Wyden, Toomey team up on cryptocurrency tax fixes - Laura Weiss, Roll Call. "Wyden, a Democrat and Finance Committee chair, and Toomey, the Banking panel’s top Republican, have raised concerns that the proposed new requirements for transfers of digital assets such as Bitcoin and Ethereum could create mandates for cryptocurrency miners, wallets and other service providers that play a part in transactions but don’t collect the information they’d be expected to send the Internal Revenue Service."
Cryptocurrency's big week: a rider in infrastructure bill & target of SEC regulatory interest - Kay Bell, Don't Mess With Taxes:
The Electronic Frontier Foundation (EFF) calls it "a poorly crafted provision that could create new surveillance requirements for many within the blockchain ecosystem. This could include developers and others who do not control digital assets on behalf of users."
Adding to crypto concerns is the speed with which the bill is expected to move.
How the broker reporting actually would work "is still very much an open question," wrote Rainey Reitman, EFF's Chief Program Officer for EFF. "Indeed, perhaps this extremely broad interpretation was not even the intent of the drafters of this language. But given the rapid timeline for the bill’s likely passage, those answers may not be resolved before it hits the Senate floor for a vote," said Reitman.
Legislate in haste, repent at leisure.
$1.2T Senate Bipartisan Infrastructure Bill Braces For Hurdles - Linda Chiem, Law360 Tax Authority: "But there's still the challenge of getting the U.S. House of Representatives to also pass the bill without major changes, experts say. Another big unknown is whether the House will insist on the Senate also passing a separate $3.5 trillion budget bill that would move in tandem, but through a special filibuster-proof process called reconciliation allowing it to clear the Senate with a simple majority."
US To Balance Global Tax Talks With Reconciliation In Fall - Dylan Moroses, Law360 Tax Authority ($). "Some details of Democrats' tax priorities have been revealed by the Biden administration, including an increase of the 21% U.S. corporate tax rate to 28% and a rewrite of international business tax provisions to strengthen the current minimum tax applied to offshore earnings. For example, the tax rate applied to global intangible low-taxed income, or GILTI, would double to 21% from 10.5%."
Interview: Five Minutes on Paying for Infrastructure - Robert Goulder and Joseph Thorndike, Tax Notes Opinions. "This bipartisan infrastructure plan should be looked at as spending, pure and simple. All this talk about pay-fors and fiscal responsibility is just window dressing and happy talk to make some people feel a little bit better about all the money that's being spent. Is that it?"
NY Halts Donor Info Collection After Justices Reject Calif. Rule - James Nani, Law360 Tax Authority ($). "New York has suspended collection of largest-donor information from tax-exempt charities while it reviews possible changes to comply with the U.S. Supreme Court's recent decision finding California's similar rule unconstitutional."
Balancing Free Speech And The Tax Exemption For Non-Profits - Renu Zaretsky, TaxVox. "This year, at least 10 states considered legislation to exempt nonprofits from reporting to states the names of donors they already report to the IRS on Schedule B."
Math Error Part II - National Taxpayer Advocate Blog:
No surprise, taxpayers are often confused by IRS notices, and math error notices are no exception. Taxpayers may not understand the nuances of tax lingo, but the notice should at least use the term “math error” and provide a simplistic explanation of what that means. Taxpayers may not understand the use of the term “math error,” but practitioners should understand the procedural significance of CP 11 or CP 12 notices. These notices are often unclear and confusing. But the omission of a critical statutory time period to request abatement goes far beyond just confusing: it has significant implications and repercussions for taxpayers, is a serious compromise of their rights, and is unacceptable.
Any tax adjustment notice should clearly state what item is being adjusted, why it is being adjusted, how the adjustment can be contested, and what the deadlines are. Some notices miss all four.
Security Summit: Tax Pros can help clients battle identity theft risk related to unemployment - IRS. "Because of fraud and identity theft, many taxpayers received Forms 1099-G for compensation they did not receive. Some taxpayers received forms from multiple states."
With a Roth conversion, there’s a surprising trick to biting the tax bullet - Lynnley Browning, Financial Planning. "Why are advisors urging clients to ditch their regular IRAs for a Roth? To lock in today’s lower rates."
Don't be hasty, though:
Taxes aren’t the only issue. A conversion doesn’t make sense if an investor is going to need income from his account in the “near future,” says Ross Bruch, a senior vice president and senior wealth planner at Brown Brothers Harriman. Why? “If you’re going to pay tax either way, you’re better off to have a few additional years of growth,” he says.
A conversion may also not be worth it if an aging investor plans on moving from a high-tax state like Connecticut to retire in no-tax Florida, or Pennsylvania, which doesn’t tax retirement accounts. That’s because there would be no savings on the state taxes owed (the top rate in Connecticut is 6.99%) when transferring a traditional IRA to a Roth.
And even with rate increases, many taxpayers have a significant decline in earnings post-retirement, moving them to lower brackets. As the Biden plan promises to insulate earners with under $400,000 in income from tax increases, that covers a lot of retirees.
No One Likes Surprise Tax Bills – Consider Tax Projections - Tax Warrior Chronicle. "Setting expectations for tax cash flow needs can take the sting out of large tax payments due and reduce the shock and surprise that could otherwise be avoided."
Pennsylvania Transportation Commission Urges Shift to Mileage Tax - Paul Jones, Tax Notes ($):"'In recent months some major vehicle manufacturers have announced their complete conversion to electric vehicles by the next decade,' the report says, predicting the state’s liquid fuels tax will be an increasingly inadequate source of revenue."
Pennsylvania Considers the Equivalent of a $2 Per Gallon Gas Tax - Ulrik Boesen, Tax Policy Blog. "A vehicle miles traveled (VMT) proposal gaining steam in Pennsylvania would be the equivalent of a state gas tax of more than $2 per gallon, and that’s not all the Commonwealth is considering."
Tax Potpourri - Roger McEowen, Agricultural Law and Taxation Blog. Everything from racing to hoop buildings.
Comparing Three Financing Options for President Biden’s Spending Proposals - Huaqun Li and Garrett Watson, Tax Policy Blog. "Three options that illustrate the range of economic impacts include financing the spending entirely through additional borrowing, increasing the corporate tax rate to 47 percent, or imposing a 2.1 percent value-added tax (VAT)."
Support Builds to Make Every U.S. Worker Save for Retirement - Austin Ramsey, Bloomberg. "Lawmakers in both chambers are considering legislation that would complement the 2019 SECURE Act, automatically enrolling new employees in voluntary workplace plans and rewarding participation even more."
A Look At The Opinion On Releasing Trump Tax Returns - Peter Reilly, Forbes. "I really hope that they don't decide to make a substantial batch of complete Trump returns public. Based on what I think I know about the way the Trump Organization is structured - hundreds of disregarded entities - the returns likely run into thousands of pages. I would then have to choose between going through them or feeling bad about myself."
Appeals Court Affirms Author’s Brand Is Part of Her Business - Kristen Parillo, Tax Notes ($):
The Tax Court didn’t err when it held that a popular crime fiction writer’s income from promoting her books is part of her trade or business and thus subject to self-employment tax, the Eleventh Circuit held.
...
At issue was how much of Slaughter’s income from her publishing contracts was derived from her trade or business of writing. Slaughter argued that her business consisted only of the percentage of time she physically spent writing, while the IRS countered that her marketing and licensing activities also fell within that trade or business.
Talk about spoilers.
Eleventh Circuit Affirms Tax Court Ruling That Author Had to Treat All of Her Publishing Contract Income as Self-Employment Income - Ed Zollars, Current Federal Tax Developments. "One key problem the panel pointed out was the fact that Ms. Slaughter claimed deductions related to expenses incurred for her promotional activities—deductions that could only have been allowed as trade or business expenses under IRC §162(a)."
Coo-kies. Today is National Chocolate Chip Cookie Day. Don't overdo it!
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