Tax News & Views Arbor Day Roundup

Trump: I ‘love the concept’ of millionaire tax hike, but ‘may not be acceptable to the public’ - Brett Samuels, The Hill:

Asked if a tax increase on the wealthy would help cover the cost of campaign proposals such as eliminating taxes on tipped wages, overtime wages and Social Security, Trump reiterated that he “would not mind personally paying more.” “But the concept is something that may not be acceptable to the public,” the president said. Trump told reporters on Wednesday that a tax increase on millionaires “would be very disruptive, because a lot of the millionaires would leave the country.”

Three Ways To Raise Revenues By Increasing Taxes on Capital Gains and Wealth of High-Income Taxpayers - Janet Holtzblatt, Tax Policy Center:

A new tax hike on high-income taxpayers might seem politically implausible but calls for one continue. Among the supporters are some Republican senators, who favor extending provisions of the Tax Cuts and Jobs Act and enacting other priorities but are also worried about the impact of unfettered spending and tax cuts on the federal debt.

Happening at the IRS

IRS turmoil: Leadership churn, worker exodus and threats to groups’ tax-exempt status roil agency - Fatima Hussein, AP News:

The agency shuffled through three acting directors over the course of a week. It’s preparing to lose tens of thousands of workers to layoffs and voluntary retirements. And President Donald Trump is weighing in on which nonprofits should lose their tax-exempt status, an incursion into the agency’s typically apolitical stance that threatens to further erode trust in federal institutions and weaponize enforcement efforts.

Just three months into Trump’s second term, the government’s fly-under-the-radar tax collector has become the latest platform for the Republican administration’s vision to cut and control the federal bureaucracy. Tax policy experts fear that taxpayer services and collection efforts will face prolonged delays as a result of the rapid changes.

Blogs and Bits

Tax records: What to keep and for how long - Kay Bell, Don't Mess with Taxes:

The IRS is fine with electronic record storage as long as it meet the same standards it applies to hard copy books and records. That means when you replace the paper versions, you must maintain the electronic storage systems for as long as they might be needed under the tax statutes of limitation.

The bottom line is to choose a record keeping method, implement it, and stick with it each passing tax year. It’s tax insurance that you hope you never need, but are glad to have if the worst ever happens.

In the Courts

Navigating ERISA Prohibited Transaction Claims: A Deep Dive into Cunningham v. Cornell University - Ed Zollars, Current Federal Tax Developments:

As CPAs in tax practice, while our primary focus may not always be on the Employee Retirement Income Security Act of 1974 (ERISA), understanding its intricacies, particularly concerning retirement plans, is crucial as plans covered by ERISA are often part of tax planning for our business clients.

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The Supreme Court’s decision in Cunningham v. Cornell University reaffirms the established principles of statutory interpretation and clarifies the pleading burden in ERISA prohibited transaction claims. Plaintiffs alleging a violation of § 1106(a)(1)(C) need only plausibly allege the elements of that section. They are not required to anticipate and negate the applicability of any of the exemptions listed in § 1108. These exemptions, including the one for necessary services with reasonable compensation in § 1108(b)(2)(A), are affirmative defenses that the defendant fiduciaries bear the burden of pleading and proving.

Tax Policy

Businesses Pay and Remit 87 Percent of All Taxes Collected in Europe - Cristina Enache, Tax Foundation:

A recent report from the Tax Foundation reveals that European countries’ tax systems significantly depend on businesses. Businesses contribute significantly to tax collection both through taxes they are legally liable to pay and taxes they are required to collect and remit on behalf of others. In Europe, businesses either pay or remit 87 percent of all the taxes collected. Without businesses as their taxpayers and tax collectors, governments would not have the resources to provide even the most basic services.

How Pillar 2 and International Tax Reforms Affect US Multinational Taxes - Thomas Brosy, Tax Policy Center:

Although the United States has indicated it will not join a global tax deal brokered by the OECD, most developed economies and several other countries and jurisdictions are well underway to implementing a key element of the agreement – a global minimum tax of 15 percent, also known as Pillar 2.

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Our estimates show that Pillar 2 works as intended: US multinationals engaging in profit-shifting or reporting profits in low-tax jurisdictions will face higher tax burdens. Multinationals that do limited profit-shifting will see little or no increase in their tax burdens.

Think Tank Says Tariffs Hit Lower-Income Workers Hardest - Dylan Moroses, Law 360 Tax Authority ($):

The institute's latest analysis, published Wednesday, indicates that if those tariffs remain in place until next year, the quintile of U.S. workers with annual incomes below $29,000 would face a tax increase equal to 6.2% of their income, while the richest 1% of U.S. income earners would face an increase amounting to 1.7% of their income.

Tax Trouble

Gov't Stands By $1.7M In FBAR Penalties Against Texan - David Hansen, Law 360 Tax Authority ($):

Constitutional law does not stop the U.S. from imposing $1.7 million in penalties against a Texan for failure to report foreign bank accounts, the U.S. told a federal court in arguing against the "myriad" of arguments she has made to dismiss the case.

What day is it?

Time to plant a tree? Just a few days after Earth Day, today is National Arbor Day!