Tax News Roundup - January 24

January 24, 2020

This is a roundup of tax news and opinion. Opinions found at the link are those of the authors of the linked item, not of your bloggers or of Eide Bailly. “$” means link may be behind a paywall.

Treasury Hopes to Release Final Interest Limit Rules as Package - Eric Yauch, Tax Analysts  ($)

The Tax Cuts and Jobs Act limited the business interest expense deduction to the sum of business interest income, 30 percent of adjusted taxable income, and floor plan financing interest. Taxpayers may indefinitely carry forward business interest expense not allowed as a deduction for any tax year...

Some of the issues that remain unresolved, specifically for partnerships, are the treatment of self-charged interest and what happens in the tiered partnership context. 

This is a big and underappreciated part of the 2017 TCJA tax law changes - but it will be much more appreciated when it fully takes effect in 2022. Some details here.

The IRS and OMB Seem to Be Getting Along - Marie Sapirie, Tax Notes Opinions. "When President Trump issued Executive Order 13789 in 2017, which began the process that ended Treasury’s 34-year claim that its tax rules weren't subject to review by the Office of Management and Budget's Office of Information and Regulatory Affairs, tax practitioners and taxpayers were concerned that the change might mean even longer delays in releasing guidance to the public."

2020 Legislative Agenda Shapes Up Similarly to Last Year - Jad Chamseddine, Tax Notes ($):

Democrats want to expand refundable credits, such as the earned income and child tax credits, making them more accessible to a larger number of low-income families. “If we can reach an agreement there, then all technical corrections are fair game,” Grossman said.

This has been a hurdle during negotiations with Republicans who refuse to further expand refundable credits beyond changes made in the TCJA. But Senate Finance Committee Chair Chuck Grassley, R-Iowa, is willing to listen, according to Mark Warren, chief tax counsel for the committee’s majority.

It didn't work last year. Maybe an election year will be different.

Tax Chiefs Combine Forces In Global Tax Evasion Fight - Kelly Phillips Erb, Forbes. “Tax cheats in the US and abroad should be on notice that their days of non-compliance are over.”

The Impact of a Financial Transactions Tax - Colin Miller and Anna Tyger, Tax Policy Blog. "Many FTTs have been enacted and subsequently repealed. If the U.S. enacts an FTT and it drives current market participants out of the market entirely, the tax could cause lasting damage to the U.S. financial system even if it is later repealed."

Related: Financial Transaction Taxes in Europe

Inequality Is A Big And Growing Issue, But A Wealth Tax May Not Be The Solution - Howard Gleckman, TaxVox. "Not only would a tax on the assets of the super-wealthy create administrative complexity, but it is also may result in a number of unanticipated consequences. And it is unlikely to achieve a key stated goal of some of its leading proponents—to reduce the political influence of the rich."

Campaign suspended. Michael Avenatti, Arrested by IRS agents and Accused of Violating Bail Terms, to Remain in Jail, Judge Rules - Washington Post ($) via TaxProf Blog

Michael Avenatti, the attorney who rose to prominence as the legal counsel for adult-film actress Stormy Daniels during her lawsuit against President Trump over a hush-money deal, will remain in jail following his rearrest by IRS agents, a judge in Los Angeles ruled Wednesday after prosecutors alleged he continued to commit financial crimes while out on bail.

Avenatti — who is accused of extorting athletic apparel maker Nike for up to $25 million and stealing millions of dollars from those he once represented, including Daniels — was arrested Tuesday evening while appearing before the State Bar Court in Los Angeles, in the middle of a disciplinary hearing alleging he stole about $840,000 from a former client.

Among the charges are allegations relating to failing to report embezzled income, failure to file returns, and failure to remit withheld taxes from businesses he controlled. 

Mr. Avenatti was briefly touted as a presidential candidate. He now has other plans.

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