Tax News & Views Tortoise not Hare Roundup

August 25, 2021

IRS Taking Up to 15 Times Longer to Process Returns With Errors – Allyson Versprille, Bloomberg ($). “The IRS is, at times, taking up to 15 times longer to process tax returns that may contain errors, an agency official said Tuesday. In a typical year, returns flagged by the IRS’s Error Resolution System, take an average of three to five days to process, said Ken Corbin, chief taxpayer experience officer at the IRS. ‘Right now, the average is anywhere from 10 to 75 days, depending on the issue and if we need to correspond with the taxpayer,’ he said at a conference hosted by the National Association of Tax Professionals.”

Oh my aching backlog: What tax pros tell clients about IRS delays – Jeff Stimpson, Accounting Today. “Many clients still have two questions: ‘Where’s my federal refund?’ swiftly followed by, ‘Well, why haven’t they processed my return?’

‘I’ve informed my clients of the backlog with the tax agencies. So my clients know that processing times are going to take much longer than normal,’ said Robert Seltzer, a CPA at Seltzer Business Management in Los Angeles. ‘All we can do is check every couple months to get a status update.’

‘We have many clients waiting a long time for their tax refunds, especially those who had to file an amended and/or paper returns,’ said Gail Rosen, a CPA in Martinsville, New Jersey.

Manasa Nadig, an Enrolled Agent and owner at MN Tax and Business Services and a partner at Harris Nadig in Canton, Michigan, reports that a few of her clients are waiting for their federal return to be processed.

‘One of them has been waiting since February. I and they have called the IRS, wait times on the [Practitioner Priority Service] line are notoriously long and most times you are kicked off the queue. Clients have reported similar problems,’ Nadig said. ‘I’m not sure if the Taxpayer Advocate Service will help in this, but it is worth a shot.’


Tax Preparer Reg Bill Has Broad Support, Co-Sponsor Says – David van den Berg, Law360 ($). “A House Republican lawmaker co-sponsoring legislation to allow the U.S. Department of the Treasury to regulate tax return preparers told Law360 on Tuesday the measure has broad bipartisan support and he expects it to eventually be adopted."

The level of support for the Taxpayer Protection and Preparer Proficiency Act is not reflected in the current number of co-sponsors because the House had been out of session until this week, said Rep. Tom Rice, R-S.C., a member of the House Ways and Means Committee. The legislation would allow Treasury to require exams, competency standards and continued education for tax return preparers. Rice is the only co-sponsor of the bill, introduced by Rep. Jimmy Panetta, D-Calif., a fellow member of the House tax panel.

‘I think there's a great chance to get a lot of co-sponsors on both sides of the aisle,’ Rice said. ‘It's just that we haven't been in session.’


House Passes $3.5 Trillion Budget Blueprint, Sets Deadline for Infrastructure Bill - Kristina Peterson and Andrew Duehren, Wall Street Journal. "The House narrowly passed a measure approving a $3.5 trillion budget blueprint and locking in a late September vote on a roughly $1 trillion infrastructure bill, ending a standoff between centrist Democrats and party leaders over their legislative agenda. Tuesday’s passage of the $3.5 trillion budget framework in a 220-212 vote unlocks a process, known as reconciliation, allowing Democrats to pass a broad package of healthcare, education and climate provisions in the Senate without GOP support, so long as all 50 senators in the Democratic caucus back it. The Senate passed the same budget blueprint earlier this month, and lawmakers are already working on drafting detailed legislation.”

Biden Praises House Adoption of $3.5 Trillion Budget Plan – Jennifer Jacobs and Justin Sink, Bloomberg ($). “President Joe Biden on Tuesday tossed aside party divisions that nearly sunk his economic agenda and credited Speaker Nancy Pelosi’s “masterful” leadership in getting the fractious House Democratic caucus to adopt a $3.5 trillion budget resolution.”

‘The House of Representatives is taking a significant step toward making a historic investment that is going to transform America -- cut taxes for working families, and position the American economy for long term, long term growth,’ Biden said Tuesday at the White House.

FYI: The President does not sign the budget into law. The budget provides guidelines for legislation, which gets signed into law if it passes Congress.

House approves procedural vote that puts Biden economic agenda in motion – Jay Heflin, Eide Bailly. “House Speaker Nancy Pelosi (D-Calif) and moderate House Democrats argued for weeks over when to vote on the $1.2 trillion Bipartisan Infrastructure Bill… In a nod to moderate Democrats, Speaker Pelosi agreed to hold a floor vote on the $1.2 trillion Bipartisan Infrastructure Bill by September 27th regardless of when a vote occurs on the $3.5 trillion tax and spending bill. This agreement converted Democrats opposing the legislation into supporters of it.”

The House Ways and Means Committee is expected to begin publicly working on the [reconciliation] bill the week of September 6. 

Committee Agendas Forming – Bloomberg ($).House Ways and Means Chairman Richard Neal (D-Mass.) told reporters Tuesday that he wants the committee to begin considering the tax measures for the reconciliation bill around Sept. 9, with the markup finishing the week of Sept. 13.”

The budget blueprint instructs the committees to complete their portions of the bill by Sept. 15. Neal outlined areas he considers priorities, including extending the expanded child tax credit, paid family leave, and improvements to Medicare. He also said the Growing Renewable Energy and Efficiency Now Act (H.R. 848) for combating climate change should be a central point of discussion. The House passed a version of that bill (H.R. 2) last year as part of a broader infrastructure package that the Senate failed to adopt.


Crypto lobbyists face defeat with House set to block tax rule changes – Kellie Mejdrich, Politico. “House Democrats on Tuesday were poised to block attempts to scale back digital currency tax rules tucked into President Joe Biden's infrastructure plan, in a new setback for crypto industry advocates fighting the proposal. The House Rules Committee, which drafts the terms of debate for bills headed to the floor, agreed to a process that would prohibit any amendments from being considered for the infrastructure bill. The full House was scheduled to vote to lock in the procedure Tuesday afternoon. The plan would also set up a floor vote on the infrastructure package by Sept. 27."

The House was set to close the door to infrastructure bill changes despite calls from Democrats and Republicans to pare back the cryptocurrency tax proposal that the Senate passed as part of the legislation earlier this month.

At issue in the fight are proposed requirements that would force cryptocurrency exchanges and other firms to report transaction information to the Internal Revenue Service, similar to rules in place for stock brokers. As drafted, industry lobbyists and sympathetic lawmakers say the plan threatens technological innovation and the viability of a growing sector of the U.S. economy.

House Approves $3.5T Budget Vehicle For Biden Relief Plan – Stephen Cooper, Law360 ($):

Neal told reporters he was undecided on whether to include a cryptocurrency provision in the reconciliation bill to define brokers and exchanges covered by the enhanced information reporting mandate in H.R. 3684, the Infrastructure Investment and Jobs Act. The bipartisan spending proposal includes $550 billion for improvements to highways, railways, airports, public transit and other systems.


White House Re-Employs EV Approach to Cut Building Emissions – Stephen Lee, Bloomberg ($). “The White House is developing a plan—reminiscent of its approach to electric vehicles—to make its own massive stock of buildings more energy-efficient, hoping to set an example for states and cities to follow. The first-ever federal building performance standards will establish metrics, targets, and tracking methods to reach federal carbon emissions goals, Mark Chambers, senior director for building emissions at the White House Council on Environmental Quality, told Bloomberg Law.”

CEQ, the General Services Administration, the Department of Energy, and the Environmental Protection Agency are working out the details of the plan, which comes in the wake of several large cities and states setting efficiency standards for buildings.


Yellen Is Urged to Block Cities From Using Aid for Debt – Shruti Singh, Bloomberg ($). “Dozens of community organizations from across the U.S. want Treasury Secretary Janet Yellen to issue rules that direct the latest round of relief funds into communities hardest hit by the pandemic and away from state and local debt repayments and police budgets."

Fifty-seven national and local groups are sending Yellen and President Joe Biden a letter Tuesday to maintain the current ban on states and cities using American Rescue Plan Act funds to repay debt. They also are asking that the aid not boost police budgets. Paying back loans and increasing funding for cops would come at the expense of community needs such a rental assistance, mental health programs, child care, homeless services and violence prevention, according to interviews with the organizations and local elected officials.

The letter can be found here.

Fla. Co. Asks State Justices For Tax Refund On Hotel Sale – Paul Williams, Law360 ($). “A Florida company implored the state Supreme Court to review an appeals court's finding that a third-party study failed to substantiate a refund claim for stamp tax paid on tangible and intangible personal property included in a hotel sale."

The company, 1701 Collins Miami Owner LLC, argued in a petition Monday that the state's First District Court of Appeal erred in holding that it couldn't use a third-party study to prove that $47.2 million of the $125 million hotel and conference center sale consisted of personal property. The lower court's ruling conflicted with case law that allows taxpayers to present evidence of monetary value in seeking a refund of documentary stamp tax levied on sales consisting of a mix of taxable real property and nontaxable personal property, the company said.

Wash. Will Impose Tax On Prepaid Wireless Services – Jaqueline McCool, Law360 ($). “Washington will impose a new excise tax on prepaid wireless retail transactions and telephone lines sourced to the state beginning Oct. 1, the state Department of Revenue said Tuesday. In a special notice the Department of Revenue said an excise tax of 24 cents per line or retail sale of prepaid wireless service would be imposed from Oct. 1, 2021, through Dec. 31, 2022. Beginning Jan. 1, 2023 the excise tax rate would be 40 cents per line or retail sale of prepaid wireless service. The tax will fund a behavioral health crisis hotline, according to the notice.”


Three Senate Finance Democrats Unveil International Tax Overhaul – Doug Sword, Tax Notes ($). “Senate Finance Committee Chair Ron Wyden, D-Ore., and fellow panel Democrats Sherrod Brown of Ohio and Mark R. Warner of Virginia have released a draft of their proposed overhaul of the international tax regime.”

Unlike a proposal from President Biden that would more broadly roll back the international tax provisions from the Tax Cuts and Jobs Act, the Senate Finance Democrats said their bill would retain the basic architecture of the 2017 law while 'ensuring mega-corporations pay their fair share.' 

Senate Company Tax Plan Boosts Penalty on Sending Profit Abroad – Laura Davison, Bloomberg ($). “American companies would face steeper penalties for shifting profits abroad in a plan from Senate Democrats that offers the clearest picture yet of the higher levies that big firms could be paying from next year. In draft legislation released Wednesday, Senate Finance Committee Chairman Ron Wyden is outlining his vision for how to reform the global tax system for multinational corporations, which Democrats say have been subject to lax rules that for decades have allowed them to shift profits and jobs outside the U.S."

'Overhauling the international tax code is central to our efforts to restore fairness,' Wyden said in a statement on the legislation, which was co-authored by fellow Finance Committee members Sherrod Brown and Mark Warner. Increased corporate-tax levies will 'fund critical investments like the paid leave and the expanded child tax credit—Social Security for our children' Democrats are planning, he said.

FWIW: Senator Wyden has released a draft of legislation that he wants to introduce in the future.  It is being presented to Senators who can comment on his proposal. After Wyden considers those comments, he will likely introduce actual legislation that he hopes will become law. At this point, it is unclear if Wyden's hope will come to fruition. 


IRS Defers Parts of Foreign Partnership Withholding Rules – Isabel Gottlieb, Bloomberg ($). “New withholding requirements affecting foreign investors will be deferred by a year to allow taxpayers more time to comply, the IRS said Tuesday. The IRS plans to amend regulations under tax code Sections 1446(a) and 1446(f) to have an applicability date of Jan. 1, 2023—rather than 2022—it said in a notice. Section 1446 applies a withholding tax to foreign partners’ share of income that is effectively connected U.S. income.”


It’s National Kiss and Make Up Day!  Today is to remind “us to end the quarrels, arguments, and fights. Instead, come to an agreement with anyone you’ve had a disagreement with on National Kiss and Make Up Day on August 25th.” Arguments are quite common. Should Kiss and Make Up be a weekly thing?

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