Tax News & Views Owner Disclosure Roundup

December 7, 2020

Boom. Dan McNeil is preoccupied with welcoming a new family member. He will return to Roundup duty when he needs to get some sleep. 

Tax Evasion Measure Makes It Into Bipartisan Defense Bill - Jad Chamseddine, Tax Notes. "But not everyone is hailing the inclusion of improved anti-money laundering rules and beneficial reporting requirements in the NDAA. Some of its fiercest critics say it disadvantages small businesses that are unable to keep up with the legislation’s regulatory requirements."

Among the provisions, as explained in the National Law Review:

The Corporate Transparency Act of 2019 would amend the Bank Secrecy Act to require any person applying to form a corporation or limited liability company under state or Native American tribal law to file a list of the beneficial owners of the corporation or LLC with the US Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). Non-US entities registering to do business as a corporation or LLC under state or tribal law would be required to file similar reports. Beneficial ownership information collected by FinCEN would be retained for five years and made available to federal, state, tribal, and local law enforcement agencies, and with their customer’s consent, to financial institutions to assist such institutions in their compliance with the customer due diligence requirements of the Bank Secrecy Act. 

FinCEN, the "Financial Crimes Enforcement Network," is the same agency that you have to file reports of foreign financial accounts with. And as with FBAR reporting, this bill provides $10,000 penalties for failure to disclose. Given that any entities filing as partnerships or disregarded entities are already required to report this information to the IRS with their tax returns, it isn't clear what the benefit of filing the same information with FinCEN will be. Even so, the provision is expected to be signed into law, according to the Tax Notes article.


This Week, or Next, for Federal Funding and Coronavirus Relief? - Renu Zaretsky, Daily Deduction. "On Friday, House Speaker Nancy Pelosi indicated she and Senate Majority Leader Mitch McConnell agreed to  attach a coronavirus relief bill to the $1.4 trillion spending package needed to fund the government after December 11. But negotiations continue over details of both the spending bill and coronavirus relief. A one-week continuing resolution to keep the government funded is likely."

Any such bill may reverse the Treasury's disallowance of deductions for expenses resulting in PPP loan forgiveness. It would be nice if they got something done before the December 15 deadline for fourth quarter corporate estimated tax payments.

Lawmakers Look to Short-Term Funding Measure as Spending Talks Continue - Kristina Peterson, Wall Street Journal ($):

Senior lawmakers on the appropriations committee had been signaling last week that the full-year spending bill needed more work and likely wouldn’t be ready by the Dec. 11 deadline. Republicans and Democrats have been hashing out differences over funding for construction of the wall along the border with Mexico, detention beds for immigrants and environmental provisions, among other matters.

House Speaker Nancy Pelosi (D., Calif.) and Senate Majority Leader Mitch McConnell (R., Ky.) said last week that they hoped to attach coronavirus relief to the full-year spending package, a compendium of the 12 bills needed to fund the government known as an omnibus.
Also by the same author: Covid-19 Resurgence and the Election Changed Calculus for Aid Negotiators.($). "Both parties see aid needed urgently as the pandemic surges and the economy shows signs of weakness."


Trump-Era Tax Rule Benefiting Some Multinationals May Get Revised Under Biden - Richard Rubin, Wall Street Journal ($):

What happened instead is that some companies facing relatively high foreign taxes owe GILTI. The classic case is Kansas City Southern, the railroad that operates only in the U.S. and high-tax Mexico.

To soften the blow and prevent companies from engaging in other tax-planning strategies, the Treasury Department has offered several regulations since 2017. These include the one Mr. Wyden criticized that creates what’s known as a “high-tax exception” to the GILTI rules.

The article notes that the process of revising regulations will take months, if the Biden administration even decides to act.

Five Reasons International Businesses Should Consider GILTI.


Analysts Wonder Whether PPP Deductibility Was Really a Mistake - Eric Yauch, Tax Notes. "James W. Wetzler, a former chief economist at the JCT, said allowing deductions attributable to PPP expenses is bad tax policy. However, there is no reason not to accept the JCT’s statement that Congress intended that there be no denial of a deduction attributable to expenses."

Tax Professionals: IRS Considering Extending 2021 Tax Season - Russ Fox, Taxable Talk. "Another fellow Enrolled Agent attended (virtually) the IRS Stakeholder Liaison IMRS meeting last week. That’s a meeting where the Stakeholder Liaisons–IRS employees tasked with assisting tax professionals–track and responds to significant national and local issues and concerns on IRS policies and procedures. During that call the IRS discussed extending the 2021 tax season by extending the filing deadlines for various 2020 tax returns."

IRS and FBI warn about business cyber scams that target COVID - Kay Bell, Don't Mess With Taxes. "n usual business email scams, online crooks spoof, or mimic, a legitimate email address. That makes the recipient think it's coming from within the business or from a client. The scammer's message typically is a request for payment, which the crook says can be made via wire transfer or gift card."

House Passes Bill To Decriminalize Marijuana For Federal Purposes - Kelly Phillips Erb, Forbes ($). "And even though the MORE Act passed the House, there’s no a guarantee that it will pass the Senate where it’s expected to face some opposition." It isn't likely to pass this Congress.

Vacation Home Conversion, Debt Discharge, And Partnership Issues All In One Tax Court Case - Peter Reilly, Forbes ($). "When you borrow money secured by property whether the debt is recourse or nonrecourse can have tremendous tax significance."

What Federal Policymakers Can Learn from Business Tax Refunds in 2020 - Garrett Watson, Tax Foundation. "Whether limited take-up of tax refunds for NOL carrybacks or other tax credits was due to administrative challenges, complexity related to determining whether it is worth taking advantage of the relief, or an unexpected upturn in economic conditions, policymakers should consider finding ways to simplify the administration of relief during future crises."

There's always a tax angle. And there is one in the Bribery-for-Pardon investigation. Aruna Viswanatha and Byron Tau report for the Wall Street Journal ($): "Sanford Diller, a philanthropist, was seeking the pardon of Hugh Baras, a California psychologist who was sentenced in 2014 to more than two years in prison for tax evasion and theft of government property, and said it was the one favor he sought in exchange for his donations, the documents reviewed by the Journal show."


Today in history. This, of course. Also: Dec. 7, 1963: Video Instant Replay Comes to TV.

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