November 16, 2021
President Biden signs Infrastructure bill into Law - Jay Heflin, Eide Bailly. "Democratic leaders in Washington originally linked enactment of the $1.2 trillion infrastructure bill to the budget reconciliation tax and spending bill also becoming law. That link has been broken."
Tax provisions are part of finally finished infrastructure bill - Kay Bell, Don't Mess With Taxes. "Yep, this is the bill with that new cryptocurrency reporting rule."
The Infrastructure Act and Cryptocurrency Transactions - Mac Stevens and Andrea Mouw, Eide Bailly:
Digital Assets Treated as Cash
The Act also treats digital assets, including but not limited to cryptocurrency, as “cash” for purposes of the existing requirement to report to the IRS on Form 8300 the receipt of more than $10,000 in one transaction (or multiple related transactions). This provision may affect businesses accepting digital assets as a form of payment. Failure to comply with this reporting requirement can result in civil and criminal penalties.
Effective Date for Information Reporting under the Infrastructure Act
The new requirements to report information related to digital assets and treat digital assets as “cash” are generally effective for returns filed and statements required after December 31, 2023.
House reconciliation vote could slip to Saturday - David Lerman and Lindsey McPherson, Roll Call:
A House vote on the Democratic reconciliation package could stretch into the weekend to await an official cost estimate from the Congressional Budget Office, senior Democrats said Monday night.
The CBO, the nonpartisan scorekeeper, announced earlier Monday that it would produce its “score,” or price tag for the sweeping tax and spending package, by the end of the day Friday.
There are signs that this wait may just be for show. The CBO is likely to estimate the revenue from increased IRS funding far below what the Biden administration is claiming, but that might not matter:
But Rep. Josh Gottheimer, D-N.J., a leading moderate who helped force the vote delay two weeks ago, said he would not be troubled if the CBO estimate on tax enforcement revenue came in lower than the administration’s forecast. He said lawmakers had debated the issue when considering the same enforcement provision as an offset for the bipartisan infrastructure bill, and Democrats and Republicans generally agreed the CBO estimate was too conservative.
If passed, the bill then goes to the tender care of the Senate, particularly Senators Manchin and Sinema.
Going to be awhile on BBB - Bernie Becker, Politico:
Senate Majority Leader Chuck Schumer has basically made it official — his chamber won’t consider the Democrats’ big climate and safety net package until December.
This probably shouldn’t come as a huge surprise at this point, given that it’s no sure thing that the House will pass the social spending measure this week. Either way, the Senate still has work left to get that measure ready for consideration, including huddling with the parliamentarian over what can make the cut in reconciliation, as our Burgess Everett reports — not to mention that Congress will be away from Washington next week for Thanksgiving.
As the Senate will almost certainly change the bill, another vote of the House of Representatives will be required to sign off on the Senate product.
IRS Enforcement Boost May Not Deliver for House Democrats - Frederic Lee and Doug Sword, Tax Notes ($):
The White House has estimated that the bill — with its rewrite of international tax regimes, a 15 percent minimum tax on corporations making $1 billion or more a year, and a surcharge on individual incomes of $10 million or more — would raise $36 billion more than it would spend over 10 years. But that relies on IRS enforcement bringing in a net increase of $400 billion over 10 years.
In a November 8 estimate, the Committee for a Responsible Federal Budget said an IRS budget boost would raise a net $125 billion over 10 years, so the reconciliation bill would fall $200 billion short of paying for itself.
States Need Small Biz Income Tax Safeguards, Pro Says - Maria Koklanaris, Law360 Tax Authority:
Cathie Stanton, national leader for state and local tax at Cherry Bekaert LLP, said without such standards, which only about one-fifth of states have adopted, small businesses are at risk of having to file in many places where they have not filed before.
Stanton said the new filing obligations could happen as a result of the Multistate Tax Commission's updated statement for interpreting the federal Interstate Income Act, more commonly known as P.L. 86-272.
According to the article, the MTC guidance pretty much destroys the federal rules limiting federal ability to tax nonresident businesses:
In many cases, under the new guidance, defeating the protection of P.L. 86-272 requires only an internet cookie, or an identifying piece of data. The exception would be if the cookie "is entirely ancillary" to the solicitation of orders for tangible personal property, but most cookies are placed to gather data that go far beyond that.
Remote Work State Tax Issues Are Here to Stay, Panelists Warn - Benjamin Valdez, Tax Notes ($):
The lack of uniformity among states in determining the tax liability for nonresident workers makes it “really difficult to comply with” their rules, Douglas L. Lindholm of the Council On State Taxation said. "It's a real trap for the unwary." Lindholm spoke during a November 15 panel at the American Institute of CPAs and Chartered Institute of Management Accountants' national tax and sophisticated tax planning conference in the District of Columbia.
Federal Cannabis Reform Turns New Leaf With GOP Bill - Sam Reisman, Law360 Tax Authority ($):
Cannabis industry leaders and policy advocates say a new Republican-led effort to decriminalize marijuana nationally marks a turning point in the fight for federal cannabis reform.
Authored by Rep. Nancy Mace, R-S.C., the States Reform Act represents the first GOP-led effort on Capitol Hill to end federal cannabis prohibition. In addition to descheduling marijuana, the bill would impose a 3% excise tax, release nonviolent cannabis offenders, and preserve existing state legalization policies.
The tax angle:
The bill would regulate cannabis much like alcohol, assigning primary regulatory authority to the Treasury Department's Tax and Trade Bureau and the Justice Department's Alcohol, Tobacco, Firearms and Explosives Bureau.
That would take cannabis out of Sec. 280E, which disallows deductions for cannabis business expenses other than cost of goods sold. But the bill is a long way from advancing, despite growing support for legalization.
However, effective November 1, 2021, the IRS will no longer offset, or recoup refunds for the calendar year in which the OIC was accepted. It will no longer apply that refund to the outstanding tax liability for the year(s) included in the OIC agreement, Form 656. For example, assume the IRS accepts a taxpayer’s OIC to settle liabilities for tax years (TYs) 2017 and 2018 on December 15, 2021. Under the new guidance, the IRS will no longer offset the refund shown on the taxpayer’s TY 2021 return and apply as a payment to the TYs 2017 and 2018 liabilities subject to the OIC agreement. For many taxpayers, this one change could be the difference of even applying for an OIC.
Related: What is the IRS Fresh Start Program?
Request to Make Late §475(f)(1) Election Denied By IRS - Ed Zollars, Current Federal Tax Developments. This election allows high-frequency traders to elect to treat trading losses as ordinary and not subject to the $3,000 annual capital loss limit. Unfortunately for many unsuccessful day traders, you have to make this advance by April 15 of the year you wish the election to be effective. in other words, it's already too late to make the election for 2021. From the post:
A major problem with getting relief for this election is the fact that a taxpayer who follows the rules will have to make his/her election very early in the year where the treatment will first apply, while one making the election following the year end will automatically have the advantage of knowing the actual results for the year. So a late electing taxpayer is, by the very nature of the election, gaining an advantage for having failed to follow the law if the IRS grants relief. Not unexpectedly, the IRS is very reluctant to grant relief for this late election.
1095 Deadline Extension May Not Happen This Time - Tonya Rule, Eide Bailly:
The IRS has extended the January 31 deadline for providing health insurance reports on Forms 1095-C and 1095-B to employees/recipients every year that the form has existed. It looks like they are going to break the habit this year.
Employers provide these forms to employees/recipients to document their health insurance offering (1095-C) and coverage (1095-C or 1095-B) for tax filings. Being late carries a "non-willful" penalty of up to $280 for each late 1095, up to $3.426 million. "Intentional disregard" of the requirements carries stiffer penalties, with no limit.
2021 3rd Quarter Published Expatriates - International Tax Blog. "The number of published expatriates for the quarter was 976."
Related: Eide Bailly Global Mobility Services.
Self-Employment Taxation of CRP Rents – Part Two - Roger McEowen, Agricultural Law and Taxation Blog. "The appellate court’s decision in Morehouse smashed the IRS position that all CRP payments must be reported on Schedule F."
IRS’s “ID.me”: Not Ready for Prime Time - Russ Fox, Taxable Talk. "The IRS rightly wants to make sure that tax professionals are who they say they are. So the IRS has partnered with ID.me to verify identity for tax professionals. In theory, the process will be mandatory sometime during the Summer of 2022. If you’re a tax professional tempted to start now with ID.me, I strongly advise waiting."
Pay Vaccine Mandate Fines, Take Tax Write-Off? - Robert Woods, Forbes. "In fact, the tax law on deducting fines and penalties has been muddled for years, so Congress at the end of 2017 tried to cut back on which fines and penalties can be deducted. Under the clarified law, it seems likely that these fines cannot be deducted, although people may try."
How Do Build Back Better Taxes Affect 5G Competition? - Erica York and Cody Kallen, Tax Policy Blog. "One unintended consequence of the tax proposals in the Build Back Better Act is a higher potential burden on wireless spectrum investments. Proposals like levying a minimum tax on book income would retroactively tax past spectrum purchases and raise the tax burden on future spectrum purchases."
Iowa taxi driver honored as 'consumer protection hero' - Beau Bowman, KCCI.com:
Des Moines' Scott Kilmer picked up a woman who said a family member was in big trouble with the IRS and needed to go to the bank and send them $38,000.
Kilmer said the whole thing felt fishy to him. He realized it was a scam and reported it to the attorney general's office before his client sent the scammer any money.
It's a sadly common scam; fortunately, the would-be victim got the right cab driver. Not all heroes wear capes.
Button it. Today is National Button Day. "Once simply ornamental in nature, the button as a means to fasten clothes has been around since 13th century Germany." It's also National Fast Food Day, celebrating a technology that has popped its share of buttons.
This is a roundup of tax news and opinion. Any opinions expressed or implied are those of the author and not necessarily those of Eide Bailly. Opinions found in linked items are those of the authors of the linked item, not of your bloggers or of Eide Bailly. “$” means link may be behind a paywall. Items here do not constitute tax advice.