, but the past two years it has been in an uproar.
The marketing expenses are a result of the need for online leads, which is the only way to succeed at a high level in loan origination. The savvy brokers have learned to fine tune those online skills, watch the results constantly, and change it up every few months. They aggressively pursue the leads, and this is very expensive.
While I would not hold my breath, I would not be surprised if a Congressional action returns "employee costs" to the tax returns as part of covid-19 coping costs for businesses.
"Level Up" is a gaming function, not a real life function.