May 26, 2021
Filers and Agencies Still Struggling With Unemployment Fraud - Paul Jones, Tax Notes:
Among the many tax complications filers face in the wake of the first year of the pandemic is fallout from an explosion of unemployment fraud, much of it related to identity theft. Payouts of unemployment insurance to thieves using stolen identities have been reported to the IRS by state unemployment insurance agencies, and victims have not only had to take steps to secure their identities but have had to try to establish that they never received the fraudulently claimed benefits and thus owe no taxes for them.
The federal government and state agencies have undertaken new efforts to counter ongoing unemployment fraud schemes and have put out guidance to help victims of 2020 tax year fraud correct the record. But given the scale of the fraud — estimated to be in the tens of billions of dollars, the number of victims, and the potential delays and confusion faced by taxpayers, experts say government entities may need to take additional steps help fraud victims and commit to long-term strategies to prevent what transpired in 2020 from happening again.
While the IRS has made progress in dealing with ID theft, it remains a significant problem. Sending tax documents as unencrypted e-mail attachments is an ID theft risk. Use your tax pro's secure portal to send tax documents.
Senate GOP to make infrastructure counteroffer Thursday - Jordain Carney, The Hill. "Part of the problem for Democrats, if they decide to walk away from the bipartisan talks, is that they don’t yet have the 50 votes they need in their caucus to pass a bill through reconciliation, the budget process that lets them avoid a 60-vote legislative filibuster."
Senate Republicans Prepare $1 Trillion Infrastructure Offer - Andrew Duehren, Wall Street Journal ($):
How to finance the package also remains a deep source of disagreement between the parties. Republicans have rejected the White House plan to raise taxes on companies to cover the cost of the infrastructure package, while the White House has argued against the fee increases favored by some Republicans.
The Republican negotiators, who are led by Sen. Shelley Moore Capito (R., W.Va.), said Tuesday that their new plan would call for repurposing Covid-19 aid for infrastructure spending.
Nominee for Assistant Tax Secretary position ‘eager’ to regulate tax preparers - Jay Heflin, Eide Bailly:
“I would be eager to work on any efforts to regulate unregulated tax preparers,” [Lily] Batchelder said, adding that “I should emphasize when we talk about the Tax Gap we should be thinking about it as people purposely not paying their taxes, but there are also people unwittingly not pay all the taxes that are owed because unregulated preparers are giving them that advice.”
Batchelder mentioned that the Treasury Department has prioritized regulating paid tax preparers to reduce the Tax Gap, which is the difference between the taxes that are owed and what is collected.
Or, maybe, federal regulation would just provide a federal credential to preparers giving bad advice.
She was also pressed by one Committee Member, Sen. John Thune (R-S.D.), on whether the Biden Administration seeks to modify the pass-thru deduction, which is scheduled to expire in 2026.
Batchelder responded by saying that she was not yet a part of the Biden Administration, but so far had seen nothing that would suggest modifications to the tax measure were imminent.
Approval of the nomination is expected.
Batchelder Backs Tax Gap Update, Defends GILTI Hike - Jad Chamseddine, Tax Notes ($). "Batchelder said that more information reporting by large financial institutions could 'raise a substantial amount of revenue' without the government having to increase taxes. Increased funding would help the IRS hire more professionals to sift through tax returns and invest in IT systems, which are 'very antiquated,' she said."
Link: Opening Statements of Nominees to the U.S. Department of the Treasury for the Senate Committee on Finance. The Batchelder statement is the third one down the page.
IRS Set to Deliver Advance Monthly Payments: Needs Ability to Update Bank Information - Elaine Maag, TaxVox. "Starting on July 15, the IRS will begin distributing a monthly Child Tax Credit payment to at least 39 million families, or almost 90 percent of families with children. The agency has created a new online portal to help families claim the correct amount. But the portal may have no way for claimants to add crucial data: an updated address and direct deposit information."
Two Important Issues that Must Be Resolved in “Global Tax Reform” - Daniel Bunn, Tax Policy Blog:
The goal of the global minimum tax is not just to establish a minimum statutory rate, but rather an effective tax rate that accounts for the way the tax base is designed. Two countries could both have a 15 percent statutory rate, but if one country provides more deductions or credits than the other, the effective tax rates would differ under the two systems.
The U.S. has had a sort of minimum tax on foreign earnings since the 2017 tax reform put Global Intangible Low Tax Income (GILTI) into law. The Biden administration has proposed not only increasing the minimum tax rate on GILTI (to 21 percent from 10.5 percent) but also proposed changing the tax base by eliminating some deductions.
Related: Five Reasons International Businesses Should Consider GILTI 2019/6
Economic Nexus Laws by State: Kansas - Sarah Craig, TaxJar. "Kansas requires that e-commerce sellers, or marketplaces, who meet their new criteria register for a Kansas sales tax permit and begin collecting sales tax when making sales to buyers in the state of Kansas."
Related: A Sales Tax Reform Game Changer: How Wayfair Changed the Sales Tax Reform Landscape 2018/11
Senate retirement lost-and-found bill mirrors House measure - Kay Bell, Don't Mess With Taxes. "Recent studies published by the University of Wisconsin-Madison's Center for Financial Security found that in 2016, there were an estimated 70,000 unclaimed retirement accounts across the United States. These accounts totaled $38 million."
Federal Student Loans and Taxes – A Primer - Steve R. Rossman, Tax Warrior Chronicles. "If the government takes the next step and cancels some/all federal student loans, then the loan forgiveness, in many cases, will be taxable under current law."
For Social Media Influencers, New Facts Follow Old Law - Nathan Richman, Tax Notes ($). "Professional advisers need to remind their influencer clients that it isn’t just their followers who pay attention to their posts. The IRS Criminal Investigation division has been very clear that reviewing social media posts is an important part of its digital and case selection strategy."
Walquist Harms The Poor: Revisiting Supervisory Approval For Accuracy Penalties - Patrick Riley Murray, Procedurally Taxing. "In short, § 6751’s application has become convoluted. The result: poor taxpayers must pay penalties that rich taxpayers can avoid through litigation."
Billionaire’s Fishing Lodge Faces DOJ Seizure in Record Tax Case - David Voreacos and Neil Weinberg, Bloomberg Tax ($). "The targeting of cash in Switzerland’s Mirabaud Bank and 143 acres where Brockman has spent parts of his summers fly fishing for rainbow and brown trout are the only known attempts to take his property since he was indicted in October. The billionaire may be forced to turn over some assets even if a judge agrees with claims by Brockman’s attorneys that he isn’t competent to stand trial or he is found not guilty, said Peter Hardy, an attorney at Ballard Spahr who edits a blog about money laundering."
Dow Jones Industrial Average Celebrates 125 Years as Wall Street’s Bellwether - Karen Langley and Peter Santilli, Wall Street Journal ($). "The index of 12 smokestack companies closed that first trading day, May 26, 1896, at 40.94. It included General Electric Co. as well as long-forgotten names like American Cotton Oil and Distilling & Cattle Feeding."
Fly away! Today is National Paper Airplane Day. But how do you celebrate in a paperless office?
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