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Key Takeaways
- Will the Senate vote on the tax bill?
- Does it even matter?
- Taxing rockets.
- Chomping at the bit for IRA sales.
- Audit storm.
- Extensions in Maine and Rhode Island.
- Court updates.
- Pondering Book Tax.
- Don’t trigger an audit.
- 2025 tax debate is alive!
- Fork full of deep dish.
Will He or Won’t He? Tax Bill’s Fate Awaits Schumer’s Decision – Doug Sword and Cady Stanton, Tax Notes ($):
The traditional tax vehicles have left the station, leaving congressional tax watchers focused on when, and if, the Senate majority leader will bring the $79 billion tax package to the floor.
Senators return April 8 after a two-week break, and for the first time in more than half a year a looming government shutdown won’t be monopolizing their focus…
That may finally create the space for the Senate to focus on tax — perhaps in the form of a compromise with Senate Republicans who want changes made to the House-passed Tax Relief for American Families and Workers Act of 2024 (H.R. 7024). Another possibility is a procedural floor vote forced by Senate Majority Leader Charles E. Schumer, D-N.Y., to bring the existing stand-alone tax bill to the floor.
This article is about the tax bill that passed the House in January. It includes R&D expensing for domestic costs, upping bonus depreciation to 100% and expanding the business interest deduction.
If the bill gets a vote will it even matter?
Bipartisan $78 Billion Tax Deal Hits GOP Roadblock in US Senate – Erik Wasson and Samantha Handler, Bloomberg:
Senate Republicans are poised to sink a $78 billion tax-cut package, gambling that they’ll win the majority in November and can push then for bigger breaks for business.
They also don’t want to hand President Joe Biden an election-year victory on the legislation, which includes both child and business tax breaks, lawmakers and aides have said.
Translation: If Senate Majority Leader Chuck Schumer (D-NY) calls for a vote on the House-passed tax bill it will not pass. If it doesn’t pass the Senate, it does not become law.
Truth be told the tax bill is not a top priority right now on Capitol Hill.
Biden heads to Baltimore as Congress faces a trio of big tests - Andrew Desiderio, Jake Sherman and John Bresnahan, Punchbowl News ($). “The House and Senate will return from recess next week facing an increasingly volatile geopolitical climate. There are three issues that lawmakers will have to contend with right away — Israel, Ukraine and the renewal of Section 702 of FISA, the federal statute that oversees how U.S. intelligence agencies conduct surveillance on foreign targets outside the country.”
Biden Takes Aim at SpaceX’s Tax-Free Ride in American Airspace – Minho Kim, New York Times. Expanding the tax base is an age-old game in D.C. Is it going intergalactic?
Commercial space companies are exempt from aviation excise taxes that fill the coffers of the Airport and Airway Trust Fund, which pays for the F.A.A.’s work and will get roughly $18 billion in tax revenues for the current fiscal year. The taxes are paid primarily by commercial airlines, which are charged 7.5 percent of each ticket price and an additional fee of about $5 to $20 per passenger, depending on the destination of each flight.
Mr. Biden’s budget proposal vows to work with Congress to overhaul the tax structure and split the cost of operating the nation’s air traffic control system. His promise is based in part on an independent safety review report commissioned by the F.A.A., which advises that the federal government update the excise taxes to charge commercial space companies.
Project Owners Eager To Sell Energy Tax Credits, Report Says – Kat Lucero, Law360 Tax Authority ($):
Project owners are pursuing new financing strategies that would support the early sale of their clean energy tax credits as more projects in their initial development stage this year seek to capitalize on the incentives as early as possible, a report released Thursday said.
Owners have been soliciting bids for credits for sale in 2025 and later tax years, adding to the growing supply of salable credits in a market that emerged after the IRS implemented transferability, a new monetization method enacted as part of the 2022 climate law, Crux Climate said in a report. Crux Climate, a startup, provides an online platform for the emerging market for salable credits.
IRS Updates
The Internal Revenue Service announced today tax relief for individuals and businesses in parts of Maine affected by severe storms and flooding that began on Jan. 9, 2024.
These taxpayers now have until July 15, 2024, to file various federal individual and business tax returns and make payments.
The Internal Revenue Service announced today tax relief for individuals and businesses in parts of Rhode Island that were affected by severe storms and flooding that began on Dec. 17, 2023, and Jan. 9, 2024.
These taxpayers now have until July 15, 2024, to file various federal individual and business tax returns and make tax payments.
IRS Warns of Fake Charities Eager to Line Their Own Pockets – Tax Notes. “The IRS has reminded (IR-2024-92) taxpayers that groups may pretend to be charitable organizations to receive donations, noting that taxpayers should verify the legitimacy of the charity and avoid charities that request gift card numbers or wire transfers.”
IRS release is here.
Navigate the IRS audit storm: Essential extension strategies for partnerships – Tom Wheelwright, Accounting Today ($) (opinion):
CPAs who serve as tax advisors to entrepreneurs and investors have a lot of worried clients these days, and with good reason.
The Internal Revenue Service is using billions of dollars in new funding from the Inflation Reduction Act for audits and artificial intelligence-powered scrutiny of tax returns. A sizable chunk of this enforcement effort is aimed at partnerships, one of the most common business structures across many sectors, including business, agriculture, energy and real estate.
Court Side
Jury Clears Exec From Penalties In Captive Insurance Case – David van den Berg, Law360 Tax Authority ($):
An insurance executive and three of his companies won't face tax penalties for promoting an illegitimate insurance arrangement, a Florida federal jury ruled Thursday.
The jury cleared Raymond Ankner and three of his companies — CJA and Associates Inc., RMC Property & Casualty Ltd. and RMC Consultants Ltd. — from penalties under Internal Revenue Code Section 6700 , which governs promotion of abusive tax shelters, according to the verdict.
Former IRS Appraiser Swings and Misses on Wrongful Firing Appeal – Mary Katherine Browne, Tax Notes ($):
The IRS correctly decided to fire an appraiser who played golf during work hours on 168 occasions, misused his paid sick leave, and attempted to cover it up when investigated, a circuit court found.
In an April 3 opinion in Sheiman v. Treasury, the Federal Circuit affirmed the judgment of the Merit Systems Protection Board that removed Michael E. Sheiman from his position as an IRS senior appraiser in Honolulu.
IRS Penalties Proper In $11B Amgen Dispute, Tax Court Says – Dylan Moroses, Law360 Tax Authority ($):
The Internal Revenue Service properly authorized penalties included in a tax bill of nearly $11 billion that drugmaker Amgen is challenging, the U.S. Tax Court said Thursday.
The IRS agents gained proper supervisor approval in asserting the penalties associated with Amgen's tax bill under dispute, according to the Tax Court's opinion in favor of the government's motion for partial summary judgment.
Attys Awarded $1.5M In Fees On Tax Disclosure Suit – David Hansen, Law360 Tax Authority ($):
Attorneys who won a $4.5 million settlement for a class of investors claiming a Chinese startup misrepresented its tax liability will receive their requested $1.5 million in attorney fees, a New York federal judge ruled.
The court also awarded $309,000 in litigation costs and $30,000 in payments to the two lead plaintiffs for representing the class, according to an order issued Wednesday. The fees, costs and payments will be paid out of the settlement fund.
Refusal to Quash IRS Summons Is Upheld in Spain's Tax Inquiry – Tax Notes. "The Eleventh Circuit affirmed a district court’s dismissal of an individual’s petition to quash an IRS summons issued to a bank for his account information at the request of Spanish authorities under the Spain-U.S. tax treaty, finding that nonresident taxpayers are covered by the treaty and the goal of the Spanish investigation is irrelevant to whether the IRS acted in good faith."
International Zone
Companies In Limbo As IRS Mulls Waiver For 15% Book Tax – Stephen Cooper, Law360 Tax Authority ($):
Corporations preparing for their quarterly estimated taxes are uncertain about paying a15% alternative minimum tax due on April 15, since the Internal Revenue Service granted waivers last year and has yet to release proposed regulations that officials have promised since October.
The IRS waived penalties tied to the corporate alternative minimum tax for 2023 in June, due to the difficulty in determining whether an entity is subject to the tax and the amount of the levy owed. In the interest of "sound tax policy," the agency said it granted relief for corporations that failed to pay their estimated liability under the corporate AMT, also known as the CAMT or the corporate book tax.
Boosted IRS Enforcement Prompts Warnings of Audit Triggers – Erin Schilling, Bloomberg ($):
Companies should be extra careful with their transfer pricing activity and research and development credit claims because they could trigger an IRS audit as the agency ramps up efforts against tax dodging after decades of underfunding, tax practitioners are telling clients.
The IRS has announced it would focus audit efforts on partnerships, corporate jets, and high-income non-filers thanks to its tens of billions of dollars in funding from the 2022 tax-and-climate law. The campaigns are part of a broader goal to reduce the gap between taxes paid and owed by targeting non-compliance from wealthy individuals and businesses.
But there are also activities outside of the enforcement initiatives unveiled in recent months that could put taxpayers on the IRS’s radar, practitioners said. These include inconsistencies or significant differences in tax forms, foreign activity, and certain tax credits.
From the “Mark Your Calendar” file
Chairman Smith Announces Hearing on Expanding on the Success of the 2017 Tax Relief to Help Hardworking Americans – House Ways and Means Committee:
House Committee on Ways and Means Chairman Jason Smith (MO-08) announced today that the Committee will hold a hearing to highlight the benefits of GOP tax reform and discuss the path forward for tax policy ahead of 2025. The hearing will take place on Thursday, April 11, 2024, at 2:00 PM in 1100 Longworth House Office Building.
And so the 2025 tax debate begins! Is it also a sign that the current tax bill stalled in the Senate is no longer a priority? Have congressional tax-writers moved on? Time will tell.
What Day Is It?
Sorry (Not Sorry) New Yorkers. It’s National Deep Dish Pizza Day! This delectable dish hails from Chicago and has notoriously been described as a “casserole” to be eaten with a fork. I’m ok with that! My first slice of New York style pizza was folded in half and shoved into a brown paper bag before it was handed to me. The horror!