November 22, 2022
Must Pass Legislation May Bump Pension Bill from Lame Duck Consideration - Jeff Carlson, Thomson Reuters Checkpoint Edge ($):
The SECURE Act 2.0 is under consideration for action as negotiators work out which provisions to include in a measure that has bipartisan support but has been given only a 40 percent chance of passage during the lame duck session, according to J. Mark Iwry, the head of national retirement policy during the Obama-Biden administration who’s now a non-resident senior fellow at the Brookings Institution. Congress, Iwry added, “has a lot of other priorities during the lame duck; … Secure 2.0 is not one of the top three or four things on the minds of most members of Congress.”
Temporary funding to keep the government open expires on December 16 and lawmakers must decide whether to pass another extension or submit an omnibus spending bill which would cover government agencies for Fiscal Year 2023. The House has passed six appropriations bills versus none for the Senate. An omnibus bill is likely the last vehicle this year to move additional legislation which could include business tax breaks and a retirement security bill if members can reach agreement before the end of the year.
Another lump of coal this year?
There will be much overseeing - Bernie Becker, Politico:
House Republicans won’t have a particularly large majority come 2023. But they’ll still have the committee gavels, so IRS officials can expect to answer a lot of questions on a wide variety of topics from multiple panels, as Pro Tax’s Brian Faler reports.
The biggest of those questions likely will be how Treasury and the IRS plan to implement the $80 billion in funding that Democrats approved over the summer — something the IRS is supposed to have a lot more information on by February, or early in the new House GOP majority.
Energy Efficiency Incentives and the Inflation Reduction Act - Kristin Gustafson, Eide Bailly. "The 45L Residential Credit is changing in 2023, with multifamily homes starting at a base credit of $500/unit, and a bonus credit of $2,500/unit for projects meeting prevailing wage and apprenticeship requirements. Additional credits are available for projects meeting the DOE Zero Energy Ready home program requirements."
Missouri Lawyers, North Carolina Insurance Agent Indicted in Tax Shelter Scheme - Matthew Pertz, Tax Notes ($). The indictment alleges an defendants ran
..."a fraudulent tax scheme known as the Gain Elimination Plan (GEP)" that inflated their clients’ business expenses with invented royalties and management fees. The three also allegedly colluded to issue life insurance policies worth upward of $200 million on fraudulent grounds, which led to large commissions for Simmons that he split with the attorneys.
The grand jury says the scheme began in 2011 and stretched from coast to coast, with clients in North Carolina, Missouri, Illinois, Minnesota, Oklahoma, Texas, and California.
EU Ministers Eye Dec. 6 Meeting For Minimum Tax Agreement - Todd Buell, Law360 Tax Authority ($). "The deal was backed in principle by all 27 EU countries, but turning it into law has taken much longer than EU leaders had hoped. A handful of countries have raised objections including the administrative burden, treatment of smaller member jurisdictions and the link between another part of the global tax deal known as Pillar One, which reallocates some taxing rights."
NRA Withholdings—No Guns, Just Taxes - Zachary Montgomery, Freeman Law:
Generally, income is subject to NRA withholding if it is sourced within the United States and is fixed, determinable, annual, or periodical (“FDAP”) income. According to the Internal Revenue Service, FDAP income is all income, except:
- Gains derived from the sale of real or personal property (including market discount and option premiums, but not including original issue discount);
- Items of income excluded from gross income, without regard to the U.S. or foreign status of the owner of the income, such as tax-exempt municipal bond interest and qualified scholarship income.
Income is fixed when it is paid in amounts known ahead of time. Income is determinable whenever there is a basis for figuring the amount to be paid. Income can be periodic if it is paid from time to time. It does not have to be paid annually or at regular intervals.
Related: Eide Bailly International Tax.
Holiday shopping (and tax time) identity theft prevention tips - Kay Bell, Don't Mess With Taxes. "Shop safely online: If you'll be electronically window shopping (or more) on Black Friday or Cyber Monday, make sure you take at least basic steps to protect your personal and financial information."
Company Owner's Daughter Is a Responsible Person for Two Payroll Quarters - Parker Tax Pro Library. "The Eleventh Circuit upheld a jury verdict which found that the daughter of a company's owner was a responsible person liable for penalties for failing to pay the company's employment taxes for two payroll quarters. According to the court, the jury's finding was supported by the fact that the daughter was a corporate officer who controlled the company's finances and had authority to disburse company's funds and thus had sufficient control over her father's company to have been able to avoid the company's non-payment of its payroll taxes."
Court of Federal Claims Rejects Defective § 6603 Strategy for Multiple Transferee Liabilities - Jack Townsend, Federal Tax Procedure. "The background is an intermediary or Midco transaction by a family corporation with the assets stripped out of the corporation by direct or indirect transfer to shareholders without paying the large tax corporate liability generated by the corporation. In initially reporting the transaction, the corporation claims the benefit of a [appropriate expletive deleted] tax shelter to effectively zero out the gain and tax, but on audit and denial of a [a.e.d.] tax shelter benefit, the gain is taxed to the corporation which has no assets (because the shareholders stripped them out directly or indirectly). So, the IRS has to chase the “transferees” – here the shareholders – to collect the payment through transferee liability under § 6901."
Form 7203 for 2022: Not much has changed in the form’s second year - Wolters Kluwer Tax & Accounting. "But just because some of the S corporation’s loss is allocated to a shareholder, that does not mean the shareholder can deduct his or her whole share. The shareholder must have enough basis in the S corporation’s stock and/or debt to absorb his or her share of the corporation’s loss."
Foreign Assets — How Can the IRS Enforce Tax Collection Overseas? (Part I) - Virginia La Torre Jeker, Virginia - US Tax Talk. "Only a small percentage of tax treaties negotiated with the US currently contain a collection assistance provision, although this may change as the US and other countries have clearly evidenced a strong desire to join forces in efforts to crack down harder on tax evasion."
Conservation Easement Syndicates Outlawyering IRS - Peter Reilly, Forbes. "That was some really sharp lawyering to get a regulation that had been in force for over thirty years blown up, because one of the comments on it had not been adequately addressed."
Tax Back To the Future: Lessons From the 1986 Book Minimum Tax - Alex Parker, Things of Caesar. "Maybe the urge to reduce taxes will be so powerful, companies will be willing to sacrifice a bit of their earnings, making everyone lose out. Especially potential investors, who are now faced with less trust-worthy public filings."
Worried About Federal Debt? Then Raise Taxes, Cut Spending, and Abolish the Debt Ceiling - Joseph Thorndike, Tax Notes Opinions. "But it’s self-evident that the debt limit has failed to curb federal borrowing. In October America’s gross national debt reached $31 trillion, an all-time record. It shows every sign of rising further — an upward trajectory that grows even more worrisome every time interest rates tick upward."
The FTX Debacle Could Alter the Crypto Policy Landscape - John Buhl, TaxVox. "If the FTX collapse prompts users to flee to a less centralized environment, those centralized exchanges will become less valuable as a tool to ensure tax compliance. Regulators will need to find a new touchpoint to best oversee the ecosystem. That could end up being decentralized exchanges or something entirely new as DeFi evolves. But without centralized exchanges facilitating compliance, we risk heading toward an antagonistic environment with one side eschewing regulation and the other ignoring the potential for innovation."
Prosecution rests in Trump Organization tax fraud case - Michael Sisak, AP via The Hill:
The Trump Organization’s lawyers opened their defense by calling to the witness stand the accountant who handled tax returns and other financial matters for Trump, the Trump Organization and hundreds of Trump entities since the 1980s.
Once Trump became president in 2017, Bender said he’d visit him twice a year at the White House so he could sign his tax extensions and returns — but those trips ended when the COVID-19 pandemic began.
That's a lot of work to get an extension signed. And how was he rewarded?
Mazars discontinued work for the Trump Organization in February.
Trump blamed Bender and Mazars for the company’s troubles, writing on his Truth Social platform last week: “The highly paid accounting firm should have routinely picked these things up – we relied on them. VERY UNFAIR!”
Reality TV's Chrisleys get hefty sentences in fraud case - Kate Brumback, AP via Washington Post:
U.S. District Judge Eleanor Ross in Atlanta gave Todd Chrisley 12 years in prison, while Julie Chrisley got seven years behind bars, according to the U.S. attorney’s office in Atlanta. Each is to serve three years supervised release afterward, and Ross also ordered them to pay restitution in an amount to be determined later.
Peter Tarantino, 60, an accountant hired by the couple, was found guilty of conspiracy to defraud the IRS and willfully filing false tax returns. He was sentenced Monday to three years in prison followed by three years of supervised release.
Not a good way to wind down one's tax career.
More from the Department of Justice Press Release:
According to U.S. Attorney Buchanan, the charges and other information presented in court: Todd and Julie Chrisley conspired to defraud community banks in the Atlanta area to obtain more than $36 million in personal loans. The Chrisleys, with the help of their former business partner, submitted false bank statements, audit reports, and personal financial statements to Georgia community banks to obtain the loans. The Chrisleys spent the money on luxury cars, designer clothes, real estate, and travel – and used new fraudulent loans to pay back old ones. After spending all the money, Todd Chrisley filed for bankruptcy and walked away from more than $20 million of these fraudulently obtained loans.
Later, while earning millions from their TV show, Todd and Julie Chrisley, along with their accountant, Peter Tarantino, conspired to defraud the Internal Revenue Service. Throughout the conspiracy, the Chrisleys operated a loan-out company. To evade collection of half a million dollars in delinquent taxes owed by Todd Chrisley, the Chrisleys opened and kept the corporate bank accounts only in Julie Chrisley’s name. But after the IRS requested information about bank accounts in Julie Chrisley’s name, the Chrisleys transferred ownership of the corporate bank account to a relative to further conceal their income from the IRS.
12 and 7 year sentences are pretty severe in the tax world. Hiding things after the IRS started asking questions likely made things worse.
The Moral? Don't defraud banks, don't cheat on your taxes, don't go on TV if you do cheat, and don't make things worse by getting tricky if the IRS comes to visit.
Starting that long Thanksgiving drive today? Then you are observing Go For a Ride Day appropriately!
This is a roundup of tax news and opinion. Any opinions expressed or implied are those of the author and not necessarily those of Eide Bailly. Opinions found in linked items are those of the authors of the linked item, not of your bloggers or of Eide Bailly. “$” means link may be behind a paywall. Items here do not constitute tax advice.