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IRS issues standard mileage rates for 2022 – IRS. "The Internal Revenue Service today issued the 2022 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes."
Beginning on January 1, 2022, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 58.5 cents per mile driven for business use, up 2.5 cents from the rate for 2021,
- 18 cents per mile driven for medical, or moving purposes for qualified active-duty members of the Armed Forces, up 2 cents from the rate for 2021 and
- 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2021.
Tax Professionals Want Relief From IRS Ahead of Filing Season - Kaustuv Basu, Bloomberg ($). “The IRS should make a difficult tax season easier by providing relief on automatic actions for compliance and waiving some penalties, the American Institute of CPAs and other organizations representing tax professionals said in a letter sent Friday to IRS Commissioner Chuck Rettig and Lily Batchelder, the assistant Treasury secretary for tax policy."
- The agency should ‘provide taxpayers with targeted relief from both the underpayment of estimated tax penalty and the late payment penalty for the 2020 and 2021 tax year,’ the organizations said.
- The request from the AICPA and other groups, including the National Association of Black Accountants, Inc. and Latino Tax Pro, come even as Erin Collins, the National Taxpayer Advocate, warned of a difficult tax filing season because of backlogs and staff shortages.
- The 2022 tax filing season begins Jan. 24. The IRS is currently answering 9% of all calls and only 3% of calls dealing with individual tax returns, the letter said.
IRS delays triggered some premature collection notices – Michelle Singletary, Washington Post. “Let’s say you filed your tax return on time but the IRS says you didn’t. You mail in proof, but your letter is stuck in a pile in an IRS office waiting to be opened. The computer system only knows it didn’t get a response, so collection notices go out and penalties and interest begin to accrue.”
Help isn’t necessarily a phone call away. There are dedicated collection call lines, but in the 2021 filing season, just 38 percent of calls were answered.
Delays in processing returns are triggering premature collection notices — and that in turn can negatively affect low-income taxpayers, warned National Taxpayer Advocate Erin M. Collins.
IRS Announces Fast-Track Private Letter Ruling Pilot Program - Nicola White, Bloomberg ($). “The Internal Revenue Service on Friday announced an 18-month pilot program to fast-track certain private letter ruling requests.”
The agency issues private letter rulings to taxpayers on demand, interpreting tax law and applying it to their specific situations. They are issued when taxpayers request such guidance before they file their taxes.
The agency made the announcement in Revenue Procedure 2022-10, saying the program covered only private letter ruling requests solely or primarily under the jurisdiction of the Associate Chief Counsel, Corporate.
NFT Investors Owe Billions in Taxes and IRS Is on the Case - Allyson Versprille, Bloomberg ($). “It’s one of the hottest corners of crypto -- and now the U.S. government wants its share of the profits.”
Investors and creators of nonfungible tokens -- a market that has ballooned to $44 billion, Chainalysis data show , and attracted fans from Justin Bieber to Melania Trump -- face billions of dollars in taxes and rates as high as 37%, according to tax experts. Internal Revenue Service officials who deal with tax evaders say they are gearing up for a crackdown.
Deterrence and Beyond: Suggestions to Improve Voluntary Tax Compliance – Darcie Costello, Tax Notes ($):
The IRS has been dealt harsh budget cuts over the past decade. Even as the agency’s responsibilities increased, federal appropriations fell by 20 percent in inflation-adjusted dollars between 2010 and 2018. These budget cuts resulted in a 22 percent decrease in the agency’s overall workforce and a 30 percent reduction in employees focused on enforcement activities. During this period, the number of highly specialized employees focused on the most complex enforcement tasks was cut by a staggering 48 percent. Thus, examination rates for both individual and corporate taxpayers fell by 40 percent between 2010 and 2018.
Treasury Asks Court to Reverse Another Covid Aid Ruling - Sam McQuillan, Bloomberg ($). “The U.S. Treasury is asking a federal court to let it recoup Covid-19 aid that Florida and a dozen other states might use to pay for tax cuts.”
Treasury on Friday filed a notice of appeal with the Eleventh Circuit Court of Appeals, urging it to reverse a permanent injunction issued by the U.S. District Court for the Northern District of Alabama Western Division that prevents it from recouping American Rescue Plan funds from 13 states. The court ruled last year that restrictions on the $350 billion of federal aid, barring states from 'directly or indirectly' offsetting a revenue loss resulting from a tax cut, were a federal overreach.
Families Face ‘Devastating’ Hit as Monthly Child Tax Credit Ends - Laura Davison, Bloomberg ($). “Millions of American families on Friday are going without a monthly benefit introduced by the Biden administration last year that many came to depend on amid a surge in the cost of living and the continued spread of Covid-19.”
It’s the first in what could be a series of missed payments unless Democrats can make headway on legislation carrying President Joe Biden’s signature economic proposals that’s now stalled in Congress.
A Tale of Two Proposed Tax Cuts: Child Tax Credit and SALT – Marie Sapirie, Tax Notes ($). “The tax cuts that have provoked some of the most intense disagreement in the debate over the Build Back Better Act stand in stark opposition. The advantage of repealing or at least raising the state and local tax deduction limit would largely accrue to higher-income taxpayers, while the expanded child tax credit (CTC) has been credited with halving U.S. child poverty.”
Despite the tension between them, the two provisions effectively create a fault line for the tax policies in the Build Back Better Act (H.R. 5376) that appears likely to either engulf the whole project or at least shake some of the bigger pieces loose. The chief similarities between the SALT deduction limit and the CTC expansion are that both have run up against President Biden’s $400,000 pledge and encountered non-trivial intraparty head winds. The resolution is not obvious. Both could be left on the cutting room floor, but that’s unlikely without a protracted fight.
New York State Tax Receipts Surge to $12.9 Billion Over Forecast - Martin Z. Braun, Bloomberg ($). “New York state tax revenue soared to $84.4 billion in the first nine months of the fiscal year, $12.9 billion more than forecast, bolstered by a business tax established in April as a work-around for federal limits placed on state and local tax deductions, state Comptroller Thomas DiNapoli said.”
New York collected $10.2 billion from a ‘pass-through entity’ tax, DiNapoli said in a news release Friday evening. He cautioned that taxpayers paying the pass-through tax are expected to reduce their personal income tax payments by similar amounts, and the December results may not reflect those offsetting reductions, ‘clouding our revenue picture.’ He urged Governor Kathy Hochul, who will introduce her first budget Tuesday, and the state Legislature to act prudently.
N.J. SALT Cap Workaround Pulls $1.6 Billion in December Revenue - Donna Borak, Bloomberg ($). “New Jersey reaped $1.6 billion in revenue from a tax break crafted to ease the pain of the $10,000 federal cap on individuals’ deductions for state and local taxes.”
Tax collections from the Pass-Through Business Alternative Income Tax, which was enacted a year ago, rose $594.9 million, or 61.2% over the previous December, according to data released by the New Jersey Department of Treasury on Friday.
Irish Data Confirm Tech IP Shift From Havens to the United States – Martin Sullivan, Tax Notes ($):
In 2020 large amounts of U.S. technology companies’ worldwide profits shifted into the United States. We can infer this from foreign-domestic profit splits in some company annual reports, from increases in the benefits of the deduction for foreign-derived intangible income, and now from Ireland’s revenue statistics that show a sharp rise in royalties paid by Irish subsidiaries for intellectual property held in the United States.
Macron’s Push for EU to Implement Global Tax Deal Hits Hurdles – William Horobin, Jorge Valero and Christopher Condon, Bloomberg ($). “European Union countries are skeptical that President Emmanuel Macron will be able to use France’s six-month presidency of the bloc to jumpstart the implementation of a minimum corporate tax, adding to risks of delays to the broader global overhaul.”
For Macron, who led the charge for international tax overhaul in recent years, swift action would boost France on the world stage and burnish his own political stature at home ahead of elections in April.
But Sweden, Estonia, Malta and Bulgaria are warning the EU’s agreed timeline -- to put new tax structures into effect by next year -- is too ambitious, according to an EU official briefed on the discussion. European finance ministers are set to discuss the topic in Brussels on Tuesday.
No Refund for Employers on Some Overseas Worker Withholding: IRS - Michael Rapoport, Blomberg ($). “An employer can’t get a subsequent refund of withholding taxes it pays under special arrangements often used for employees working in foreign countries, according to a memo released Friday by the IRS’s Office of Chief Counsel.”
The case concerns ‘tax equalization’ programs, which are intended to prevent a foreign assignment from having any effect on an employee’s tax liability. Under the arrangement, the pay for an employee working overseas is reduced, and in exchange the employer pays the employee’s tax withholding out of its own funds rather than deducting it from the employee’s wages.
Tax Issues Raised by the Use of Cross-Border Partnerships – Greg Featherman, Tax Notes ($):
In this report, Featherman explores various tax issues related to (or affecting) the use of cross-border partnerships, including issues concerning both inbound and outbound investments by U.S. investors.
Happy Martin Luther King Jr Day!
From National Day Calendar:
Martin Luther King Jr Day honors the American clergyman, activist, Civil Rights Movement leader. Dr. Martin Luther King Jr.(January 15, 1929 – April 4, 1968) is best known for his role in advancing civil rights using nonviolent civil disobedience. King has become a national icon in the history of American progressivism.