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IRS Allows Direct Deposit For Amended Income Tax Return Form – Bloomberg ($):
Taxpayers will be now be able to select direct deposit for refunds associated with Form 1040-X, Amended US Individual Income Tax Return, when filing electronically, according to the IRS Thursday.
Taxpayers who filed Form 1040-X previously had to wait for a paper check for any refund.
The IRS document is here.
Tax Pros Push Back On Proposed Limits On IRS Appeals – David van den Berg, Law360 Tax Authority ($):
Some tax professionals are continuing to push for the IRS Independent Office of Appeals to consider taking on cases involving challenges to the validity of agency guidance, despite proposed regulations saying the office wouldn't generally accept such administrative appeals.
The Internal Revenue Service said in proposed rules last yearthat the appeals office wouldn't consider any issue based on taxpayer arguments that regulations issued by the U.S. Department of the Treasury are invalid, absent an unreviewable federal court decision tossing the entire regulation or the provision being challenged. The IRS and Treasury said in the proposal that they believe consideration of such arguments by the appeals office would be inappropriate because regulations are extensively reviewed prior to being issued.
Fully Funded IRS Should Prioritize Timely Guidance, Advocate Says – Lauren Loricchio, Tax Notes ($):
The IRS dropped the ball when it failed to issue timely guidance in two recent instances and should prioritize being more timely in the future, the national taxpayer advocate said.
In a February 9 blog post, National Taxpayer Advocate Erin Collins noted that the IRS didn’t provide timely guidance regarding state tax rebates and new Form 1099-K reporting requirements, causing headaches for taxpayers, tax professionals, and software providers.
New Ways and Means Oversight Chair Wants to Hear From Tax Pros – Doug Sword, Tax Notes ($):
As he readies to launch investigations into the IRS, the new House Ways and Means Oversight Subcommittee chair wants to hear from those who regularly practice before the agency.
Leaks, backlogs, and allegations of improper targeting at the IRS are central to the Republican-led full Ways and Means Committee’s plans for a dozen or so investigations this Congress. But the Oversight panel is the more typical player when it comes to investigating the agency, and new subcommittee Chair David Schweikert, R-Ariz., says his approach will be largely an academic one aimed at taking deep dives into how the IRS does business and how it could improve through the better use of data.
‘This is less about beating the crap out of the IRS,’ Schweikert told Tax Notes. ‘It’s more about what’s wrong. What can we help fix? What can we make more efficient?’
GOP Prepares Lines of Questioning for Werfel - Kim Dixon, Bloomberg ($):
Senate Finance Committee Republicans are gearing up to question IRS Commissioner nominee Danny Werfel next week, and they are expected to question him on the agency’s $80 billion in new funding from the Inflation Reduction Act…
'It’s going to be focused on IRS oversight, and the implementation of $80 billion funding that they’ve got,' [Committee ranking member Mike] Crapo (R-Idaho) said, 'but I can’t go into more detail than that.'
It will interesting to see how many times “87,000 new IRS agents” is uttered during this hearing
Speaking about throngs of agents:
Bicameral legislation would provide necessary oversight of the IRS and strengthen accountability for taxpayers – Sen. John Thune (R-SD) press office:
The IRS Funding Accountability Act would give Congress a direct say in how this new funding could be spent, hold the IRS more accountable, and provide more transparency for the American people.
House Republicans unveil proposed cuts amid debt limit fight – Aris Folley, The Hill:
Republicans on the House Budget Committee recently unveiled potential areas of spending the party could target as a battle over raising the nation’s debt limit heats up Capitol Hill.
What do spending cuts have to do with taxes? If Washington leaders pursue the path of spending cuts to increase the debt limit, it won’t be long before others insist that tax increases be included in the discussion.
CPA Group Makes Technical Tax Recommendations to Congress - Naomi Jagoda, Bloomberg ($).
Notable proposals:
- Relief from last-in, first-out accounting rules— which lawmakers in both parties have expressed interest in—in light of pandemic-related supply chain disruptions;
- Permanent and uniform disaster relief on individual income taxes and to allow all state and local taxes derived from businesses to be deductible;
- Clarification that the term 'tax shelter' in tax-code provisions about accuracy-related penalties applies only to abusive transactions;
Few Businesses Can Avoid the Changes to R&D Capitalization Rules – Stephen Boncimino and Alexandra Colman, Bloomberg ($):
This you likely know:
Since Jan. 1, 2022, all businesses have been required to capitalize their R&D expenditures for tax purposes over a five- or 15-year period. Previously, they were able to expense R&D costs in their entirety during the tax period incurred. When we look at the tax code holistically, companies with large amounts of R&D expenses are affected the most.
And then, the fearmongering:
At first glance, corporate taxpayers may have assumed that the changes to Section 174(a) only impacted life science companies—those with lab coats and test tubes. But after reviewing the definition of R&D, this change will be impacting all industries—and that means you.
DC Circ. Skeptical Of Claim That ACA Penalties Aren't Taxes – Anna Scott Farrell, Law360 Tax Authority ($):
The D.C. Circuit questioned a phone retailer's argument challenging $1.1 million in taxes for failing to offer employees health insurance, with the court saying Thursday that Congress warned of such a levy by calling the penalty a tax in the Affordable Care Act.
While Optimal Wireless LLC argued that Congress did not intend for the penalty to be a tax because it called it an "assessable payment" seven times in the law and a ‘tax’ in only three isolated instances, the judges on the three-judge panel during oral arguments were skeptical.
Four-Day Work Weeks Would Earn Tax Breaks With Maryland Proposal - Chris Marr, Bloomberg ($):
The growing interest in four-day work weeks could get a boost from Maryland state lawmakers, who are considering a first-in-the-nation approach that would give employers tax breaks if they try trimmed-down schedules.
Legislation pending in Maryland (HB 181 / SB 197) would offer employers a tax incentive for testing out a four-day week with at least 30 employees and letting the state’s labor department collect research on their experience. It also would encourage state and local government agencies to try out the alternate work week.
West Virginia Senate suspends rules, approves $600 million tax cut plan -Roger Adkins, Charleston Gazette-Mail:
The West Virginia Senate approved a tax-cut plan Wednesday that favors what senators are calling a more fiscally conservative and multi-faceted approach over the governor’s proposed 50% reduction in the personal income tax.
Kentucky Senate sends income tax cut bill to governor – Erin Kelly, Spectrum News:
Republicans wrapped up work Wednesday on making a deeper cut in Kentucky's individual income tax rate, sending the bill to the Democratic governor in the midst of an election campaign.
20,000 people have yet to pay Portland-area taxes meant to combat homelessness and pay for preschool - Kyle Iboshi, KGW8:
Both taxes target individuals who made more than $125,000 annually or couples who bring in more than $200,000 dollars combined.
Metro collects 1% tax on income over those thresholds for the homeless services tax. Multnomah County adds a tax of 1.5% over that threshold. The tax rate bumps up to 3% for all income above $400,000.
House Tax Leader Denounces International Plan to Raise Minimum Corporate Tax – Richard Rubin, Wall Street Journal ($):
The House’s top tax legislator criticized an international agreement to raise minimum taxes on corporations, saying Republicans in Congress wouldn’t accept the deal reached by the Biden administration and more than 130 countries.
Rep. Jason Smith (R., Mo.), who became chairman of the House Ways and Means Committee last month, said the agreement would help China gain a competitive advantage and hurt the U.S.
Smith wrote a letter dated today to OECD secretary general Mathias Cormann about this subject. The letter is here.
From the “Not Business as Usual” file:
For America’s economy to work, we need a working-class agenda – House Ways and Means Chairman Jason Smith (R-Mo.), The Hill:
The past two years have been particularly tough for working families. The price of everyday goods and services has skyrocketed — rising 13.9 percent since President Biden took office — with gas prices up nearly 50 percent. The Federal Reserve has been forced to respond to President Biden’s failed economic policies by raising interest rates higher than the past 15 years combined, pushing home ownership out of reach for millions of families, while workers, farmers, and small businesses on the frontlines of our economy see real wages shrinking.
That is why under a House Republican majority, we will put the interests of working families first — much of that work will be under the purview of the House Ways and Means Committee where I am honored to be serving as chairman in the 118th Congress.
In the past, this committee routinely addressed issues affecting large, multinational companies. It will be interesting to see how this shift in focus will affect campaign contributions.
Happy National Cream Cheese Brownie Day! Its got chocolate and cream cheese. What else do you need!