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Key Takeaways
- Data leaks from IRS infuriate Taxpayers.
- But Free-File went well.
- Following the wrong law.
- Exemption Status Could be on the Line.
- Court updates.
- Pushing Trade Leader on Tax Adjustments.
- Lobby-Shop Gold.
- Smell the Peace Rose.
IRS Leak Leaves Rich Taxpayers Frustrated With Few Legal Options - Erin Schilling, Bloomberg ($):
The IRS sent letters to wealthy taxpayers this month informing them that they were affected by a theft of tax information carried out by a former agency contractor who also took the returns of former President Donald Trump and many high-profile billionaires.
While not wealthy, yours truly had my tax information stolen from the IRS roughly ten years ago. My information remains on the Dark Web and I continue to get harassing phone calls saying that “officials” will come to my house and arrest me if I don’t pay up. I wasn’t given the option to sue the IRS.
IRS To Decide Soon On Renewal Of E-File Pilot Program – David van den Berg, Law360 Tax Authority ($):
The agency will meet with various "partners and stakeholders" in the coming weeks regarding the pilot program, and responses from those talks and project data will help the agency determine the program's future, Werfel told reporters. The agency has been gathering data and user feedback since the pilot began and is studying it, Werfel said.
Direct File pilot officially closes after more than 140,000 taxpayers successfully use direct e-filing system in 12 states, including integration with 4 state tax systems – IRS. “The Internal Revenue Service announced the closure of the Direct File pilot with several hundred thousand taxpayers across 12 states signing up for Direct File accounts, and 140,803 taxpayers filing their federal tax returns using the new service.”
The IRS as Legislator: Are Things Working as They Should? – Monte Jackel, Tax Notes ($):
The point: "[I]f Congress makes a drafting mistake that means following the literal words of the statute would produce unintended results, must the statute still be applied exactly as written?"
Tax Exempts
Speaker Johnson calls on Columbia University president to resign and threatens federal funding for colleges – Scott Wong, Peter Nicholas and Stephanie Gosk, NBC News:
One consequence for not doing as told could be the school losing its tax status.
The effort to restrict or remove the tax exempt status from colleges and universities has been a goal for quite a long time. One could argue that the current tumult is being used as an excuse to revoke the tax policy.
Court Side
IRS Sees Flaws in Asset Values of Skin Care Inventor’s Estate – Erin McManus, Tax Notes ($):
The valuation and ownership of shares in a limited liability company, inventory of the antiaging product, Ethocyn, along with furnishings, motor vehicles, guns, art, and other assets are all being disputed by the IRS in its April 11 answer filed with the Tax Court in Estate of Burnison v. Commissioner.
4 More Indicted In Alleged Abusive Trust Tax Scheme – Anna Scott Farrell, Law360 Tax Authority ($). “A federal grand jury in Denver indicted four more people in connection with what prosecutors call a conspiracy to defraud the government in a multistate scheme to promote abusive tax shelters using sham trusts to hide business income and illegally deduct personal expenses such as family weddings.”
Abbott Labs' $417M IRS Bill Isn't Wrong, Tax Court Told – David Hansen, Law360 Tax Authority ($):
In a point-by-point response filed Thursday, the agency rejected Abbott's claims that it incorrectly added billions of dollars to Abbott's income by erroneously adjusting stock-based compensation, royalty payments and amortization deductions among other miscellaneous adjustments when computing the company's liability for the 2019 tax year.
Ex-Moody's GC Cops To Tax-Filing Fail On $54M Paycheck – Carla Baranauckas, Law360 Tax Authority ($). “The former general counsel for Moody's Corp. has pled guilty to willfully failing to file federal income tax returns for four years in which he collected $54 million in income, federal prosecutors announced Friday.”
International Zone
Ways and Means GOP Warn of Tax Implications of USTR Digital Move - Samantha Handler, Bloomberg ($):
Feenstra, along with nine other GOP lawmakers, wrote that they are also concerned about the tax policy implications. The policy seems to contradict Treasury’s position in Pillar One negotiations at the Organization for Economic Cooperation and Development, the lawmakers said. The Republicans, too, still have issues with the 2021 global tax deal’s Pillar One, which seeks to reallocate multinationals’ residual income to market jurisdictions.
How New Transition Rules Coordinate Foreign Branch Guidance – Carrie Brandon Elliot, Tax Notes ($). “Proposed regs issued November 14, 2023 (REG-132422-17), provide taxpayers with rules that address how to transition from previous section 987 guidance to the new rules for foreign branch gains and losses. The transition rules coordinate application of previous versions of the section 987 regs with the proposed regs’ new rules.”
From the “Money Pit” file
Still-Stalled Business Break Tax Bill Helped Drive Lobbying Jump - Chris Cioffi and Samantha Handler, Bloomberg ($):
Filings from heavy hitters like the US Chamber of Commerce and the Business Roundtable showed a boost in spending, including on advocacy for the tax bill. At least 340 companies and groups listed the legislation in their lobbying filings, representing interests ranging from housing and child welfare advocates to universities, county governments, and industry groups.
Money flowed to lobby shops to enact the “Tax Relief for American Families and Workers Act of 2024,” which includes R&D expensing, expanding the 163(j) interest deduction and upping Bonus Depreciation. The bill passed the House but has stalled in the Senate.
Now, lobby shops are turning their focus to the 2025 tax fight, which will be huge. This fight will be about extending provisions in the Tax Cuts and Jobs Act (TCJA) and it could extend into 2026 or even 2027.
Tax staffers also expect any extension of TCJA provisions to be for a single year, meaning lawmakers will bicker about TCJA extensions every-single-year. This means that lobby shops will be lobbying for their clients every-single-year, and clients will be paying them for this service every-single-month. That means fat monthly checks will be flowing to lobby shops for years to come.
Legislation that extends TCJA provisions should be called the “Making Lobby Shops Permanent Act.”
What Day Is It
Happy National Peace Rose Day! This flower has an interesting history. National Day Calendar: