Tax Update Blog

Tax News & Views Payroll Taxes, Crypto, & IT Roundup

September 4, 2020 | Blog

By Daniel McNeil

Trump Administration Begins Payroll Tax Deferral Plan – Rick Rubin, WSJ ($). “One very large employer looks likely to participate—the federal government that Mr. Trump controls. The National Finance Center at the Department of Agriculture, which processes payrolls for more than 600,000 federal workers at multiple agencies, said last week it was preparing to implement the tax deferral in September.”

Related: Federal workers are forced payroll tax deferral guinea pigs – Kay Bell, Don’t Mess With Taxes.

 

IT Modernization – The IRS’s Reliance on Antiquated Technology Poses a Continuing Risk to Tax Administration – National Tax Advocate Blog.

“In order to provide first-rate taxpayer service, the IRS will require a substantial overhaul of its IT systems. Over the past 50 years or so, the IRS has developed hundreds of software programs to meet the needs of its business units. But these programs generally lack the ability to interface with each other to provide a seamless taxpayer experience, nor are they nimble enough to integrate new technologies, with the consequence that data from one system must be re-entered into another (e.g., when a taxpayer’s case moves from Exam to Appeals).”

The IRS has outlined a plan to upgrade its systems. The article points out that funding the upgrade and modernization is falling short.

“It is incumbent upon Congress to fund the technological upgrades the IRS requires to provide an enhanced level of service and improve its overall operations. The IRS estimates it requires approximately $2.5 billion over six years to implement its modernization plan. Yet Congress appropriated only $150 million in fiscal year (FY) 2019 and $180 million in FY 2020 for business modernization efforts.”

Former IRS Head Anticipates Trouble With Corporate Refund Claims – William Hoffman, Tax Notes ($). “The IRS could face an avalanche of corporate tax refund claims next year resulting from business losses during the COVID-19 pandemic, but enhanced income reporting should help with tax administration, a former agency chief said.”

“The five years of carrybacks for corporate tax losses allowed under the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136) will produce “gigantic refund claims from businesses that lost gigantic amounts of money during the crisis,” according to former IRS Commissioner Charles O. Rossotti.

At the same time, Rossotti said during a September 3 Tax Policy Center webinar, technology businesses have been making “unprecedentedly big profits, and they’re the ones that have the greatest flexibility to reallocate that money, for example, overseas,” which would be a challenge for IRS tax administration in terms of dealing with the tax gap”

 

Second Batch of Final Bonus Depreciation Regs Under ReviewNathan Richman, Tax Notes ($). “The IRS and Treasury have delivered a second batch of final regulations for the new bonus depreciation rules to the Office of Management and Budget for regulatory review.”

Recent IRS Cryptocurrency Memorandum: Surprise, Surprise, It’s Still Taxable – Jason B. Freeman, Forbes.

“The IRS memorandum was quietly made public on August 28.  It is a reminder that the IRS continues to receive requests for additional cryptocurrency tax guidance.  In the memorandum, the IRS lays out its view that convertible virtual currency is “property” for federal tax purposes, and that its receipt in exchange for performing services gives rise to gross income.”

Teleworking? Your Income Could Get Taxed Twice – Liz Farmer, Forbes. “If your job is based in New York or Massachusetts but you’re now working from home in another state, you may be in for a rude surprise. These states and five others have laws that can tax you anyway.”

 

Income Tax Planning Guidance for Dentists in a Pandemic Year – Podcast, Eide Bailly. “As year-end approaches, tax planning preparation becomes increasingly important. Dentists who have received HHS Provider Relief Funds, PPP or EIDL loans certainly need to keep good accounting of any funds received to help them financially through the COVID-19 shutdowns.”

McDonald's: Despite what you've heard, our burgers decompose – Amanda Kooser, Cnet.

“The global fast-food chain issued a statement this week titled "Response to myth that McDonald's burgers do not decompose." It's a short missive that may've been sparked by a recent TikTok video of a woman showing off what she says are a McDonald's burger and fries combo from 1996. She describes them as "completely intact." 


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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.