Tax Update Blog

Tax News & Views Mega Millions, Mega Taxes Roundup

January 25, 2021 | Blog
By Daniel McNeil

Win $1 Billion Mega Millions Lottery Jackpot, Pay Mega Taxes – Robert W. Wood, Forbes. “The tax withholding rate on lottery winnings is only 24%. Given the big spread between 24% and 37%, some lottery winners do not plan ahead, and can have trouble paying their taxes when they file their tax returns the year after they win.”

Judge says Treasury must give Trump 72 hours before releasing tax info to Democrats – Naomi Jagoda, The Hill. “Judge Trevor McFadden, a judge in federal district court in Washington, D.C., appointed by Trump, directed the Treasury Department and IRS to provide Trump’s personal lawyers with the three-days notice before providing the former president’s tax returns to the House Ways and Means Committee.”

Biden administration announces efforts to help people get their stimulus payments – Naomi Jagoda, The Hill. “Treasury said Friday that it will build on the IRS's previous work to establish web tools that nonfilers can use to provide information to the agency so that they can receive their payments. The department also said that it would reach out to people who may not have internet access or may not speak English.”

AICPA Seeks Guidance on COVID-19 Relief Program Excess Wages – Nathan J. Richman, Tax Notes. “The American Institute of CPAs has asked the IRS and Treasury to issue guidance allowing taxpayers to claim the employee retention credit for wages that aren’t used in an application for Paycheck Protection Program loan forgiveness.”

“The AICPA’s January 15 letter “recommends that the IRS and Treasury provide guidance stating that the filing of a PPP loan forgiveness application does not constitute an election to forgo the ERC with respect to the amount of wages reported on the application exceeding the amount of wages necessary for loan forgiveness.”

IRS Guidance on Employers with PPP Loans Claiming ERC Under Special Fourth Quarter 941 Rule Limited to Those Denied Forgiveness – Ed Zollars, Current Federal Tax Developments. “In a web page posted on January 22, 2021, the IRS has determined that the special fourth quarter Form 941 procedure to claim the Employee Retention Credit will apparently only apply to borrowers who have had their PPP application for forgiveness denied.”

6 small business tax breaks in current COVID relief law – Kay Bell, Don’t Mess With Taxes.

“Millions of folks have been struggling to make ends meet as the pandemic has ravaged the economy. But they are facing fiscal woes in large part because their employers are in trouble, too. When companies get their footing back, they can start to rehire laid off staff and things should pick up all around. That's why recent coronavirus measures also have included help for firms, especially smaller businesses, beyond the love it/hate it Paycheck Protection Program (PPP).”

A Tax Credit to Fix Capitalism - Leonard E. Burman, TaxVox.

“In a new paper in the National Tax Journal, I describe a straightforward solution to capitalism’s failure to equitably distribute the gains from economic growth. The main feature of this proposed solution is a large universal wage subsidy. It would operate as a refundable tax credit that increases in size as the economy grows—guaranteeing that the benefits of capitalism are broadly shared.

In the main version of my proposal, someone earning wages of $15,000 per year would receive $25,000 when combined with the wage credit. Someone with $50,000 in wages would earn $60,000 including the credit.”

Using Carbon Tax Revenue to Grow the Economy – Elke Asen, Tax Policy Blog. “One way to combine the policy goals of carbon reduction and economic growth would be to enact a carbon tax and use the newly generated tax revenue to make the Tax Cuts and Jobs Act’s (TCJA) individual income tax provisions—which are set to expire at the end of 2025—permanent.”

Mistakes IRA Beneficiaries Are Making After The SECURE Act – Bob Carlson, Forbes. “More than a year has passed since the Setting Every Community Up for Retirement Enhancement (SECURE) Act passed Congress by a wide margin. Yet, many IRA beneficiaries don’t know about the law or are receiving bad information about it.”

 

Partner capital account reporting gets transition penalty relief – Paul Bonner, Journal of Accountancy. “The IRS provided transition penalty relief Tuesday to partnerships in complying with new rules for reporting partners’ capital account balances.”

“The relief in Notice 2021-13 follows up on Notice 2020-43, issued in June 2020, in which the IRS sought public comments to help inform its development of the r­ules. Then, in October, the IRS issued tax year 2020 draft instructions for Form 1065, U.S. Return of Partnership Income, containing the rules. The IRS also issued a news release (IR-2020-240) accompanying the draft instructions, in which it said it intended to provide the relief issued Tuesday.”


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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.