Tax News & Views Tax Extenders and Dog Roundup

Lengthy Tax Extender Wish List Awaits Lame-Duck Session - Tax Notes ($):

The long list of extenders had earlier been projected to cost about $15 billion, but delays, expansion, and retroactivity ballooned the final price tag to $51 billion (JCX-54R-19). That included $15 billion for biodiesel tax breaks that had expired at the end of 2017, resulting in windfall checks to biodiesel producers that went as high as $450 million. It also included $12.8 billion for disaster tax relief.

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Another factor tipping the scales toward an active extender season is the large number of Senate Finance Committee Democrats who are resigning and may make a last push for their favorite tax legislation, said Anna Taylor of Deloitte Tax LLP. Longtime Senate Democratic taxwriters Debbie Stabenow of Michigan, Thomas R. Carper of Delaware, and Benjamin L. Cardin of Maryland are not running for reelection.

How many millionaires? Tax returns by income group for 2024 - Editorial Staff, Accounting Today. "Tax season ended on April 15 and the six-month extension deadline is approaching in October. As of May 23, there were 132,270,182 total tax returns filed with the Internal Revenue Service. Measured by income group, those who made between $50,000 and $75,000 filed the most returns, at 15.69% of the total filed. Those in the $1,000,000-or-more group filed only 0.22% of the total."

IRS Spinoff Guidance Sparks Worries About Short-Term Debt - Natalie Olivo, Law 360 Tax Authority ($): "Companies that intend to give creditors equity tied to a spinoff transaction won't get early tax-free approval if the exchange involves recently acquired debt under IRS guidance that practitioners say draws an arbitrary line without accounting for ordinary business operations."

Senators Scold IRS for 'Insulting' Response to Antisemitism Inquiry - Fred Stokeld, Tax Notes ($):

Republican senators are renewing their demand that the IRS investigate tax-exempt organizations that allegedly supported antisemitism on college campuses and blasting the agency for what they say has been an insufficient response to their initial request.

“The tone and brevity of your interim response is troubling, leaving us questioning the value of the information you provided and how serious your office takes oversight inquiries,” five senators, including Finance Committee members John Thune, R-S.D., and Marsha Blackburn, R-Tenn., told IRS Commissioner Daniel Werfel in an August 22 letter, referring to the IRS’s response to the senators’ May 9 request that the agency investigate the funders of alleged criminal activities on college campuses.

Blogs and Bits

IRS provides relief to Ernesto victims throughout Puerto Rico; various deadlines postponed to Feb. 3, 2023 - IRS. "The Internal Revenue Service announced today tax relief for individuals and businesses throughout Puerto Rico affected by Tropical Storm Ernesto that began on Aug. 13, 2024. These taxpayers now have until Feb. 3, 2025, to file various federal individual and business tax returns and make tax payments."

IRS provides relief to South Dakota victims of severe storms, straight-line winds, flooding; various deadlines postponed to Feb. 3, 2025 - IRS. "The Internal Revenue Service announced today tax relief for individuals and businesses in South Dakota that were affected by severe storms, straight-line winds and flooding that began on June 16, 2024. These taxpayers now have until Feb. 3, 2025, to file various federal individual and business tax returns and make tax payments."

Organizations Lose Charitable Donee Status - Tax Analysts, Tax Notes ($). "The IRS has listed (Announcement 2024-32, 2024-35 IRB 535) organizations that no longer qualify as charitable donees under sections 501(c)(3) and 170(c)(2)."

IRS Publishes 2024 Interest Rates for Special Use Value of Farms - Tax Analysts, Tax Notes ($). "The IRS has published (Rev. Rul. 2024-16, 2024-35 IRB 534) a list of the 2024 average annual effective interest rates on new loans under the Farm Credit System for purposes of computing the special use value of real property used as a farm for which an election is made under section 2032A."

Taxes on the Campaign Trail

How a Corporate Tax Rate Change Could Impact Companies Growth, Investment - Jennifer Williams, The Wall Street Journal:

Vice President Kamala Harris has endorsed increasing the levy, currently at 21%, to 28%, echoing what the Biden administration has proposed. Republican presidential nominee Donald Trump, meanwhile, recently told executives he wanted a 20% corporate tax rate and has floated a levy as low as 15%. Neither may get the respective rates if their party doesn’t gain full power of Congress.

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A higher tax rate now would be more punishing than it would have been 10 years ago. That is because the 2017 cut to 21% broadened the tax base, meaning more income is taxed at a certain threshold. Finance chiefs are looking at the potential impacts of a higher levy on companies’ balance sheets, including cash flow, investment strategies and whether price tags for consumer products will rise to offset bigger tax bills, CFOs and tax advisers say.

Trump: You Can Keep 100 Percent of Tips - Alexander Rifaat, Tax Notes ($):

Speaking at a rally in Las Vegas August 23, the Republican presidential nominee appeared to suggest that he wants to exclude tips not only from income taxes but also payroll, Social Security, and Medicare taxes.

“We are going to let you keep 100 percent of your tip income,” Trump said.

While both Trump and Vice President Harris have come out in favor of eliminating taxes on tips in some form, tax policy observers have warned that it could hurt service workers in the long term if they aren’t paying into benefit programs such as Social Security and Medicare.

There Is No Kamala Harris Golf Tax - But Maybe There Should be One - Andrew Leahey, Forbes:

There has been much made on social media in the last twenty-four hours of a supposed proposal by the Harris administration for a 20% excise tax on all things related to golf. As with so many things on the internet, it appears to have no basis in fact and originates from a parody account on Twitter/X.

Covid-19 Fraud Scheme

Over 20 defendants sentenced to prison in multimillion dollar national COVID-19 fraud scheme - IRS (Defendant names omitted):

Defendant of Charlotte, and Defendant of New Jersey, had both obtained a fraudulent PPPs loan on behalf of their purported janitorial and cleaning services companies. As of today, 22 defendants have now been sentenced to prison for their role in the scheme. To date, an additional nine defendants have pled guilty to this scheme in the Eastern District of North Carolina and are awaiting sentencing.

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Defendants created fraudulent supporting documents and applications for each PPP loan in exchange for 25% of the total loan proceeds. The fraudulent applications grossly inflated the number of employees and wages being paid prior to the COVID-19 pandemic by backdating fraudulent IRS forms. Following the disbursement of the PPP loans, Defendant gave each defendant, via text messages subsequently obtained by law enforcement, detailed instructions as to how to make it appear that the PPP loans were being paid out to employees. In reality, most or all of the money was transferred back to the defendants. The fraudulent payroll records were then submitted to the Small Business Administration (SBA) to obtain 100% loan forgiveness.

What Day is It?

To all of our furry friends; happy National Dog Day!