Tax News & Views Deferred Due Date and Bug-busting Roundup

Due Date! It seems like just yesterday that 1040s were due - well, it was just last month. Today is also a due date:

• 2020 returns for taxpayers in Texas, Oklahoma and parts of Louisiana affected by storms are due today.
• Second quarter estimated tax payments for individuals and corporations are due today.
• Forms 1120 for corporations with February year-ends are due today.
• Forms 990 for non-profits with January year-ends  are due today.

To ensure timely-filing, e-filing is best. If you must paper file, Certified Mail, Return Receipt Requested, is best.

If you are really under the gun, an IRS-authorized private delivery service works, but save your shipping documents and be sure to use an "authorized" service. For example, UPS Next Day Air works, but UPS Ground does not. Be sure to use the proper IRS street address if you use a private delivery service.

 

Senate, House Taxwriters Readying Proposals for ‘Big’ Bill - Doug Sword, Tax Notes ($):

Finance Committee Chair Ron Wyden, D-Ore., pointed to a trio of big-ticket items that are ready — or nearly ready — to be wrapped into a possible infrastructure bill. That includes a “framework” he coauthored with committee members Sherrod Brown, D-Ohio, and Mark R. Warner, D-Va., to overhaul the international tax regime, the Clean Energy for America Act (S. 1298) that includes electric vehicle credits of up to $12,500 per person, and a capital gains proposal to keep the wealthy from “using their lawyers and accountants to get out of paying anything for years on end.”

Exclusive: Democrat exploring 'patriot tax' on multimillionaires' wealth - Naomi Jagoda, The Hill. "Rep. Thomas Suozzi (D-N.Y.), a member of the tax-writing House Ways and Means Committee, said that he’s exploring the idea of a one-time tax on the wealth of the richest Americans as Democrats seek to increase taxes on the rich in order to pay for spending priorities."

One time? 

"Suozzi has yet to introduce any legislation based on his idea, and the tax he's considering could face challenges with being enacted."

 

Biden Provides Clarification on His Proposal to Eliminate the Stepped-Up Tax Basis - Ava Archibald, Eide Bailly. "Under President Biden’s American Families Plan, certain donors or deceased owners of appreciated assets would realize capital gain at the time of a transfer."

Several Charity Groups Object to Accelerated Giving Bill - Fred Stokeld, Tax Notes ($). "In response to arguments that new restrictions on DAFs and private foundations are needed to ensure that charitable dollars reach charities, the organizations said there is no data to suggest that restrictions would boost charitable giving. "

 

Low Taxes Brought Ireland Prosperity. A Global Tax Deal Now Threatens It. - Paul Hannon, Wall Street Journal ($):

Over the past two decades, multinational businesses have flocked to Ireland, drawn by a corporate tax rate of just 12.5%. Most of the U.S. digital giants use the country as their European headquarters. Nine of the world’s largest pharmaceutical companies have significant operations in the country, often making drugs that are sold to the U.S.

...

Now, the U.S. is leading a charge to set a minimum tax rate of 15% on corporate profits, a plan that gained fresh support from the Group of Seven countries meeting in the U.K. this weekend.

 

IRS Provides FAQs on Small Business and Family Tax Credits - Caitlin Mullaney, Tax Notes. "The FAQ for the paid sick and family leave credit provides answers to 123 questions, including provisions related to self-employed individuals, special issues for employees, use of third-party payers, interaction of the ARPA tax credit with other tax credits, taxation and deductibility of the credit, periods the credit is available, substantiating eligibility, allocable collectively bargained contributions, and allocable qualified health plan expenses."

 

California: State Can Tax Stock Option Appreciation Occurring After Taxpayer Moved Out - Iris Chung, Eide Bailly. "The taxpayer, a Facebook employee, left California in 2010 and vested in restricted employer stock options in 2012."

Texas Comptroller Answers Franchise Tax FAQs - Texas Comptroller of Public Accounts, via Tax Notes. "For an annual report, generally an entity should enter the federal accounting year end date that ended in the calendar year before the calendar year in which the report is originally due. If, however, there is no such ending date, which may occur when an entity uses a 52-53-week accounting period, then enter Dec. 31 of the calendar year before the calendar year in which the franchise tax report is due."

 

EV mileage tax floated as way to fund infrastructure bill - Kay Bell, Don't Mess With Taxes. "Mileage taxes for all instead of fuel taxes has been toyed with at federal and state levels for a while. The idea gained ground when cars manufacturers started making more fossil-fuel efficient vehicles. It increased when hybrids autos became the rage."

Lesson From The Tax Court: Accounting For Attorney Malpractice Settlements - Bryan Camp, TaxProf Blog. "The less obvious lesson in these cases is how the ostensible lesson creates a bargaining chip for malpractice attorneys sitting at the poker table of settlement negotiations.  Taxpayers might account for the tax treatment of malpractice settlements either by structuring the settlement to make the payments eligible for exclusion, or by grossing up the settlement to reflect taxes imposed that would not have been imposed on settlement of the original action."

Amount Received by Taxpayer to Settle Claim Against Divorce Attorney Must Be Included in Her Income - Ed Zollars, Current Federal Tax Developments. "The Court explains that it will not attempt to convert a malpractice claim into awards wholly of a type that would be excludable income."

Interview: Taxes and the LGBTQ Community - David Stewart and Patricia Cain, Tax Notes Opinions. "Prior to the Windsor ruling, there was no recognition of status between two people, even if they were married to same-sex partners or members of a civil union. They were treated like strangers under the law."

 

Combined Effect of a Higher Corporate Rate and Permanent Bonus Depreciation - Erica York, Tax Policy Blog. "The negative effects of President Biden’s proposed 28 percent corporate income tax rate could be tempered by improving how the corporate income tax base treats investment expenses. As we explain in our new book Options for Reforming America’s Tax Code 2.0, tax rates only matter because there is a tax base where they apply—and the structure of that base matters for the economic effect of a rate change."

The 2021 Tax Season (Part 1) - Russ Fox, Taxable Talk. "There Are Black Clouds on the Horizon for Tax Administration. Congress and the IRS keep putting more and more work on tax professionals, and this is going to add to the cost of tax filings."  

Cheat On Your Taxes, Get IRS Penalties; Obstruct IRS, Get Jail - Robert Wood, Forbes ($). "Some people think they can outsmart the IRS and cover something up. The coverup can be worse than the crime."

Related: IRS Exam Assistance..

 

Pro Publica Tax Dump - Leslie Book, Procedurally Taxing. "The culture of respecting taxpayer confidentiality is deeply engrained in the IRS and is punishable by civil and criminal penalties.  While Pro Publica did not reveal who released the information (and states it did not know the source), it is not clear whether the perception that the IRS cannot be trusted with confidential information may have an impact on some of the major procedural/tax administration proposals in the Biden Made in America Tax Plan."

IRS Justified in Firing Agent Who Disclosed Taxpayer Info - Kristen Parillo, Tax Notes ($). "The Federal Circuit has upheld the firing of an IRS agent who disclosed protected taxpayer information to her attorney while defending herself from a proposed suspension."

If an IRS employee leaked the wealthy taxpayer data to Pro Publica, getting fired will be a small part of the leaker's concerns.

 

Tax Headaches Are Threatening Dreams of Working From the Beach - Charlie Wells and Ivan Levingston, Bloomberg:

Ten years ago, the likes of Uber, Facebook and Instagram differentiated themselves from Wall Street firms by offering free lunches, kooky office setups and a casual dress code.

Now, companies from London to New York and Toronto to Berlin are formalizing and even extending their Covid-era flexible-work options, often with liberal limits on where employees can commute from and how long they can do it for.

Related: Considering Foreign Operations? You Need a Global Mobility Program.

 

The second quarter estimated tax deadline isn't today's only holiday. It's also National Bug Busting Day: "Head lice can affect anyone at any age, but these pesky creatures most frequently prey on children between 4 and 11." 

Not to pick nits, but I may pass on this one.