Tax News & Views World Nation States and Chocolate Roundup

July 7, 2021

U.S. Reconciliation Bill May Have Global Minimum Tax Provisions - Stephanie Soong Johnston, Tax Notes ($):

Treasury is in talks with Congress’s top Democratic taxwriters about including global minimum tax provisions in a partisan reconciliation package that would align the United States’ domestic priorities with its OECD inclusive framework goals.

Senior Treasury officials confirmed to reporters July 6 that Treasury Secretary Janet Yellen has been huddling with Senate Finance Committee Chair Ron Wyden, D-Ore., and House Ways and Means Committee Chair Richard E. Neal, D-Mass., to try using reconciliation to push through changes related to pillar 2 of a two-pillar global tax reform plan.

The 2017 international tax changes were done in "huddles," rather than through a process of debate and deliberation. That may not work well this time either.

Decoding the global tax deal - Ryan Heath, Politico:

What could sink the deal? Lack of unity in the European Union, and lack of unity in Congress. An Irish official told POLITICO: “the government of Ireland supports rational global tax reform. But Ireland cannot sign on to generalized language that does not include cast-iron assurances on specific issues and policies that matter to us.” Rep. Kevin Brady (R-Texas), the top Republican on the House Ways and Means Committee, described the global tax deal as “a dangerous economic surrender that sends U.S. jobs overseas, undermines our economy, and strips away our U.S. tax base.”

Bipartisan spending deal meets fresh resistance from key Democrats - Alexander Bolton, The Hill. "Two major financing mechanisms for the spending proposal — repurposing unspent funds for unemployment benefits and for state assistance — are meeting resistance from a group of Democratic senators who say higher corporate tax rates should be the primary revenue source."


Minnesota Governor Approves Tax Relief, SALT Cap Workaround - Carolina Vargas, Tax Notes:

Minnesota Gov. Tim Walz (DFL) has approved an omnibus tax bill that includes tax relief for workers and small businesses and a workaround to the state and local tax deduction cap.

Under H.F. 9, signed by Walz July 1 as part of the state’s biennium budget, passthrough entities can elect to file and pay taxes at the entity level and owners can claim a refundable credit for their share of the taxes paid, allowing passthrough owners to skirt the $10,000 SALT deduction cap. 

Also: "H.F. 9 allows forgiven Paycheck Protection Program loans to be excluded from state gross income and allows taxpayers with federal adjusted gross income of less than $150,000 to exclude $10,200 of unemployment insurance benefits from their gross income."

Florida Decouples From Some Federal COVID-19 Relief - Lauren Loricchio, Tax Notes:

H.B. 7059 decouples from a CARES Act provision that temporarily raised the limit on the business interest expense deduction in IRC section 163(j) from 30 percent adjusted taxable income to 50 percent ATI for tax years 2019 and 2020.

It also decouples from a provision in the CARES Act that changed the depreciable life of some qualified improvement property from 39 years to 15 years, known as the fix to the so-called retail glitch in the 2017 federal Tax Cuts and Jobs Act.

Ohio Governor Approves Budget With Income Tax Relief - Carolina Vargas, Tax Notes.  "Substitute H.B. 110, signed June 30, includes a 3 percent across-the-board reduction in personal income tax for tax years 2021 and later. The fiscal 2022–2023 budget will also reduce the number of tax brackets from five to four, with 3.99 percent as the new top rate."


3 Advance Child Tax Credit moves (& more!) to make in July - Kay Bell, Don't Mess With Taxes. "July tax to-do's range from mundane tasks like checking your payroll withholding to getting ready for hurricanes (and other disasters) to planning for sales tax holiday shopping."

Why Security Matters to Your Employee Benefit Plans - Troy Atkinson and Michael Nouguier, Eide Bailly. "ERISA-covered plans are a prime target for cybercrime. They are storehouse of personal data on participants, including Social Security numbers and a variety of other personally identifiable information. This makes them ripe for identity theft as well as a host of other potential cyber scenarios."

Lesson From The Tax Court: The CDP Butterfly - Bryan Camp, TaxProf Blog. "Collection Due Process (CDP) hearings are like butterflies: taxpayers must act quickly to catch the first opportunity before it flits away and dies; and, even when caught, CDP hearings require careful handling."

Exploring How Remote Work Could Impact the Way Countries Tax Individuals - Thomas Locher, Tax Policy Blog. "For example, imagine a management-level British worker in the financial services industry leaving for the sunny shores of Mallorca, or the history and favorable tax rates of Prague. These choices will impact the tax revenues of both the United Kingdom and the country to which the worker moves." 

Related: Considering Foreign Operations? You Need a Global Mobility Program.


Into the Weeds with the Advance Child Tax Credit – Including Dispute Resolution - Nina Olson, Procedurally Taxing. "Preparers have commented that it is difficult enough to ascertain that a child lived with a taxpayer for more than half the year, much less try to determine the child lived with a taxpayer more than half of a month, on a month-by-month basis."

How Will Advance Child Tax Credits Affect My Tax Return? Jason Dinesen. "Many people are asking what the advance child tax credit payments that start in July will do to their 2021 taxes. The short answer is, it could reduce your refund."


R&D and Manufacturing Are Costliest Biden Plans, Not Infrastructure - Doug Sword, Tax Notes ($):

The biggest spending category in the combined American Jobs Plan and American Families Plan is the $1.13 trillion proposed over 10 years for research and development and to encourage U.S. manufacturing, the July 6 report says.

The next costliest category is education, where $1.11 trillion is proposed to make two years of preschool and two years of community college available for free, according to the University of Pennsylvania research project analysis.

Searching for Supply-Side Effects of The Tax Cuts and Jobs Act - William Gale, TaxVox. "Overall, the TCJA’s advocates promised many supply-side benefits and promised they would materialize quickly. But at least for the first two years, the Act failed to deliver its promises on investment and growth, leaving the country instead with higher deficits and a less equal distribution of after-tax income."

Biden’s Top Marginal Capital Gains Tax Rate Would Be Highest in OECD - Clifton Painter, Tax Policy Blog. "When combined with the 3.8 percent net investment income tax (NIIT) and average top state capital gains tax rates, the proposal would lead to a top combined rate of 48.4 percent—significantly higher than the current 29 percent rate."


District Court Holds that Delinquent Payment and Filing After CI Agent Contact Is Admissible in Criminal Case - Jack Townsend, Federal Tax Crimes. "The lesson is that, when contacted by CI, the defendant and his counsel should consider delinquent filings. Of course, the delinquent filings will establish the tax due and owing element of some tax crimes, but if it defeats the willfulness element (intent to violate a known legal duty), then it works."

Better still to not get delinquent on paying payroll tax and filing tax returns, of course.


Like every other day, today is World Chocolate Day


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