October 7, 2020
Trump Sends Mixed Messages Over Covid-19 Stimulus - Kristina Peterson, Andrew Duehren and Nick Timiraos, Wall Street Journal ($). "President Trump pulled the plug on ongoing bipartisan coronavirus relief talks in an abrupt move that jolted Wall Street and surprised lawmakers of both parties, but hours later called on Congress to approve a bill providing another direct check to many Americans."
Trump Abandons Coronavirus Relief Negotiations - Jad Chamseddine, Tax Notes:
President Trump has instructed White House officials to stop negotiating with congressional Democrats over another COVID-19 relief package, ending hopes of injecting more money into the Paycheck Protection Program and expanding the employee retention tax credit.
In a series of tweets October 6, Trump blamed Democrats for refusing to take a $1.6 trillion offer made by the administration the week of September 28 and instead holding out for the more costly Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act (H.R. 925), which the House passed October 1.
IRS Rolls Out Campaign Targeting Nonresident Rental Income, Again - Andrew Velarde, Tax Notes ($):
NRAs [Nonresident aliens] who own U.S. rental property are subject to a 30 percent withholding tax on gross rent unless an election is made to treat the income as effectively connected to a U.S. trade or business.
The NRA rental campaign follows September’s announcement that LB&I would also be targeting NRAs' compliance with the reporting requirements of the 1980 Foreign Investment in Real Property Tax Act for foreign persons that dispose of their U.S. real property interest.
While targeting non-resident owners of real estate, there are related issues for U.S. taxpayers. The 30% withholding on gross rent makes it important for U.S. commercial tenants to obtain a form W-8 ECI from foreign landloards to show that the landlord will treat the rent as "effectively connected" income. Also, real estate purchases should get sellers to certify that they are not non-resident aliens subject to withholding on their sale proceeds. Failure to get such certification can leave the tenant or the buyer holding the bag for the withholding.
Eide Bailly's Shannon Lemmon has more information.
Why Cybersecurity Awareness in the Workplace is Everyone’s Business - Jason Olson, Eide Bailly. "To truly implement a culture of cybersecurity awareness, you must make it a daily intention rather than a hopeful suggestion."
Interview: Analyzing the President’s Tax Returns - Tax Notes Opinions. "Tax Notes contributing editor Joseph J. Thorndike and University of Iowa law professor Andy Grewal take a closer look at the The New York Times reporting on President Trump’s tax returns."
PPP Guidance Eases Some Obstacles in M&A Deals - Emily Foster, Tax Notes ($). "According to the SBA notice, there are no restrictions on transactions involving the sale or transfer of an ownership interest of a PPP borrower if the note is paid in full before closing. That includes situations in which the borrower has completed the loan forgiveness process and the SBA has either remitted funds to the lender in full satisfaction of the note or the PPP borrower has repaid any remaining balance."
Tax Agency Watchdog Is Investigating IRS Use of Cellphone Location Data - Byron Tau, Wall Street Journal ($). "The use of a tool that collects the location records of millions of U.S. cellphones has raised privacy and civil liberties concerns about the bulk collection of Americans’ personal data and its use by law enforcement."
State and Local Tax Ballot Measures to Watch on Election Day 2020 - Jared Walczak, Katherine Loughead, Ulrik Boesen and Janelle Cammenga, Tax Policy Blog. Many of these initiatives are in Eide Bailly states. These include:
Arizona Proposition 207 would legalize recreational marijuana and tax retail sales at 16 percent of retail price. Arizona forecasts roughly $166 million in excise tax revenue when the market has matured, and this revenue would be allocated to community colleges, police departments, fire departments, transportation funding, and a new Justice Reinvestment fund. Click here for the Tax Foundation’s full analysis.
California Proposition 15 would undo the protections of California’s Proposition 13 and introduce “split roll” property taxation—commercial properties would be assessed on their market value, while residential properties would continue being assessed on purchase price.
Colorado Proposition 116 would reduce the income tax rate from 4.63 percent to 4.55 percent on both the individual and corporate sides. The tax cut would be retroactive to January 1, 2020, meaning taxpayers would benefit from the relief starting this year. Click here for the Tax Foundation’s full analysis.
Montana I-190 would legalize the sale of recreational marijuana, taxed at 20 percent of the retail price.
South Dakota Amendment A would legalize the recreational use of marijuana and impose an excise tax of 15 percent of sales price.
Illinois also has a controversial constitutional amendment to impose a graduated income tax on the ballot.
Clinton County, Iowa added to counties eligible for deferred filing for Derecho disaster. The IRS yesterday added Clinton county to the list of counties eligible for tax deadline relief as a result of the August 10 windstorms. All returns otherwise due after August 10 for taxpayers in those counties are now due December 15, 2020. These include extended 1065 and 1120-S calendar 2019 filings and extended 1040s.
The other Iowa counties already eligible for the relief are Benton, Boone, Cedar, Jasper, Linn, Marshall, Polk, Poweshiek, Scott, Story, and Tama.
IRS Free File sees record use in 2020 filing season - Kay Bell, Don't Mess With Taxes. "This filing season, IRS Free File online products marked a 50 percent increase over last year."
Bad Dates Followed by Bad Inserts - Keith Fogg, Procedurally Taxing. "One of the excuses the IRS put forward in conjunction with the relatively quiet announcement that it would send out a high volume of notices with bad dates involved the stuffers that it would put in each envelope."
Taxpayer Has No Recourse For Excess Medicare Tax Withheld When Deferred Compensation Not Paid in Full - Ed Zollars, Current Federal Tax Developments. "Life can be unfair, and the tax law even more so."
What to Do When Your Ex Wrongly Claims the Kids - Jason Dinesen. "Drill this into your head: THE IRS DOESN’T CARE ABOUT YOUR DIVORCE DECREE!"
IRS Seizures: The Good, the Bad, and the Ugly - Jason Freeman, Freeman Law. "TIGTA’s findings underscore the need for competent legal counsel when facing a potential IRS levy or seizure."
The Reality of Incomes, Taxes and Redistribution in America - Scott Lincicome, Cato Institute. "First... the CBO shows that total annual federal taxes — income, payroll, corporate, and excise — paid by the richest Americans (households making around $300,000/year or more) have basically doubled since 1979.
Judge Amy Coney Barrett Appropriately Defers to the Tax Court’s Factual Findings and Closely Follows Precedent in Recent Tax Opinion for the Seventh Circuit - Chaim Gordon. "Would Judge Barrett be more sympathetic to taxpayers’ arguments in cases involving large corporate taxpayers that properly document their transactions and keep regular business records? That remains to be seen."
Today in Tax History. A riot broke out in Alkmaar, The Netherlands (History Guffaw):
On October 7, 1714, the good people of Alkmaar in the Netherlands went insane and started rioting. Why? Were the financers and bankers in Alkmaar getting large taxpayer funded bailouts? Did the protest the involvement of Netherlands in distant lands (Suriname/Indonesia)? Little representation in government (this was the 1700’s)? No, none of that. Alkmaar levied a beer tax.The only way a government can tax a Heineken or Amstel Light is from a cold, dead hand. Let’s break stuff!
I can't condone this 306-year old mayhem, but I understand.
This is a roundup of tax news and opinion. Any opinions expressed or implied are those of the author and not necessarily those of Eide Bailly. Opinions found in linked items are those of the authors of the linked item, not of your bloggers or of Eide Bailly. “$” means link may be behind a paywall. Items here do not constitute tax advice.
Take a deeper dive into this Insight’s subject matter.International Tax