July 10, 2020 | Blog
Supreme Court Paves the Way for N.Y. Prosecutor to View Trump Taxes – Jess Bravin and Brent Kendall, WSJ ($). “The Supreme Court paved the way for a New York prosecutor to enforce a subpoena for President Trump’s financial and tax records, but issued a mixed decision in a related case involving subpoenas from Congress.”
The decisions—both on 7-2 votes on Thursday—send the cases back to lower courts, where Mr. Trump can raise additional objections to the subpoenas. The rulings put off, likely until after the November election, the attempts to explore Mr. Trump’s finances, but also accelerate a criminal investigation into hush-money payments to women who claim to have had affairs with Mr. Trump because New York prosecutors now can move forward without waiting for the president to leave office.
Perspectives On The Supreme Court's Trump Tax Return Decision – Paul Caron, TaxProf Blog.
Supreme Court Appeases and Upsets Those Seeking Trump’s Returns – Jad Chamseddine, Tax Notes ($).
IRS Updates Auto Depreciation Limits for 2020 - Joe Kristan, Eide Bailly. “The IRS has released (Rev. Proc. 2020-37) the updated limits, which apply to vehicles far below the Rolls-Royce level. There are different tables when bonus depreciation (Sec. 163(k)) applies and when it does not.”
File Your Taxes, Even if You Can’t Pay – Laura Saunders, WSJ ($). “If you owe Uncle Sam, blowing off tax filings has immediate consequences that compound and are almost impossible to escape, because the IRS is the most powerful creditor in the nation.”
Bozo Tax Tip #4: Procrastinate! – Russ Fox, Taxable Talk. “What happens if you wake up and it’s July 15, 2020, and you can’t file your tax? File an extension. Download Form 4868, make an estimate of what you owe, pay that, and mail the voucher and check to the address noted for your state. Use certified mail, return receipt, of course.”
Don’t Forget About The Revised Deadline For Tax-Exempt Organizations – Kelly Phillips Erb, Forbes. “Information returns for tax-exempt organizations are ordinarily due on the 15th day of the fifth month after the close of the tax year. If the due date falls on a Saturday, Sunday, or legal holiday, the due date is the next business day. This means that May 15 is usually the deadline for most tax-exempt organizations to file. However, for the 2019 tax year, the deadline for tax-exempt organizations was pushed to July 15, 2020.”
House Subcommittee Advances IRS Funding Bill to Appropriations – William Hoffman, Tax Notes ($). “The House Appropriations Subcommittee on Financial Services and General Government moved the $91.64 billion funding bill to the full committee by voice vote after a 23-minute hearing July 8.”
Of the $91.64 billion, $12.1 billion would go to the IRS.
Further noted in the article:
“The CBO (Congressional Budget Office) noted that the IRS’s budget has decreased 20 percent from its 2010 levels, resulting in the elimination of 22 percent of agency staff. As a result, the IRS has performed 46 percent fewer examinations of individual tax returns and 37 percent fewer corporate income tax return exams, the CBO said. IRS enforcement funding has fallen 30 percent since 2010, according to the report.”
How to report coronavirus paid sick leave and family leave to employees – Sally P. Schreiber, J.D. “On Thursday, the IRS explained how employers should report the amount of qualified sick and family leave wages paid to employees under the Families First Coronavirus Response Act, P.L. 116-127 (Notice 2020-54).”
“Employers will be required to report payments to employees either on box 14 of Form W-2, Wage and Tax Statement, or in a separate statement. The guidance provides employers with language to use on the Form W-2 or in the statement to employees.
Employers must separately state the total amount of qualified sick leave wages paid because the employee was quarantined or diagnosed with COVID-19, the total amount of qualified sick leave wages paid because the employee was caring for a sick individual or for a child (or for other similar reason), and the total amount of qualified family leave wages paid.”
Consolidated groups get NOL Guidance – Sally P. Schreiber, J.D., Journal of Accountancy. "The IRS issued proposed (REG-125716-18) and temporary regulations (T.D. 9900) to provide guidance for consolidated groups on the treatment of net operating losses (NOLs) after recent statutory changes."
Both the law known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97, and the Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136, amended the rules for NOLs. As a result of those amendments, an NOL deduction is the sum of:
The total of NOLs arising before Jan. 1, 2018 (pre-2018 NOLs) that are carried to that year; plus
The lesser of:
The total of NOLs arising after Dec. 31, 2017; or
80% of taxable income less pre-2018 NOLs (the 80% limitation).
Final FDII Regs Offer Significant Changes to Documentation Rules – Andrew Velarde, Tax Notes ($). “The 295-page final rules (T.D. 9901), which include guidance on FDII as well as the deduction under the global intangible low-taxed income provision, were released July 9 and follow up on proposed regs (REG-104464-18) released in March 2019. The rules address myriad issues related to the deductions for GILTI and FDII, including computational, definitional, and ordering rules.”
“Overall, there were a number of pretty substantial changes in the final regulations,” Marissa Rensen of KPMG LLP said, pointing specifically to the documentation rules. “There are . . . two categories: Either documentation rules are gone and you now have specific substantiation, or there is no specific documentation or substantiation rules, which is a pretty significant change.”
How Stable is Cigarette Tax Revenue? – Ulrik Boesen, Tom VanAntwerp. Tax Foundation. “Cigarette excise taxes have been a source of state revenue for decades, but in recent years, reliance on these taxes has increased.”
What percentage does the average taxpayer pay in federal income taxes?
In 2017, the top 1 percent of taxpayers paid an average federal income tax rate of 26.76 percent. The bottom 99 percent, or all the rest of the taxpayers, paid an average rate of 11.4 percent.
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