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Programming note: Eide Bailly offices will be closed Monday, January 16, in honor of Dr. Martin Luther King Jr. Day. Regular programming resumes on Tuesday. If significant tax legislative news happens, we may post an update.
Tax Season Begins Jan. 23 With the IRS Promising Improvements - Laura Davison and Naomi Jagoda, Bloomberg ($): "The US tax filing season will begin Jan. 23 and run through April 18 with, perhaps, less frustration for both taxpayers and the Internal Revenue Service than in recent years."
The 12-week time frame to submit IRS forms is an annual and often dreaded American tradition marked by a nationwide rush to gather paperwork and comb through the complicated tax code, usually with the help of software or an accountant or other professional.
IRS Says Tax-Filing Season to Start Jan. 23 – Richard Rubin, Wall Street Journal ($):
The tax-payment deadline this year is April 18 for most taxpayers. Many California residents can wait until May 15 because of the recent natural disasters there. Taxpayers can claim an automatic six-month extension to file their full returns; that doesn’t change the payment deadline.
IRS announcement is here.
Hopefully, this year’s tax season will be better than previous years.
This year, however, should be a better experience for taxpayers, with the IRS receiving additional funding, adding 5,000 customer service representatives, and reducing a large backlog of tax returns that had slowed down the agency.
Still, the IRS recommends filing electronically and opting for direct deposit for the quickest refund.
Eide Bailly coverage of this issue is here.
More Eide Bailly insight:
Taxpayer Advocate Report Highlights Top 10 Taxpayer Problems – Joe Kristan, Eide Bailly:
A new report by the IRS Taxpayer Advocate says processing delays are the ‘Most Serious Problem #1’ faced by taxpayers during 2022. From the report's Executive Summary:
In 2020, the IRS quickly fell behind in processing paper-filed tax returns, resulting in tremendous backlogs of unprocessed paper. Even though the IRS tried to clear its paper backlogs through additional hiring, mandatory overtime for staff, and “surge teams” of employees reassigned from other IRS business units, IRS processing delays and paper backlogs continue to be a Most Serious Problem for taxpayers.
Then there is this fun nugget:
IRS says ‘Tax Day’ will be different this year — put these important tax dates on your calendar – Andrew Keshner, Market Watch:
This year, refunds will be arriving in a time of high inflation and potential recession worries — and experts caution there’s a good chance many refunds could be smaller, now that pandemic-era increases to certain tax credits have vanished.
Ways and Means Republicans Mull Agenda Items - Alex Clearfield, Bloomberg ($):
House Ways and Means Chairman Jason Smith (R-Mo.) held his first meeting with the committee’s new members Thursday, laying out his vision for the panel.
Further down the article:
One possibility was ‘holding the IRS accountable’ for any egregious enforcement of the new rules on 1099.
Further down:
[Rep. Nicole] Malliotakis, in a phone interview, said the members discussed how some small tweaks to existing policies or eliminating others could bring in more revenue.
The child tax credit and the SALT deduction were among the topics discussed.
This conversation was undoubtedly about passing tax legislation that could modify long-sought-after business tax breaks, but tweaking the CTC or SALT cap would likely reduce revenue.
Regarding ‘holding the IRS accountable’: More than 1099s will likely be examined:
Smith Statement on Selection as Next Chairman of the House Ways and Means Committee – House Ways and Means Committee:
Congressman Jason Smith (MO-08) released the following statement after being selected to serve as the Chairman of the House Committee on Ways and Means for the 118th Congress:
…
'Our first step is defunding the $80 billion pay increase Democrats gave the IRS to hire 87,000 new agents to target working families. But we are not stopping there. If confirmed, the new IRS Commissioner should plan to spend a lot of time before our committee answering questions about the leaking of sensitive taxpayer information and an agency with a history of targeting conservative Americans. We will make it clear to every IRS employee that the Ways and Means Committee welcomes whistleblower efforts to uncover corrupt behavior at that agency.
Eide Bailly coverage of this statement is here.
Partnerships Get Few Answers in Book Minimum Tax Guidance – Erin Slowey, Bloomberg ($):
A new Treasury notice on the corporate alternative minimum tax gives some guidance for companies with investments in a partnership but still leaves many unsure if the tax will apply.
The CAMT is a 15% tax on applicable corporations or companies with over $1 billion of average annual applicable financial statement income, or AFSI, over a three-year period. The tax, which became effective Jan. 1, excludes S corporations, regulated investment companies, and real estate investment trusts.
Further down the article:
Approximately 150 corporations will be subject to the tax, according to the Joint Committee on Taxation, but there could be many more impacted by the tax and its guidance.
The guidance referred to in the article was released on December 27, 2022, and is here.
Lawmakers Ask Treasury Not to Delay Electric Vehicle Credits – Tax Notes:
Guidance implementating [sic] the section 30D tax credit for electric vehicles (EVs) and section 45W tax credit for commercial EVs shouldn’t be delayed and doing so contravenes the intent of the Inflation Reduction Act (P.L. 117-169), six Democratic lawmakers said in a January 11 letter to Treasury Secretary Janet Yellen.
Minnesota Conforms to Key Recent Features of Federal Tax Code - Michael Bologna, Bloomberg ($):
Minnesota has conformed its tax system to a number of federal tax code features, including provisions of the pandemic relief laws passed by Congress over the last three years and the Biden administration’s student loan debt relief plan.
Gov. Tim Walz (D) signed a bill Thursday adopting corporate and individual provisions of the Internal Revenue Code as amended through Dec. 15, 2022, by seven federal laws, including the CARES Act, the American Rescue Plan Act, the Infrastructure Investment and Jobs Act, and the Inflation Reduction Act.
Governors of All Stripes Remain Pretty Steadfast on Tax Relief – Angélica Serrano-Román and Donna Borak, Bloomberg ($):
With the new year, governors have started laying out their formal budget and policy agendas for upcoming legislative sessions through inaugural addresses, state of the state speeches, and other kickoff events. Notably, West Virginia’s governor rolled out plans to create the ‘biggest tax cut’ in the state’s history and in New Jersey the governor said residents can expect ‘significant tax cuts’ ahead.
Gov. says he wants to give you an income tax refund again… and homeowners a break too - WSBTV.com:
Gov. Brian Kemp spent the morning Wednesday talking to Georgia’s economic leaders about his plans for the coming year.
Among his plans is $1 billion in income tax rebates to Georgians over what he calls inflation relief.
He also wants to give another $1 billion in property tax relief grants as rising inflation can also inflate property taxes.
‘Taxachusetts’ Revived in New England After Millionaire Surtax - Christopher Anstey, Bloomberg ($):
Tax advisers have long said it’s inadvisable to die in Massachusetts — one of the least generous states for estate levies — but now it may also be worth thinking twice about living there.
At least that may be the case for those anticipating earning over $1 million anytime soon.
Massachusetts voted in favor of imposing a 4% surtax on taxable incomes over $1 million after a closely fought campaign. The levy, approved by 52% of voters in November, kicked in at the start of this year.
W.Va. Lawmakers Eye Legalizing, Taxing Cannabis – Sam Reisman, Law360 Tax Authority ($). “A Democratic West Virginia lawmaker has introduced a bill to legalize adult-use marijuana and impose a 15% excise tax. The bill, H.B. 2091, was introduced on Wednesday by Del. Danielle Walker and joins a small slate of other cannabis reform legislation that has been introduced this week in Charleston. “
EU Plan to Equalize Tax Treatment of Debt, Equity Hits Roadblock - Stephen Gardner, Bloomberg ($):
EU countries have decided to put on hold discussions about a plan to equalize the tax treatment of debt and equity amid concerns raised by several members.
Under the plan, proposed by the European Commission in May 2022, the costs of raising money via equity would become tax deductible, as interest costs are currently. A few EU countries already allow equity deductions, though most do not.
OECD Picks Former US Treasury Official to Lead Tax Policy Center – Meg Shreve, Bloomberg ($):
Manal Corwin, a former US Treasury official, will head the OECD’s tax division, the organization announced Friday.
Corwin will start April 3 as director of the Organization for Economic Cooperation and Development’s Center for Tax Policy and Administration. She was previously a delegate to the OECD Committee on Fiscal Affairs and deputy assistant Treasury secretary for international tax affairs. She is principal in charge of KPMG’s Washington National Tax practice.
From the “Burying the Lead” file:
Why You Might Get a 1099-K - Jessica Walrack, U.S. News & World Report:
This is how the article begins:
You might receive a Form 1099-K for tax year 2023 – and beyond. That's because the America Rescue Plan of 2021 changed the reporting threshold requirement for third-party settlement organizations (TPSOs), which are companies that process payments between two parties…
Previously, you’d receive a Form 1099-K from a TPSO only if you conducted more than 200 transactions equaling at least $20,000 in gross payments. But starting in tax year 2023, the TPSOs will issue one once you’ve received $600 in annual gross payments for goods or services – regardless of your number of transactions.
So, anyone who sells goods or services and receives $600 or more in funds processed by a third-party processor (e.g., Stripe, PayPal, Venmo) should expect to receive a 1099-K.
Whoa! That’s jarring. I'm freaking out! What does this mean?? Will I get a 1099-K for buying a friend lunch and have to prove that the money I received was a reimbursement and not income? What do I do?!?!?!
Perhaps I should finish the article, which – further down – states:
The new threshold for 1099-K forms was originally scheduled to go into effect for the 2022 tax year. On Dec. 23, 2022, however, the IRS postponed the new threshold, and tax year 2022 is now a ‘transition year,’ according to the agency.
Oh. That’s calming. Luckily, I kept reading the article and didn’t go with my first impulse, which was to throw my laptop against the wall, exist the house, and set several trash cans on fire.
Pro tip (I’m a former reporter): Lead with the more pertinent information, like “IRS Delays 1099-K Reporting Requirements.”
I mean, the word “delay” is in the IRS’ headline and lead announcing the DELAY:
Headline:
IRS announces delay for implementation of $600 reporting threshold for third-party payment platforms’ Forms 1099-K
Lead:
The Internal Revenue Service today announced a delay in reporting thresholds for third-party settlement organizations set to take effect for the upcoming tax filing season.
It’s not rocket science. It's journalism 101.
Yikes! It’s Friday the 13th! Remote work from under your bed!!