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Backlog of income tax returns is growing, delaying refunds to millions – Aimee Picchi, CBS News. “The IRS is falling behind in processing millions of income tax returns, potentially delaying refunds for many Americans. According to the Taxpayer Advocate Service, an independent arm of the IRS focused on tax filers' rights, the agency is holding almost 31 million returns for manual processing just ahead of the May 17 tax filing deadline. That backlog has grown by 2 million returns since mid-April, National Taxpayer Advocate Erin M. Collins told CBS MoneyWatch.
Frontline, farm-state Democrats push back against Biden tax plan – Lindsey McPherson, Roll Call. “A group of 13 House Democrats, led by Iowa’s Cindy Axne and California’s Jim Costa, is pressing party leaders to exempt family farms from a tax increase President Joe Biden has proposed on inherited assets to help pay for new child care, education and other spending.”
What's on Mitch McConnell's mind – John Bresnahan, Anna Palmer and Jake Sherman, Punchbowl News ($). “Here are some highlights from Senate Minority Leader Mitch McConnell’s appearance in Hopkinsville, Ky.":
McConnell called getting ridof the ‘step-up basis’ a ‘second estate tax.’ ‘This is a devastating blow to family farms and small businesses all across America. … This is not something that I or do I think any of my Republican colleagues are prepared to support. This is not infrastructure. This is about a whole lot of other things. And i'm hoping that if the Democrats are unable to pass this new $4.1 trillion bill, they’ll sit down with us and talk about passing an infrastructure bill.’
Biden Leans Into Plans to Tax the Rich – Jim Tankersley and Annie Karni, New York Times. “President Biden delivered a clear and punchy message to America’s highest earners on Wednesday: I’m going to raise your taxes, but your vacation homes are safe.”
‘We’re not going to deprive any of these executives of their second or third home, travel privately by jet,’ Mr. Biden said after brief remarks on an economic aid program he signed into law this year. ‘It’s not going to affect their standard of living at all. Not a little tiny bit. But I can affect the standard of living that people I grew up with.’
Biden Budges on Corporate Rate Target – Jonathan Curry, Tax Notes ($). “President Biden suggested in a speech on infrastructure spending that a more modest increase in the corporate income tax rate than he originally proposed might be acceptable to get a deal done. ‘The way I can pay for this is . . . making sure the largest companies don’t pay zero and reducing the [Tax Cuts and Jobs Act’s] tax cut to between 25 and 28 [percent]; that’s a couple hundred billion dollars,’ Biden said during a May 6 speech in Lake Charles, Louisiana.”
Biden’s $80 billion plan to beef up IRS audits may target wealthy small business owners – Kate Dore, CNBC. “President Joe Biden is asking for $80 billion to help the IRS crack down on tax avoidance from wealthy Americans and big corporations. The proposal seeks a boost in enforcement staffing, technology and additional bank reporting, measures that may generate an estimated $700 billion in tax revenue over the next decade. However, some financial experts say the plan may spark more audits for certain small businesses.”
25 Percent Corporate Income Tax Rate Would Make U.S. Above Average Compared to Peers – Erica York and Garrett Watson, Tax Foundation. “Some lawmakers have expressed concerns about President Biden’s proposal to raise the federal corporate income tax rate from 21 percent to 28 percent, and instead suggest raising the rate to 25 percent. Including state corporate taxes, a 25 percent federal corporate income tax rate would result in a combined average top corporate tax rate of 29.53 percent—higher than the 23.51 average among industrialized countries in the OECD. In some states, the combined top corporate tax rate would be higher than in any other country in the industrialized world.”
Biden's fattened up IRS will audit "restaurants, retail, salons and other service-based companies" – Michael Mirsky, Americans for Tax Reform. “President Biden's plan to fatten up the IRS by $80 billion will target small businesses with aggressive audits such as ‘restaurants, retail, salons and other service-based companies.’ Experts interviewed by CNBC note the plan would affect many small businesses that depend on usage of cash.”
Online Taxes Hurt Small Digital Cos., Industry Rep Says – Alex Parker, Law360 Tax Authority ($). “Taxes on online revenue will hurt small and medium-size digital businesses, even if they're not directly affected, a representative of small technology companies said Thursday at hearings held by the U.S. Trade Representative's office. Speaking at multiple virtual hearings on potential U.S. tariffs against European digital services taxes, Mike Sax, founder of the App Association, said smaller online companies rely on a larger digital ‘ecosystem’ that would be hampered by taxes targeted at those business activities.”
‘They have suppliers, and they are suppliers to other companies,’ Sax said during a hearing about Italy's digital services tax. ‘So while they might not be directly affected by this, it will affect their business partners. And it might impact their business partners' ability to afford their services, or complicate the business interactions that they have.’
Details and Analysis of Tax Proposals in President Biden’s American Families Plan – Garrett Watson, Huaqun Li, Alex Durante and Erica York, Tax Foundation. “According to the Tax Foundation General Equilibrium Model, the American Families Plan’s tax changes would lead to a 0.4 percent reduction in long-run Gross Domestic Product (GDP). Gross National Product (GNP) would fall by 0.6 percent, employment would decrease by about 64,000 full-time equivalent jobs, and wages would drop 0.4 percent.
New York Democrat Suozzi Takes on the SALT Cap – Kaustuv Basu, Bloomberg ($). “Rep. Tom Suozzi (D-N.Y.) is among lawmakers from high-tax states who want to repeal the $10,000 cap on deductions for state and local taxes paid. Individuals in Democratic states like New York and California have seen their tax bills go up as a result of the cap, which was part of the 2017 tax law. Suozzi is leading the fight against the cap, trying to pressure the Biden administration and leaders in Congress to include the repeal in an upcoming legislative package.”
No itemizing needed to claim these 23 tax deductions – Kay Bell, Don’t Mess with Taxes. “Even before 2017's Tax Cuts and Jobs Act (TCJA) greatly increased the standard deduction amounts, most people chose to use the standard deduction amount. But one thing that the latest tax reform law didn't change is the ability for many to get some added deductions without itemizing.”
IRS speeds creation of tax pro accounts due to COVID – Michael Cohn, Accounting Today. “The Internal Revenue Service plans to offer online Tax Pro Accounts for practitioners in the third quarter of this year, due to a timeline accelerated by the COVID-19 pandemic. At a recent Internal Revenue Service meeting attended by the National Association of CPA Practitioners, the upcoming Tax Pro Accounts will offer real-time processing while entering data into the system, which will automatically identify information that needs to be fixed. It will be accessed through the IRS e-Services log-in, already used by many tax professionals.”
Trump Doc Subpoena Should Be Upheld, House Panel Says – Dylan Moroses, Law360 Tax Authority ($). “A U.S. House committee seeking former President Donald Trump's personal and business financial records should be able to obtain the information now that he is no longer in office, the panel told a D.C. federal court. Since Trump is no longer president, the separation-of-powers concerns that prevented the House Committee on Oversight and Reform from obtaining his financial records through a subpoena issued to Mazars USA LLP aren't at issue any longer, the panel told the D.C. court Wednesday.”
The committee should now be able to enforce its subpoena to Mazars and obtain Trump's information because with Trump out of office, its ongoing legislative investigation isn't intruding on the executive branch's functions, the panel said in its motion for summary judgment.
New Mexico to end taxes on medical pot, revise grow limits – Morgan Lee, Associated Press. “New Mexico will stop charging sales taxes on limited amounts of medical marijuana and begin revising current limits on pot cultivation June 29 in the first steps toward legalization of recreational marijuana, top health and licensing regulators announced Wednesday in a letter to authorized cannabis businesses.”
Gov. Signs Business Equipment Tax Exemption Into Law – Shaylee Ragar, Montana Public Radio. “Republican Gov. Greg Gianforte has signed a bill into law to increase the tax exemption on business equipment up to $300,0000. The BIG Jobs Act, or Business Investment Grows Jobs Act, is projected to exempt 4,000 more businesses from having to pay taxes on equipment purchases with the increased exemption limit.”
Ark. Will Exempt Coins, Currency From Sales Tax – Jaqueline McCool, Law360 Tax Authority ($). “Arkansas will exempt coins, currency and metal bullion from state sales and use tax under a bill signed by the governor. S.B. 336, which Republican Gov. Asa Hutchinson signed Monday, will exempt gold, silver, platinum and palladium bullion as well as coins and currency in the form of gold, silver, other metal or paper from state sales and use tax. The exemption will take effect in July.”
Colo. House OKs Expanding Virus-Related Eatery Sales Tax Break – Jaqueline McCool, Law360 Tax Authority ($). “Colorado would allow restaurants and other food and beverage establishments whose revenue was affected by the coronavirus pandemic to retain sales tax for additional months under a bill passed by the state House of Representatives.”
Iowa Will Carry Out Broadband Grant Tax Exemption - Jaqueline McCool, Law360 Tax Authority ($). “Iowa will implement a law providing an income tax exemption for qualified government grants given to communications service providers for broadband infrastructure development under a rule adopted by the Department of Revenue.”
Ore. Seeks Penalty For Frivolous Avoidance Of Withholding Tax – Daniel Tax, Law360 Tax Authority ($). “Oregon would apply a penalty for employees who continually use frivolous positions to avoid withholding and would allow the state tax department to adjust deficient withholdings without documentation from employers under a proposed rule.”
Biden Tax Plan Takes Aim at Trump-Era Investment Incentive – Richard Rubin, Wall Street Journal. “The Biden administration says it’s trying to spur investment in America—while proposing to remove a four-year-old tax break that was intended to do exactly that. The break—a deduction for foreign-derived intangible income—has an odd name, but it works in some ways like an export subsidy for companies […] Now, Biden administration officials say they intend to repeal the FDII deduction and replace it with unspecified tax breaks for research. That decision, announced in President Biden’s infrastructure plan, marked a shift from his campaign tax plan, which didn’t include a repeal.”
Crypto Standard Could Be Delayed A Year, Saint-Amans Says – Todd Buell, Law360 Tax Authority ($). “A global reporting standard for crypto-assets could be delayed by one year because of the time needed to reach agreement on digital taxation, the chief tax negotiator for the Organization for Economic Cooperation and Development said Thursday.”
Bozo Tax Tip #7: Use a Foreign Trust to Avoid Taxes! - Russ Fox, Taxable Talk. “By far the worst tax schemes in the view of the IRS are offshore (foreign) trusts. In fact, trusts of all sorts—domestic and foreign—are regularly abused.”
Factoid Bonanza!
Fun Fact: A cow-bison hybrid is called a “beefalo.”
Interesting Fact: More twin babies are being born now than ever before.
Odd Fact: The first person to be ticketed for speeding was going 8 mph. England’s Walter Arnold on January 28, 1896, was traveling at four times the 2mph speed limit in his 19th Century jalopy and was chased down and ticketed by a cop on a bike.
Gross Fact: The severed head of a slimy-looking sea slug can grow a whole new body.