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Treasury Says EV Tax Credit Guidance Is on Track - Alexander Rifaat, Tax Notes:
Worth up to $7,500 per purchase, the credit seeks to entice consumers to buy EVs while also encouraging investment in the country’s clean energy supply chain, from battery production to parts.
The credit requires that 50 percent of EV batteries come from North America (eventually reaching 100 percent by 2028) and that battery content be either domestically sourced or from a free trade partner.
Treasury guidance on electric vehicle tax credit due next week - Kelsey Tamborrino, Politico:
The Biden administration will release the eagerly awaited proposed guidance for the domestic sourcing requirements for electric vehicles to qualify for the Inflation Reduction Act‘s clean energy incentives next week, a Treasury official said on Wednesday.
The IRA passed by Democrats last year included those incentives in the nearly $370 billion in climate change measures, but the legislation limited them to EVs made using domestically produced mineral and batteries, angering European nations that complained the rules violated trade agreements by denying them the full tax credit.
‘Historic’ $480 million tax cut sign by Gov. Cox. Here’s how it will impact Utah taxpayers. - Bryan Schott, Salt Lake Tribune:
Gov. Spencer Cox affixed his signature to the “historic” $480 million tax cut package approved by Utah lawmakers earlier this month. While most of those reductions will be in effect for the 2023 tax year, one big part is on hold until after the 2024 election.
The primary piece of the tax cut puzzle drops Utah’s corporate and personal income tax rate from 4.85% to 4.65%. Those cuts primarily benefit the top 5% of wage earners, or those who make more than $235,000 per year, who will see a yearly state income reduction between $1,000 and $3,000. Utahns who make over $638,000 per year, or the top 1% of earners, will see a reduction between $5,000 and $9,500. Most taxpayers will see their income tax bill shrink by $500 or less annually.
Utah Trims Corporate, Individual Tax Rate, Creates Birth Bonus - Angélica Serrano-Román, Bloomberg ($). "Among other provisions, the new law allows taxpayers with a newborn child to claim the $1,750 personal exemption twice in the year of the child’s birth."
Yellen Takes Heat on IRS Funding Plan Timeline - Cady Stanton and Doug Sword, Tax Notes ($):
Treasury Secretary Janet Yellen faced criticism on the delayed public release of the IRS’s additional funding plan from Senate Democrats’ top appropriator.
At a March 22 hearing, Senate Appropriations Committee Chair Patty Murray, D-Wash., pressed Yellen about a timeline for the IRS’s much-anticipated plan for using the additional funding from the Inflation Reduction Act (IRA, P.L. 117-169), complaining that Treasury “has had enough time to produce it and we expect to see it.”
IRS' Plans For $80B Funding Boost Coming Soon, Yellen Says - Asha Glover, Law360 Tax Authority ($). "The Inflation Reduction Act, signed into law last year, allocates $45.6 billion for enforcement, $25.3 billion for operations support, $4.75 billion for business systems modernization and $3.18 billion for taxpayer services to the IRS over a decade."
In this scam targeting individuals, swindlers pose as a "helpful" third party and offer to help create a taxpayer's IRS Online Account at IRS.gov. People should remember they can set these accounts up themselves. But third parties making these offers will try to steal a taxpayer's personal information this way. Taxpayers can and should establish their own Online Account through IRS.gov.
These scammers often ask for the taxpayer's personal information including address, Social Security number or Individual Taxpayer Identification number (ITIN) and photo identification. The criminal then sells this valuable information to other criminals. They can also use the sensitive information to file fraudulent tax returns, obtain loans and open credit accounts.
The IRS urges people to watch out for these "helpful" criminals. The only place individuals should go to create an IRS Online Account is IRS.gov. People should not use third-party assistance, other than the approved IRS authentication process through IRS.gov, to create their own IRS online account.
Conservative coalition takes aim at Biden’s IRS-run tax preparation service - Alexander Bolton, The Hill:
The program is the brainchild of Sen. Elizabeth Warren (D-Mass.), who in 2021 reintroduced it to simplify the tax filing process for millions of Americans in the hopes of saving average Americans hours and hundreds of dollars usually spent on filing taxes.
But conservative critics led by Americans for Tax Reform President Grover Norquist say the government shouldn’t be helping Americans figure out how much they owe in taxes because the Internal Revenue Service has a vested interest in collecting as much tax revenue as possible.
New South Dakota Law Temporarily Reduces Sales Tax Rates - Emily Hollingsworth, Tax Notes ($). "H.B. 1137, signed into law March 21, reduces the sales and use tax rate on a wide variety of goods and services — including the sale of retail items, fuel and utilities, and services ranging from accounting to garment alterations — from 4.5 percent to 4.2 percent. It also reduces the tax rate on the use of services like passenger transportation and mobile telecommunications. The tax reduction will be in effect until June 30, 2027, when sales and use taxes will revert to their original 4.5 percent rate, according to the bill."
10 common tax filing mistakes to avoid - Kay Bell, Don't Mess With Taxes. "1. Not reporting all your income: Economic, and recently health, issues have prompted more Americans to expand their earnings options. These side hustles or full-time entrepreneurship or investments, to name just a few, also come with tax responsibilities."
IRS Calls Out Email And Text Scams As Part Of Its Annual Dirty Dozen List - Kelly Phillips Erb, Forbes. "One recent example is a phony email claiming to come from the IRS with a subject line advising that it’s a notice of underreported income. The email may include an attachment or a link to a bogus web page meant to look like the IRS website with a “tax statement.” When you open the attachment or click on the link, you download malware to your computer. That can take over your computer’s hard drive, allowing someone remote access to your computer, including passwords and other information that can be used to commit identity theft."
Filed an amended tax return with the IRS? You have a 20-week wait. - Michelle Singletary, Washington Post. "If you catch your own error, wait until after the original return is processed to file the amended return. 'That’s because having both an original return and an amended return in the system for the same year at the same time will usually delay the processing of both returns,' Smith said. 'If refunds were claimed on both, that could mean a substantial delay for both refunds.'"
How to Fill Out a Form 1040 - E. Napoletano, Wall Street Journal. "Whether you file your taxes electronically or by mail, knowing what each section of the form contains can help you gather the information you’ll need to answer questions from your accountant or chosen tax prep software."
IRS Expands Tax Relief For California Storm Victims - Robert Wood, Forbes. "The IRS has given victims of severe winter storms, flooding, landslides and mudslides in California that began March 9, 2023, until Oct. 16, 2023, to file various individual and business tax returns and make tax payments. Following the disaster declaration issued by FEMA, individuals and households affected by severe winter storms, flooding, landslides and mudslides that reside or have a business in Alpine, Amador, Butte, Calaveras, Del Norte, El Dorado, Fresno, Glenn, Humboldt, Imperial, Inyo, Kern, Kings, Lake, Los Angeles, Madera, Mariposa, Mendocino, Merced, Mono, Monterey, Napa, Nevada, Orange, Placer, Plumas, Sacramento, San Benito, San Bernardino, San Francisco, San Joaquin, San Mateo, San Luis Obispo, Santa Barbara, Santa Clara, Santa Cruz, Sierra, Sonoma, Stanislaus, Trinity, Tulare, Tuolumne and Yuba counties qualify for tax relief."
Tax Statutes of Limitation – Run Fast, IRS is Right Behind You - Virginia La Torre Jeker, US Tax Talk. "The SOL clock will not even begin to tick unless an income tax return is filed! In other words, not filing the return means a taxpayer will be looking over his shoulder forever, nervously wondering if the IRS is catching up. Even death is no solution, since the tax liabilities will follow the estate and possibly, the heirs."
LITC Program Office Announces Supplemental Grant Opportunities for New Clinics and Expansion of its Eligibility Criteria - Erin Collins, NTA Blog. "The Low Income Taxpayer Clinic (LITC) Program is a critical part of a fair and effective tax administration system, and brings justice to underserved populations. The Taxpayer Advocate Service awards matching grants to qualified organizations that represent low-income taxpayers before the IRS in tax controversies and educates taxpayers who speak English as a second language (ESL taxpayers) about their taxpayer rights and responsibilities."
An Economist Takes on the Social Security Earnings Test -Laurence Kotlikoff, Next Avenue. "Social Security's Earnings Test tops my list for our government's most senseless and personally financially destructive policy. The Earnings Test is a massive tax that isn't. It's a tax that's levied and then secretly returned making no money on balance for the government (as measured on an actuarial present value basis). Its sole purpose is to con Social Security beneficiaries below age 67 into thinking that earning money beyond a di minimis amount will come at a huge loss in current net income as well as lifetime benefits."
Biden’s Math of Just Taxing the Rich Doesn’t Add Up - Adam Michel, Liberty Taxed. "By promising the American people he would only raise taxes on people earning over $400,000, President Biden has made his budget math next to impossible. There is simply not enough income at the top of the distribution to cover the projected federal budget deficit, let alone a significant expansion in federal spending over the next decade."
Biden Budget Tax Proposals: Details & Analysis | Tax Foundation - Tax Policy Blog (six contributors). "Our estimate likely understates the full economic harm from the budget because we do not model the effects of the 25 percent “billionaire minimum tax” on unrealized capital gains of high-net-worth taxpayers or the impact of certain international tax changes, such as the undertaxed profits rule (UTPR)."
Recent Tax Court Case Shows Social Media’s Role in IRS Exams - Me, on Bloomberg. "The IRS has the internet and knows how to use it. So the next time you have a hot take and post it on a blog or social media, remember that a future IRS examiner may be reading it, says Joe Kristan of Eide Bailly."
Former Lincoln lawyer sentenced to two years in prison in tax case - IRS (Defendant name omitted):
Between 2011 and 2017, Hoffman Law Office, P.C. LLO was a professional corporation doing business as a law firm in Lincoln. Defendant was the owner, operator, and sole employee of Hoffman Law, and exercised control over the business affairs, including authorizing business expenses, authorizing payment of employee compensation, approval of payments made by the corporation, and approval of payment of "payroll taxes" to the Internal Revenue Service.
...
Between 2011 and 2016, Hoffman Law failed to pay over to the Internal Revenue Service payroll taxes which were due and owing to the United States of America. For example, as of October 31, 2015, Defendant failed to pay over to the Internal Revenue Service $11,155.12 in payroll taxes he owed for the previous quarter ending September 30, 2015.
In October 2013, the IRS notified Defendant of its intent to file levies to collect the taxes due for 2010 and 2011. Thereafter, several levy payments totaling more than $46,000 were received from the bank that held the Hoffman Law operating account. In 2014, Defendant began the practice of transferring funds from the firm's trust fund account to its operating account and then immediately writing checks to himself that he cashed or deposited into his personal bank account. Defendant engaged in this conduct, at least in part, so that he could receive the funds before any levies on the account could be made by the IRS, which resulted in the account having a low balance from time to time in the event the IRS levied on the account. Between 2011 and 2016, Defendant failed to pay $241,362.92 in employment taxes. Including interest and penalties, Defendant's outstanding tax debt grew to $325,197.90, which is the amount of restitution he was ordered to pay to the IRS as part of his sentence.
We can draw several lessons from this case. First, don't fall behind on employment taxes - it can cascade into worse problems, like it did here, and you'll have to pay up eventually. Also, lawyers shouldn't use their trust accounts as a tax planning tool. Finally, once the IRS is after you, hiding things only makes it worse.
Related: Eide Bailly IRS Exam Assistance.
Something for everyone. It's both National Puppy Day and Cuddly Kitten Day!