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IRS Chief Warns Funding Cuts Could Hinder Progress - Asha Glover, Law360 Tax Authority ($):
"To keep moving forward, it's critical for the IRS to continue to be adequately funded. We should be concerned if our base budget continues to be cut year after year," Werfel said. "Even with the $60 billion in new funding for the coming decade, we have to make the case to Congress to fully fund our annual budget request."
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Lawmakers are currently working on appropriations bills for the 2024 fiscal year. The IRS funding bill passed by the Republican-led House Appropriations Committee in July would give the agency $11.2 billion for fiscal 2024 — a $1.1 billion drop compared with the agency's fiscal 2023 budget. The Senate Appropriations Committee's IRS funding bill would give the agency $12.3 billion, which is in line with the agency's current-year funding."
GOP Has a SALT Problem, and We’re Not Talking Hypertension - Doug Sword, Tax Notes ($).
Now it’s the summer of 2023, and a push mainly by GOP members from New York is behind the stalling of the House GOP’s three-bill tax package advanced by the House Ways and Means Committee in June. Republicans on the committee had hoped to quickly bring the package to the floor, but resistance from members from high-tax states who want to raise the SALT cap gummed up the works.
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But SALT relief that overwhelmingly favors the wealthy at the expense of low- and middle-income households has PwC’s Rohit Kumar setting the odds of the return of an unlimited SALT cap at “basically zero.”
IRS Stokes Coverup Allegations With Admission It Backdated Form - Lauren Vella and Aysha Bagchi, Bloomberg:
It’s a case in which the IRS is under fire for potentially violating the law and attorney professional-conduct rules in its crackdown against a type of investment it has put on its “Dirty Dozen” list of tax scams for several years. The IRS argues that investors have taken billions of dollars in improper deductions.
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IRS lawyers “knew or should have known” about the false statements “for a long time” and failed to quickly alert the Tax Court, LakePoint’s lawyers claimed. IRS lawyers handed over the relevant emails and attachments in November 2022, but LakePoint alleges that the IRS didn’t answer questions about the emails or initially give information about how the correspondence and the attachments were related.
Democrats in Bullish Mood on IRA’s One-Year Anniversary - Alexander Rifaat, Tax Notes ($):
President Biden and his fellow Democrats celebrated the one-year anniversary of enactment of the Inflation Reduction Act by arguing that the law is helping reinvigorate the economy and improve tax administration.
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William McBride of the Tax Foundation welcomed the improvements in the IRS’s customer service over the past year but said he believes more structural problems have been left unaddressed.
“The underlying disease is the complexity of the tax code. What does the IRA do about that? It deprioritizes it and actually makes it worse. None of the provisions are simple,” McBride argued, highlighting uncertainty over the corporate alternative minimum tax as a prime example.
Big costs, sweeping changes: What to know about the IRA - Kelsey Tamborrino, The Hill:
Polls show that Biden is struggling to get voters’ attention for his signature law, and the anniversary is competing with headlines about record-high temperatures, deadly wildfires and other dire climate news from around the globe. But Biden and other Democrats have mostly leaned into an economic message as they fan out across the country to sell the public on the IRA, which has drawn at least $270 billion in private sector investments for technology such as wind turbines, solar panels and electric vehicle batteries.
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Estimates based on the Congressional Budget Office’s official score last year put the cost of the law’s climate and energy provisions at about $391 billion over the decade between 2022 and 2031. But other analyses since then have put that figure much higher, including a Goldman Sachs estimate that said it would total closer to $1.2 trillion.
New Tax-Credit Market Aims to Funnel Billions to Clean Energy - Amrith Ramkumar, Wall Street Journal:
The tax-credit plan is part of the climate legislation that became law one year ago. The first publicly announced deal, by Bank of America will be closely watched because it could enable a far bigger range of companies to buy the credits than under current programs.
The bank agreed to purchase $580 million in wind-energy tax credits from renewable-power developer Invenergy and investors, the companies said Wednesday. The money helped fund the Invenergy group’s purchase of a portfolio of renewable-energy projects from utility American Electric Power The funding from Bank of America allowed the buyers to raise debt from a group of banks and close the previously announced $1.5 billion deal.
Related: Energy Efficiency Incentives and the Inflation Reduction Act.
Republican Interest in EO Political Activity May Signal Change - Fred Stokeld, Tax Notes ($):
Philip Hackney, who served in the IRS Office of Chief Counsel, said he welcomes a request for information that House Ways and Means Committee Chair Jason Smith, R-Mo., and Ways and Means Oversight Subcommittee Chair David Schweikert, R-Ariz., made in an August 14 open letter to nonprofits and the public.
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The August 14 letter asks whether additional disclosures by section 501(c)(3) and 501(c)(4) organizations that are intervening in political campaigns would help prevent illegal contributions from foreign nationals aiming to influence U.S. elections.
The article notes that GOP representatives have opposed such disclosures over privacy concerns.
Ending Surprise IRS Visits Leaves Door Open for More Tax Dodges - Bob Kerr, Bloomberg ($). "With its July 24 announcement, the IRS may have inadvertently sent a message that it’s pulling back from collection work and, by extension, green-lit more non-compliance."
FinCEN, IRS-CI take steps to stem construction industry payroll tax fraud - Kay Bell, Don't Mess With Taxes:
FinCEN pointed to the final rule it issued last year establishing a beneficial ownership information reporting requirement, pursuant to the bipartisan Corporate Transparency Act.
That rule, which FinCEN calls "a historic step in support of U.S. government efforts to crack down on shell companies and illicit finance" required most corporations, limited liability companies, and other entities created in or registered to do business in the United States to report to FinCEN information about their beneficial owners. Those are the persons who ultimately own or control the company.
IRS Rules That Receipt of Crypto Units As Rewards for Staking Is Taxable Income - Parker Tax Pro Library. "The IRS ruled that a cash method taxpayer that stakes cryptocurrency native to a proof-of-stake blockchain and receives additional units of cryptocurrency as rewards when validation occurs must include the fair market value of the rewards in the taxpayer's gross income in the tax year that includes the date on which the taxpayer obtains dominion and control over the validation rewards."
Lesson From The Tax Court: Tax Consequence For Discharge Of Non-Recourse Debt - Bryan Camp, TaxProf Blog. "Discharge of non-recourse debt as a result of a property sale cannot generate DOI income (and thus cannot qualify for exclusion under §108) but must instead be used in calculating gain from the sale."
DOI= Discharge of Indebtedness. Debt discharge income can be tax free in bankruptcy or if the taxpayer is insolvent. Non-recourse debt, as the post explains, is another matter.
Commissioner Werfel indicates e-filing of Form 941-X coming soon - Christopher Wood, Thomson Reuters Tax & Accounting. "Although the eligibility time period for the ERC has passed, eligible employers can still claim the tax credit on an amended employment tax return. In general, the deadline for filing a Form 941-X to claim the ERC is April 15, 2024, for 2020 tax periods and April 15, 2025, for 2021 tax periods. However, currently, Form 941-X can only be filed on paper. There is no electronic filing option."
IRS Commissioner Says Extra Funding Resulted In Dramatically Improved Service To Taxpayers - Kelly Phillips Erb, Forbes. "More changes are coming. Phone service will get even better, according to Werfel. A customer callback option—long available in the private sector—has arrived at the agency and will make it possible for IRS employees to cover up to 95% of callers seeking live assistance. When call volumes are high, taxpayers can request a call back for an additional 73 toll-free applications, bringing the total number of applications with an option for customer callback to 116 taxpayer-facing applications."
Business owner pleads guilty to tax charge - IRS (Defendant name omitted, emphasis added):
Assistant U.S. Attorney Russell T. Ippolito, Jr., who is handling the case, stated that Defendant was the President, CEO, and majority shareholder of Applied Sciences Group (ASG), a technology business that largely developed software. She was also the founding partner of the partnership KRP Holdings (KRP). By law, businesses must account for income tax, social security tax, and a hospital insurance (Medicare) tax in the wages of individual employees, equal to a percentage of the wages earned by the employee. These taxes are commonly referred to as "trust fund taxes" because employers hold these taxes in trust for the government. For all of 2018 and three quarters of 2019, Defendant failed to pay over the trust fund taxes to the IRS on behalf of the employees of ASG and KRP, resulting in a loss of approximately $1,100,837 to IRS. Defendant also admitted that she obtained a Paycheck Protection Program (PPP) loan from the federal government in the amount of $117,277, to which she was not entitled.
Failing to pay over withheld taxes is almost certain to attract IRS attention. It's a bad idea to scam COVID tax break programs. And two wrongs definitely don't make a right.
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