Tax News & Views Collections, Liens, Levies and Orange Clothes Roundup

June 16, 2021

High-Income Nonfilers in IRS Collections Crosshairs - William Hoffman, Tax Notes ($):

The IRS announced June 14 that systemic and automated lien and levy programs idled by the agency’s People First Initiative in April 2020 will resume operations this summer. Most automated levies in coordination with state and municipal tax collection programs will also resume July 15.

The agency also said that on June 15, it would begin following up with taxpayers who had ignored earlier balance due notices, offering them 30 days to settle up (45 days if they’re abroad) or else face levies or notices of federal tax lien starting August 15.

The IRS remains behind in handling correspondence, so we can expect some taxpayer frustration as collection efforts on erroneous notices begin while taxpayer responses to the notices sit unread in service center mail bins.

Related: Why is it Important to Read IRS Notices?


IRS unveils online tool to help nonfilers get advance child tax credit payments - Kay Bell, Don't Mess With Taxes. "The IRS' updated online non-filer sign-up tool now is operational. The tax agency is urging families who don't normally file tax returns to register using the online option so that they can begin receiving the [Advance Child Tax Credit] payments next month."

What to Know About the New and Upcoming Child Tax Credit Portals - Marie Sapirie, Tax Notes Opinions. "The portals will serve two different groups. One will target taxpayers who filed a tax return in 2019 or 2020, and the other, which opened on June 14, will allow eligible nonfilers to provide their information to the IRS so that they can receive the advance payments of the credit. The portals will allow taxpayers to determine their eligibility; change their income, family status and number of qualifying children, and financial information; and opt out of receiving advance payments."


Huge budget reconciliation package may not move until fall - Jennifer Shutt and Jessica Wehrman, Roll Call. "Final passage of a sweeping budget reconciliation package to enact President Joe Biden’s fiscal policy agenda on infrastructure, child care, education and more likely won’t occur until sometime this fall, according to House Democrats’ point man on budget issues."

Administration directs House Dems to pursue ‘two-track’ strategy in moving Biden’s Jobs Plan - Jay Heflin, Eide Bailly:

The White House made clear to us in our conversations today that we’re preparing to take a two-track approach,” said Rep. Hakeem Jeffries (D-NY), who is the chamber’s Democratic Caucus Chairman.

The first track will focus on getting Republicans to support a bipartisan package. If those talks fail to bridge an agreement, the second track will be engaged, which is passing a partisan bill that only Democrats support.

This reduces the chances for a tax bill this summer:

The House's two-track strategy could lengthen the amount of time it takes to pass the bill. House Speaker Nancy Pelosi (D-Calif.) originally wanted to pass legislation before the July 4th Holiday. Given the two-track plan as explained by Jefferies, it does not seem likely that House Democrats will meet this deadline.

The Congressman today did not provide a timeline for when legislation would be introduced.


Yellen to face grilling in back-to-back hearings - Lindsey McPherson, Roll Call. "The Treasury secretary is set to defend Biden’s fiscal 2022 budget request, which would increase net revenues over the coming decade by $3.6 trillion, or about 1.3 percent of projected gross domestic product. She’ll be under pressure, mostly from Republicans, to explain why Congress should enact what would amount to the largest tax increase as a share of the U.S. economy in more than half a century."

Details and Analysis of President Biden’s FY 2022 Budget Proposals - Huaqun Li, William McBride, and Garrett Watson, Tax Policy Blog. "Using the Tax Foundation General Equilibrium Model, we estimate the tax proposals impacting individuals and businesses would increase federal revenue by about $1.3 trillion conventionally over 10 years. In addition, the administration claims about $700 billion in additional revenue from tax enforcement. We estimate the combination of revenue and spending proposals contained in the president’s budget would reduce U.S. gross domestic product (GDP) in the long run by 0.9 percent and result in 165,000 fewer U.S. jobs."

Global Tax Deal Holdouts Face Squeeze Under Biden Administration Plan - Richard Rubin, Wall Street Journal ($). "In other words, if the global minimum corporate tax is set at 15% and Ireland decides to keep its tax rate at 12.5%, Irish companies operating in the U.S. couldn’t fully benefit from the lower rate back home. The U.S. would essentially tax much of their income at 28% under the Biden administration’s plan."

Tracking the 2021 Biden Tax Plan and Federal Tax Proposals - Erica York, Tyler Parks, and Alex Muresianu, Tax Policy Blog. "We’ve created the following tax tracker to help you stay up-to-date as new plans emerge from the Administration and Congress. Check back throughout 2021 for a snapshot of the current tax debate and explore our in-depth analysis of President Biden’s FY 2022 budget proposals to learn more about its economic and fiscal impact."


Rettig Discusses Tax Leak With Republican Taxwriters - Jad Chamseddine and Doug Sword, Tax Notes ($). "IRS Commissioner Charles Rettig briefed House Ways and Means ranking member Kevin Brady, R-Texas, on the leak that led to sensitive taxpayer information being used in an investigative report as Republican anger increases over the issue."

Pro Publica’s Billionaires: Stories Behind the Story - C. Eugene Steuerle, TaxVox. "Tax research may be set back significantly. My fear is the Pro Publica leak will make gathering, analyzing, and releasing tax information by Treasury and IRS even more difficult. Access to data by outside researchers, including those of us at the Tax Policy Center, could also be further restricted."


Sales Tax Considerations for Nonprofits in a Virtual World - Dylan Lien and Jennifer Barajas, Eide Bailly:

Although nonprofit entities, such as section 501(c)(3) organizations, are generally exempt from federal income tax, states do not automatically exempt nonprofit organizations from sales or use tax. Some states have broad exemptions, allowing organizations with federal tax-exempt status to purchase products and services exempt from sales or use tax, if the purchase is used to fulfill the organization’s “mission” or “purpose.” In other states, the nonprofit exemption rules are more limited and only certain nonprofit organizations exempt by state statute can claim the exemption from sales or use tax.


Iowa: Online learning program taxable as software-as-a-service. The Iowa Department of Revenue said learning plans offered by are subject to Iowa sales taxes. "The Director finds that the sale of all of Petitioner’s learning plans are taxable because the learning plans are the sale of the Platform and the Platform is SaaS. 12 Pursuant to the Department’s guidance, the Platform is SaaS because it is vendor-hosted computer software that is accessed through the internet or a vendor-hosted server."

Link: Document Reference 21310003.

Related: Identifying Your Sales Tax Risks


Colorado Bill Offers Temporary Sales Tax Relief for Caterers - Tax Analysts. "Colorado H.B. 21-1265, signed into law in response to COVID-19, allows a qualifying retailer in the catering industry to temporarily deduct from its net taxable sales the lesser of aggregate state net taxable sales for all events or $70,000 for the months of June-August 2021; such a retailer may retain the resulting sales tax collected to make up for revenue lost because of the pandemic."

South Dakota v. Wayfair: Three Years Later - Jennifer Dunn, TaxJar. "On June 21, 2018 the Supreme Court ruled that states could require online retailers with “economic nexus” in the state to collect sales tax from buyers in that state, even if the retailer had no other presence in the state."

Related: A Sales Tax Reform Game Changer: How Wayfair Changed the Sales Tax Reform Landscape.


Hidden high tax rates at low incomes. Craig Richardson, a columnist for the Winston-Salem Journal, computes how a single parent with two children could face hidden taxes of over 80% on an increase in the minimum wage from $7.25 to $15.00. With the phase-out of various welfare benefits due to higher income, the hypothetical taxpayer would only pocket about $199 of a $1,240 monthly earnings increase. 

(Via Marginal Revolution)


Former Construction Executive Sentenced To 46 Months In Prison For Tax Evasion And Bribery Scheme - U.S. Department of Justice. "In all, the defendants have pled guilty to failing to pay taxes, between 2010 and 2017, on bribes exceeding $5.1 million. The defendants received such bribes in various forms, including millions of dollars in cash, as well as construction projects on their individual homes and properties, and the direct payment of personal expenses."

Just because you don't get a 1099 for that bribe doesn't mean it's not taxable.

No clothes is the new orange? Today is No Orange Clothes Day. Staying out of prison on tax evasion charges makes this holiday easier to observe.

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