Tax News & Views Tax Policy Heads South Roundup

December 14, 2020

Senate Passes Defense Bill With Provisions to Combat Tax Evasion - Jad Chamseddine, Tax Notes ($):

The National Defense Authorization Act (NDAA) (H.R. 6395), which updates federal anti-money-laundering laws, passed with a veto-proof majority (84-13) on December 11. Improvements to corporate transparency laws that give Treasury's Financial Crimes Enforcement Network more power to crack down on anonymous shell companies and tax evasion have been years in the making and garnered strong bipartisan support, Senate Finance Committee ranking member Ron WydenD-Ore., said in a statement.

Improvements may be in the eye of the beholder. The bill requires reporting of the owners of corporations to the Fincancial Crimes Enforcement Network, on penalty of $10,000 fines. This will often duplicate disclosure already required on tax returns. It promises to trigger expensive foot-fault penalties to otherwise compliant taxpayers. Whether tax evaders will disclose their ownership structures remains to be seen.

The article quotes the National Federation of Independent Business in opposition:

“This legislation would burden small businesses with 12.2 million new initial paperwork hours at a cost of $531 million, something small business employers simply cannot afford as they deal with the ongoing COVID-19 pandemic,” NFIB's Kevin Kuhlman said in a statement.


Corporate taxes due tomorrow; queue up your EFTPS payments today. The final estimated tax payment for calendar-year corporations for 2020 is due tomorrow. As corporations are required to remit their estimates electronically, that typically requires setting up payments today in EFTPS, the Electronic Federal Tax Payment System

The tax law requires most corporations to have 100% of their payments for 2020 remitted by tomorrow to avoid an interest-charge underpayment penalty. See Form 1120-W for details.


Lawsuit Challenges PPP Questionnaire for High-Dollar Borrowers - Eric Yauch, Tax Notes. "In a complaint filed December 8 in Associated General Contractors of America v. U.S. Small Business Administration, the group said that although the SBA claims to be interested in evaluating the borrower’s certification in the spring when the economic viability of many businesses was uncertain, the questionnaire focuses on the events that occurred after the loan was received."

Related: Resources on Relief, Forgiveness and Changing Legislation.


Biden and Corporate Taxes: The Question Is How High? - Gerald Seib, Wall Street Journal ($). Quoting incoming director of the Office of Public Engagement, is quoted:

If you’re asking me, do I think Joe Biden’s plan is to raise the corporate tax rates, the answer is yes, because I believe that’s what he said on the campaign trail.

The real question is how high and what the investment will do. But I think that he has done a good job of staying in the middle as a moderate, and running a campaign that others said was a campaign you couldn’t win, saying that he would work with Republicans and Democrats, and that he would govern in a pragmatic way. So I think for the business community, that should be reassuring. 

Of course, much is riding on the January Senate runoffs in Georgia, which will determine control of the upper house.


Latest Form 1040 Asks for More Income Information - William Hoffman, Tax Notes ($):

“There also is more detail required on income tax withheld, broken out by form,” said Mark J. Mazur, co-director of the Urban-Brookings Tax Policy Center. He added that there is also more explicit information on Schedule H, “Household Employment Tax,” to help filers “make sure they report all the tax they owe — not just their individual income tax.”

Taxpayers tend to provide preparers with the information they have always provided. Preparer questionnaires are often returned incomplete or ignored with the taxpayer W-2s and 1099s. That's never a good thing, and less so this year than ever.

IRS Releases Form 1040 For 2020 (Spoiler Alert: Still Not A Postcard) - Kelly Phillips Erb, Forbes ($). "The IRS has made cryptocurrency compliance one of its target issues for the 2021 year, so expect this box to get a lot of scrutiny."

Tax software in 2021 filing season to offer multi-factor identity protection - Kay Bell, Don't Mess With Taxes. "It means in most cases that we must take at least two steps to enter information that ensures we do indeed have the right to see the account and/or make any moves involving it."


Germany Extends Coronavirus Aid, Tax Relief for Businesses - Sarah Paez, Tax Notes. "The new measures also extend the deadline for filing 2019 tax returns to March 31, 2021, and extend deferral options. According to the release, taxpayers who are directly negatively affected by the coronavirus crisis may apply to their tax office for a tax filing deadline deferral of June 30, 2021."

Eide Bailly is a member of the HLB global advisory and accounting network, with 22 network members in Germany.


Individual and Business CARES Act Tax Provisions Due to Expire on December 31 - Garrett Watson, Tax Policy Blog:

Business provisions that will also be expiring on December 31 include:

  • The Employee Retention Tax Credit (ERTC), which provided a refundable payroll tax credit of up to 50 percent on wages paid up to $10,000 to qualifying employers, which aimed to keep workers on payroll during the economic downturn.
  • The loosened net interest tax deduction limitation, which went from a limit of 30 percent of earnings before interest, tax, depreciation, and amortization (EBITDA) up to 50 percent for this tax year.
  • Delayed employer-side Social Security payroll tax payments. Firms electing to delay these payments in 2020 will have to repay the tax over the next two years, with half due on December 31, 2021 and the other half due on December 31, 2022.
  • Net operating loss (NOL) carrybacks for firms with losses during the economic crisis this year (also applying for the 2018 and 2019 tax years). Similarly, the limitation for taking NOL deductions to 80 percent of taxable income will be reinstated in 2021.
  • Many suspended business taxes, including the alcohol excise tax on alcohol used as an input for producing hand sanitizer and the suspended aviation excise taxes.

Remember that "quickie refunds" for calendar 2019 loss carrybacks need to be filed by December 31.


San Francisco Cannabis Business Tax Suspended for Calendar Year 2021 - CCH AnswerConnect. "In addition and beginning January 1, 2022, the manner in which the tax is calculated is changed." 

Common Sense and Tax Policy - Any Connection? - Annette Nellen, 21st Century Taxation.

I want to draw attention to the numerous places in our tax laws where tax breaks are provided for people who don't need them...One that I was reminded of recently in looking at updates for 2021 cars that qualify for perhaps up to a $7,500 credit for purchase of a new qualified plug-in electric drive motor vehicle (Code section 30D) is that the buyer of a MSRP $156,900 Bentley Motors Bentayga Hybrid SUV gets a $7,500 tax subsidy from the government - that is, all other taxpayers chip in a bit to help this buyer get the luxury car.

IRS At Supreme Court Over Captive Insurance - Peter Reilly, Forbes ($). "If the customers decided to self-insure, they would not get a deduction for money they put aside to be prepared for whatever eventuality they were insuring against. At a very basic level, that is the tax incentive for a captive insurance company."

Related: Recent Developments in Micro-Captive Insurance—A Reportable Transaction 


Going south. On this date in 1911, Roald Admundsen and his team became the first explorers to reach the South Pole.

Celebrate! It's National Bouillabaisse Day. "Bouillabaisse? What the heck is that you might ask. It’s a seafood stew (or soup) that originated in France."


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