Tax News & Views 401(k) for Dinner Roundup

401(k) limit increases to $23,000 for 2024, IRA limit rises to $7,000 - IRS:

 The Internal Revenue Service announced today that the amount individuals can contribute to their 401(k) plans in 2024 has increased to $23,000, up from $22,500 for 2023.

...

The limit on annual contributions to an IRA increased to $7,000, up from $6,500. The IRA catch‑up contribution limit for individuals aged 50 and over was amended under the SECURE 2.0 Act of 2022 (SECURE 2.0) to include an annual cost‑of‑living adjustment but remains $1,000 for 2024.

The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), and most 457 plans, as well as the federal government's Thrift Savings Plan remains $7,500 for 2024. Therefore, participants in 401(k), 403(b), and most 457 plans, as well as the federal government's Thrift Savings Plan who are 50 and older can contribute up to $30,500, starting in 2024. 

 

Energy Credit Portal for Auto Dealer Registration is Now Open - Mary Katherine Browne, Tax Notes ($):

Auto dealers can now register to submit sales information to the IRS and promptly receive payment for transferred new and used clean vehicle tax credits.

The agency launched the Energy Credits Online portal November 1 to facilitate the transfer of section 30D and section 25E credits directly to the car dealer at the point of sale, effectively providing an instant drop in the purchase price.

Car dealers can also use the online portal to submit “time of sale” reports, which will confirm a vehicle’s eligibility for a credit whether or not the buyer chooses to transfer the credit to the dealer.

IRS opens free Energy Credit Online tool for sellers of clean vehicles to register for time-of-sale reporting and dealer advance payments for the Clean Vehicle Credit - IRS:

The Internal Revenue Service announced today that sellers of clean vehicles can now register using the new IRS Energy Credits Online tool, available free from the IRS.

Known as IRS Energy Credits Online or IRS ECO, this free electronic service is secure, accurate and requires no special software. Though available to any business of any size, IRS Energy Credit Online may be especially helpful to any small business that currently sells clean vehicles.

Related: Eide Bailly Dealerships Services.

 

IRS Pot of Money Doubly Targeted by GOP - Doug Sword and Cady Stanton, Tax Notes ($):

The $79 billion in Inflation Reduction Act funding for the IRS — since reduced to about $58 billion — was targeted by Republicans in both chambers November 1; the effort in the Senate was unsuccessful, while the one in the House is still playing out.

The Senate scotched 23-74 an effort to claw back $25 billion in enforcement dollars the IRS is getting from last year’s reconciliation bill, while Democrats voiced their outrage over a proposal from House Speaker Mike Johnson, R-La., to grab $14.3 billion of the IRA funds to balance the cost of emergency aid to Israel.

Proposed IRS Cut Would Slice Revenue By $26.8B, CBO Says - Asha Glover, Law360 Tax Authority ($). "House Republican legislation that would rescind $14.3 billion in Inflation Reduction Act funding for the Internal Revenue Service to offset an aid package for Israel would decrease federal revenue by $26.8 billion over the next decade, the Congressional Budget Office said Wednesday."

 

IRS Extends Extra Transition to Perfect Research Credit Claims - Caleb Harshberger, Bloomberg ($).

The IRS is again extending a transition period giving taxpayers more time to perfect claims seeking research credits through Jan. 10, 2025, the agency announced Wednesday.

The transition period gives an extra 45 days for filers to perfect research credit claims—essentially provide missing information flagged by the agency, and fix any problems before a final determination on the claims is made.

Related: Research & Development Tax Incentives 

 

IRS uses new funding to target tax evasion by large partnerships - Wolters Kluwer Tax & Accounting:

The IRS says that for many years it has seen partnership returns showing discrepancies “in the millions of dollars” between end-of-year balances on one year’s returns and beginning balances on the following year’s returns—and believes the number of these discrepancies has been growing. It also said that many of these partnerships are failing to attach statements explaining the discrepancies.

The IRS thinks these discrepancies may suggest cheating, especially in the case of partnerships with more than $10 million in assets. But the IRS simply “did not have the resources” to follow up with partnerships suspected of noncompliance. Commissioner Werfel said the agency had been “overwhelmed” in the partnership area.

Seems like the sort of thing that might attract IRS attention. 

 

4 tax moves to make this November - Kay Bell, Don't Mess With Taxes. " Feather your workplace retirement nest. Sorry, not sorry, for that fowl pun. But seriously, this is the perfect time to check out your retirement savings, especially the one you have at work."

Tax Court Nixes Attempted Rollover of Cash Proceeds from Sale of Partnership Interest - Parker Tax Pro Library. "The Tax Court held that a taxpayer who received a distribution from his individual retirement account (IRA) of his interest in a partnership after he failed to report the fair market value of the partnership interest to the custodian in accordance with the custodial agreement, was taxable on the value of the partnership interest at the time of the distribution."

No Protection From Penalties When CPA Fails to E-File Return - Leslie Book, Procedurally Taxing/Tax Notes:

Here is a brief summary of the facts in Lee. Lee, a surgeon, hired CPA Kevin Walsh to file his tax returns for 2014, 2015, and 2016. For each year, the returns claimed about $1 million in gross income and reflected six-figure overpayments. Lee applied the overpayments to the following year’s estimated tax liabilities. Every year, Lee reviewed the returns and signed a Form 8879, “IRS e-file Signature Authorization,” which authorized Walsh to e-file the returns on his behalf.

Unfortunately for Lee, Walsh never e-filed the returns. 

 

IRS Extends Use Of Some Pandemic-Era Technology Provisions - Kelly Phillips Erb, Forbes. "Sometimes, good things can come from adversity. During the pandemic, the IRS had no choice but to begin to move towards new technologies—including accepting digital signatures. Now, the IRS has announced that it is extending 'certain temporary flexibilities.' Specifically, they will accept digital signatures 'indefinitely until more robust technical solutions are deployed.' Additionally, the agency will allow encrypted email when working directly with IRS personnel until Oct. 31, 2025."

Split Interest Land Acquisitions – Is it For You? (Part 1) - Roger McEowen, Agricultural Law and Taxation Blog. "A split-interest transaction involves one party acquiring a temporary interest in the asset (such as a term certain or life estate), with the other party acquiring a remainder interest.  The temporary interest may either refer to a specific term of years (i.e., a term certain such as 20 years), or may be defined by reference to one or more lives (i.e., a life estate).  The remainder holder then succeeds to full ownership of the asset after expiration of the term certain or life estate."

 

FBAR Compliance: From Requirements to Submission - Olivier Wagner, 1040Abroad. "FBAR stands for Foreign Bank Account Report, a disclosure requirement mandated by the United States Treasury Department. It is officially known as FinCEN Form 114 and is separate from your income tax return. The FBAR is designed to provide the U.S. government with information about financial accounts held by U.S. persons in foreign countries."

Related: Eide Bailly International Tax. 

 

New Study Finds TCJA Strongly Boosted Corporate Investment - William McBride and Alex Durante, Tax Policy Blog. "The study is based on a large sample of 12,000 corporate tax returns covering several years prior to the enactment of the TCJA and two years after. The authors find that, on average, firms impacted by the policy changes increased domestic investment by about 20 percent in the subsequent two years relative to firms with no tax change."

Halloween Candy Raises Spooky Tax Questions - John Buhl, TaxVox. "What scares come to mind when purchasing Halloween candy: ghosts, witches, or taxes? Yes, taxes should be on the list because Halloween reminds us how simple-sounding policy can end up downright spooky (or at least confusing)."

 

The New York Times, USSCt Justice Clarence Thomas, Juicy Gifts & the Tax Lessons! - Virginia La Torre Jeker, US Tax Talk. "There is another tax rule that says gifts are not items of income. So, if the friend cancelled the debt strictly out of disinterested generosity and affection for Justice Thomas, this cancellation would be a gift and would not be income to Justice Thomas for tax purposes.  On the other hand, if the motive of the lender is not out of such affection, and something is expected in return, then forgiving the debt is not a gift at all."

 

Cheshire woman pleads guilty to fraud and tax offenses stemming from nearly $1 million embezzlement scheme - IRS (Defendant name omitted):

According to court documents and statements made in court, Defendant was employed as the office manager for a family-owned construction business, identified in court documents in "Company A," based in Orange. Beginning at least as early as 2016, Defendant made false entries into Company A's payroll and accounting system that caused the system to generate hundreds of fraudulent checks payable to her or to "Petty Cash." Almost immediately after she generated a fraudulent check, Defendant changed the reference in the payroll and accounting system to show that it had been issued to a different payee. Defendant sometimes generated checks in the name of Company A's owner, forged the signature of Company A's owner on the checks, and either cashed the checks or deposited them into her bank account. She also altered the payroll and accounting system in other ways, which resulted in her receiving additional pay to which she was not entitled. Through this scheme, Defendant embezzled $955,960.71 from Company A.

In addition, Defendant failed to pay $233,738 in federal income taxes on her embezzled income for the 2016 through 2021 tax years.

This sort of thing happens more than people realize. Good internal accounting controls help prevent it.

Related: Eide Bailly Forensic Accounting.

 

Hopefully unrelated. Today is the Day of the Dead and National Men Make Dinner Day.