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IRS interest rates increase for the third quarter of 2022 – IRS:
The Internal Revenue Service today announced that interest rates will increase for the calendar quarter beginning July 1, 2022. The rates will be:
- 5% for overpayments (4% in the case of a corporation).
- 2.5% for the portion of a corporate overpayment exceeding $10,000.
- 5% for underpayments.
- 7% for large corporate underpayments.
Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus three percentage points.
Why Taxpayers Owed $500 Billion in Taxes When They Filed This Year – Penn Wharton Budget Model:
Summary: Households owed more than $500 billion in taxes when they filed their returns this year, an increase of about $200 billion from immediately prior to the pandemic. The large tax liability owed at filing is mostly the result of a surge in capital gains and other income from financial assets in 2021.
Pandemic Tools Could Increase IRS Subject Expert Availability – Nathan Richman, Tax Notes ($). “IRS subject matter experts based in Washington could be more useful and available to taxpayers and audit teams in the field with videoconferencing software, according to Douglas O’Donnell, IRS deputy commissioner for services and enforcement.”
House Democrats Signaling Wariness on Tax Perks in Chips Bill - Kaustuv Basu, Bloomberg ($). “A bipartisan effort by senators to add tax provisions to a major bill aimed at increasing competitiveness with China (H.R. 4521) is running into headwinds, as some House Democrats balk at adding measures that are seen as helping corporations.”
Senate Finance Committee Chairman Ron Wyden (D-Ore.) and ranking member Sen. Mike Crapo (R-Idaho) want to add a tax credit for domestic fabrication of semiconductors, known as the FABS Act (S.2107). There is also a push to add a research and development expensing provision that expired at the end of 2021. The R&D perk would let companies fully deduct research and development costs in the year they occur, rather than writing them off over five years.
But some House Democrats fear that trying to do so would slow down the bill, which is being worked on by a bicameral, bipartisan conference committee, and several people familiar with the discussions said that trying to add provisions that are seen as benefiting corporations is politically perilous for Democrats, because it risks drawing fire from the progressive wing of the party.
Certain lawmakers have vowed to oppose legislation that provides business tax relief if the bill does not expand the Child Tax Credit, which is a revenue hit of about $105 billion per year. If the Chips bill does not include tax provisions, the next best chance to pass tax provisions will likely be in a year-end bill (that's assuming Build Back Better is dead).
Is Build Back Better dead?
Build Back Better Still Has Shot, Other Tax Vehicles Not So Much – Doug Sword, Tax Notes ($). “Unless the reconciliation bill gets back on track, Congress might be done with tax legislation for the year, based on comments from some of the top staffers on the taxwriting committees.”
Qualifier alert (emphasis added):
‘There still remains, I think, a path to 50 votes in the Senate for a package’ focused on energy, climate, prescription drug pricing, and deficit reduction… said Robert Andres, senior policy adviser for Senate Finance Committee Democrats.
A person can have thoughts on a lot of things. That doesn’t make them real. Getting Build Back Better across the finish line remains an uphill battle.
Case in point: Below is an article citing the same staffer reporting that he is iffy on Build Back Better passing.
Energy Credits Face Uncertain Future if Senate Doesn’t Act Soon – Mary Katherine Browne, Tax Notes:
Speaking at a Novogradac & Co. LLP conference, Andres said that while he’s confident that a deal can be reached [on Build Back Better] with Sen. Joe Manchin III, D-W.Va., that would retain the vast majority of the bill’s energy provisions, it’s difficult to predict whether it will. He called this period of time the ‘murkiest period legislatively' that he has ever experienced.
Fizzling legislative agenda leaves Democrats wondering about midterms – Amie Parnes and Morgan Chalfant, The Hill. “Democrats once hailed Build Back Better as the policy that could help them win the midterms. But as even the possibility of a scaled-back version of President Biden’s signature legislation fizzles in the 50-50 Senate, some are wondering if the president will have anything comparable to campaign on as the election season inches closer."
While the odds seem to be shrinking for Congress passing a Build Back Better bill, never say never. Obamacare was declared dead - just before it got enacted.
Heads up: Certain lawmakers want to pass the retirement "Secure 2.0" bill this year. The House approved its version and we're waiting on the Senate to act. It is unclear when the upper chamber will take up the legislation. The Senate Finance Committee is expected to mark-up a bill, but has yet to publicly announce the meeting. This bill includes tax provisions, but certain lawmakers do not want to add non-germane tax provisions to it for fear it will kill the bill. Stay tuned.
Inaction On Retention Credit Risks Nonprofit Staff Cuts – David van den Berg, Law360 ($). “In the face of congressional inaction on legislation to restore the employee retention tax credit for the fourth quarter of 2021, nonprofit organizations could find themselves having to lay off workers or unable to rehire laid off employees.”
Crypto Implosion Juices Senate Odd Couple’s Push to Clamp Down – Michael Smith and Allyson Versprille, Bloomberg ($). “Cynthia Lummis, a conservative Republican from a Wyoming ranching family, and Kirsten Gillibrand, a moderate Democrat from Albany, New York, aren’t supposed to get along -- let alone work together. But with Washington riven by deep partisan division, they have bonded over one thing: crypto needing new rules.”
Expected to be included in the legislation (emphasis added):
An advisory body would also be arranged to study and make recommendations for regulating future developments in the crypto market. The legislation would also exempt people from having to report and pay taxes when they make purchases using cryptocurrency if their resulting capital gains are $600 or less. Some argue that would make it more attractive to actually use digital currencies to pay at a checkout counter.
Dems Renew School Bond Push in $130 Billion Infrastructure Bill - Nic Querolo, Bloomberg ($). “Congressional Democrats are looking to invest $130 billion in the nation’s crumbling schools, partly by reviving a type of debt financing killed by tax reform during the Trump administration. The Rebuild America’s Schools Act, which went to committee markup Wednesday, would establish a $100 billion grant program and authorize $30 billion of school infrastructure tax credit bonds, both aimed at high-poverty schools around the country where shabby infrastructure poses a health risk to students and staff.”
Bayonne Apartment Assessments Upheld by N.J. Tax Court – Perry Cooper, Bloomberg ($). “The New York City suburb of Bayonne, N.J., properly treated two adjoining apartment buildings as separate for property tax purposes, the New Jersey Tax Court ruled. Tax Court Judge Mary Siobhan Brennan rejected owner Eilat Realty Co.'s argument that the buildings are so functionally integrated as to form a single economic unit. She upheld the city’s separate assessments for the 2017 though 2021 tax years in an unpublished opinion Thursday.”
Tax Avoidance, Money Laundering by LLCs Get State Attention – Michael Bologna, Bloomberg ($). “If sunshine is the best disinfectant, Alaska, New York, and Wyoming are planning to spray some of it on business structures that enable tax avoidance, money laundering, and other types of criminal conduct. The states are considering legislation modernizing their corporate secrecy statutes, requiring more robust disclosure of the beneficial owners of limited liability companies and trusts.”
Parson unsettled on $500 million tax credit proposal – Ryan Pivoney, Fulton Sun. “A measure to provide $500 million in tax credits to Missourians may be in jeopardy of Gov. Mike Parson's veto power.”
‘We've cut taxes twice since I've been governor of the state of Missouri, and we cut them for everybody and it's fair for everybody and it's forever,’ Parson said. ‘I'm not for sure doing something right now just to be able to take $500 million and just be able to put it out there. And, really, what's the accountability for that?’
Pizza Hut Magnate Wins Income Tax Case at Kansas High Court – Perry Cooper, Bloomberg ($). “The Kansas Supreme Court ruled Friday that Gene Bicknell, former owner of the largest chain of Pizza Hut franchises in the US, was no longer a Kansas resident when he sold the chain in 2006 and therefore didn’t owe Kansas income tax on the sale.”
NJ Bill Would Increase Research Tax Credit For Corps. - Michael Nunes, Law360 ($). “New Jersey would increase a qualified research expenses tax credit for corporations engaged in targeted industries as well as increase a basic research payment tax credit under a bill introduced in the state Senate.”
Mass. Capital Gains Ruling Blurs Limits Of States' Tax Reach – Paul Williams, Law360 ($). “The Massachusetts high court's finding that a Florida company didn't owe tax on capital gains stemming from a sale of its interest in a Massachusetts entity did little to resolve ambiguity surrounding states' abilities to tax investments from out-of-state companies.”
Miss. Justices Told Hardware Co.'s Sales Were Tax Exempt – Michael Nunes, Law360 ($). “The sales of a hardware supply company in Mississippi that sells products wholesale to oil and gas service providers are exempt from state sales and use tax, the business' attorney told the state Supreme Court.”
Treasury Sees Changes in Foreign Tax Credit Regs by Year-End - Michael Rapoport, Bloomberg ($). “The US Treasury Department aims to issue changes before the end of the year to address complaints about new regulations on foreign tax credits, a Treasury official said Friday. At least some of the change will be out in ‘probably a matter of months’ and ‘likely this year,’ said Jose Murillo, deputy assistant secretary for international tax affairs, speaking at a Tax Council Policy Institute conference."
Batchelder: Global Tax and IRS Funding Would Restore Trust in Government – Alexander Rifaat, Tax Notes ($). “Faith in government would be strengthened in the United States by providing additional resources to the IRS and internationally by passing the OECD global tax deal, according to Lily Batchelder, Treasury assistant secretary for tax policy.”
IRS Is Tracking Dispute Talks Under Pillar 1, Official Says – Natalie Olivo, Law360 ($). “The Internal Revenue Service is following discussions about how countries may approach disputes about cross-border profit allocations under the so-called first pillar of a global corporate tax overhaul, an agency official said Friday, noting that ‘we saw this on the horizon.’”
Preamble Sheds Light on U.S. Partnerships Owning Foreign Corporations - Carrie Brandon Elliot, Tax Notes ($). “Published on January 25, T.D. 9960 provides guidance on stock ownership thresholds to U.S. partnerships in new reg. section 1.958-1(d). The regs affect U.S. persons that own stock of foreign corporations through U.S. partnerships and U.S. partnerships that are U.S. shareholders of foreign corporations.”
Was legendary rock back Iron Butterfly done in by taxes?
A Very Candid Conversation with Mike Pinera – Stone Cold Crazy:
[Jeff Cramer]: So what caused Iron Butterfly to break up?
[Mike Pinera]: Tragedy fell to the band. Apparently, the managers were not paying the taxes and were keeping the money for investments. Some of the investments didn’t pan out. At the end of the year when we would audit, the accountants would say, “There are hundreds of thousands of dollars missing here.” The taxes were not being paid. So, the IRS came in. For instance, Lee Dorman had a multi-million dollar business selling exotic cars in Beverly Hills—the Ferraris and Lamborghinis and all of that. They took away all of that because he didn’t pay the taxes… The band had a big meeting, and we found out that legally we could not prosecute these managers to get out of our management contract and get new managers. What we could do was file criminal charges against them, but that wouldn’t do anything. We would still be managed by the very guys who we were suing. So, somebody in the band had a bright idea and said, ‘Why don’t we break up. It might take a year, it might take two years. Let’s just take a hiatus. We can then get back together, and the management contracts will have run out.’ Everybody said, ‘Yeah. Let’s do that.’
Do not ask this reporter how her weekend went:
The Saturday I Spent Five-and-a-Half Hours in Line Waiting for the IRS – Laura Saunders, Wall Street Journal ($). “In more than a few columns, I’ve written about customer-service problems at the Internal Revenue Service. Now I know firsthand just how bad they can be.”
On Saturday, May 14, I waited 5 ½ hours for a meeting with a courteous and helpful IRS employee. I was at the agency’s Taxpayer Assistance Center in Harlem, one of two New York City IRS offices open that day—along with three dozen others across the country—for walk-in visits. No more walk-in days at any IRS office are scheduled for the rest of 2022.
I arrived at 8:30 a.m., because the hours were 9 to 4 and I wanted to be near the front of the line. Silly me: The line had started forming by 6:30, and by my count I was No. 48. By 9 a.m., the line had about 100 people and stretched a full city block outside the building. Some people brought their children.
Perhaps she should have responded by mail or phone. Oh right, they're also problematic.
Happy National Lucky Penny Day! Find a penny and pick it up and all day long you’ll have good luck! Here are some folks who experienced good luck with their pennies, according to National Day Calendar:
Pennies may not have much value these days. However, there are a few pennies that have made a mint for the owner:
1943-D: Lincoln Bronze Penny sold for $1.7 million.
1944-S: Lincoln Steel Penny sold for $373,750.
1943-S: Lincoln Penny made of Bronze sold for $282,000.
1909 VDB: Lincoln Penny sold for $258,500.
1856: Flying Eagle Penny sold for $172,500.