Tax News & Views Falls Off the Omnibus Roundup

December 14, 2022

No Breakthrough in Sight in Omnibus Tax Title Talks - Doug Sword, Tax Notes ($):

House Ways and Means Committee Chair Richard E. Neal, D-Mass., described as “pretty stubborn” the negotiations taking place on a tax package centered on renewal of the expanded child tax credit and a trio of corporate tax breaks

“I think there’s a lot of resistance on the Republican side,” said Neal, who added that he had hoped for a major deal because the two parties have extensive wish lists. That includes Republicans’ “Big Three”: rolling back research and development amortization and the tightening of net interest expensing, both of which went into effect this year, and extending bonus depreciation, which begins phasing out in 2023.


Tax provisions unlikely in omnibus, Senate GOP leader says - Brian Faler, PoliticoPro ($). "'I don’t see it now — I’m certainly not getting good vibes on a tax title,' said Senate Minority Whip John Thune (R-S.D.)."

Top appropriators clinch deal on government funding framework - Caitlin Emma and Marianne Levine, Politico. "Senate Majority Leader Chuck Schumer said earlier Tuesday that a revamp of the outdated Electoral Count Act and emergency money for Ukraine will be included in the year-end bill. Other provisions, including tax provisions like an extension of the enhanced Child Tax Credit, are much less certain."

Deal close on fiscal 2023 spending framework as stopgap prepped - Aidan Quigley and Lindsey McPherson, Roll Call. "A year-end tax package is also under discussion, and lawmakers need to deal with massive automatic cuts to programs like Medicare and farm price supports early next year."


IRS funding, child tax credit will be top issues in 2023 - The Hill:

Another big piece of tax legislation now being debated by lawmakers that could also be pushed to next year is a major retirement package favored by Wall Street. A version of the bill sailed through the lower chamber in the spring with broad bipartisan support.


Proponents of that bill argue it will help low- and middle-income people save for retirement, while critics say it’s tailored to the interests of rich people with oversized retirement accounts serviced by the financial sector.


Ken Griffin Sues IRS Over Tax Privacy Breach That Also Affected Other Billionaires - Richard Rubin, Wall Street Journal:

Mr. Griffin, the founder and chief executive officer of Citadel, filed the lawsuit in federal court in the Southern District of Florida, where he lives. His lawsuit is using a section of the tax code that allows taxpayers to sue the government if a federal officer or employee discloses their information knowingly or negligently. The law allows taxpayers to get at least $1,000 per disclosure and attorneys’ fees, and they can seek punitive damages if there was a willful disclosure or gross negligence.

The exact path by which the tax data reached ProPublica isn’t publicly known. The lawsuit cites a long series of inspector general reports dating back more than a decade showing various flaws and gaps in IRS information security. 

The lawsuit relates to the June 2021 publication of detailed tax information of wealthy taxpayers by non-profit media outlet ProPublica. 


Citadel CEO Sues IRS Over Leak Of Tax Return Info - Theresa Schliep, Law360 Tax Authority. "'IRS personnel exploited the IRS' willful failure to establish adequate administrative, technical and physical safeguards for the IRS' data and records systems to misappropriate confidential tax return information for the highest-earning U.S. taxpayers, including Mr. Griffin, and then unlawfully disclosed those materials to ProPublica for publication,' the complaint added."

Hedge Fund Manager Sues IRS Over ProPublica Tax Data Leak - Caitlin Mullaney, Tax Notes ($). "'It is clear why Mr. Griffin’s and these other taxpayers’ confidential tax return information was and may continue to be so readily available to ProPublica: the IRS’s well known, systemic failures to establish appropriate safeguards to protect taxpayers’ confidential return information from unauthorized and unlawful inspection and disclosure,' the complaint says."


Sub-$400k Audit Pledge May Have Ill Effects, Advocate Says - Nathan Richman, Tax Notes ($):

Part of Treasury Secretary Janet Yellen’s pushback against what some have called inaccurate and dangerous rhetoric about what the IRS will do with its recent influx of resources has a promise that any increase in audit activity will focus on taxpayers earning over $400,000. The Inflation Reduction Act (P.L. 117-169) increased the IRS’s budget by $80 billion over 10 years.

“This is a concern I have, on not necessarily the statement but the interpretation of the statement. . . . I’m hearing from a lot of accountants and enrolled agents that their clients are telling them that they’re not going to be audited because they’re under $400,000 and so therefore, I can be a little loosey-goosey with that return because no one’s going to be looking at it,” Collins said December 13 at a conference in Las Vegas hosted by the American Bar Association Section of Taxation.

If you keep saying only other people will pay taxes, people may start to think you're serious.


Reporting holiday and year-round taxable tip income - Kay Bell, Don't Mess With Taxes. "Regardless of their size or when you get them, tips are taxable income that must be reported on federal and, for most folks, state tax returns."

Recent court decisions show pitfalls of deducting donated property - National Association of Tax Professionals. "Generally, if a taxpayer wants to claim a deduction for non-cash charitable contributions, the IRS has substantiation requirements when the donated property has a value of more than $500 and the taxpayer must complete Form 8283, Noncash Charitable Contributions."

Tax professionals express frustration with the IRS practitioner priority service line - Wolters Kluwer Tax & Accounting. "In recent weeks, getting through on the PPS has been virtually impossible, according to many. The degradation in service seems to be tied to the October rollout of a speech recognition system that the IRS is piloting to thwart auto-dialers and robocalls being offered by a few entrepreneurs to enable tax pros to 'jump the line.'"

Federal Jury Convicts Father and Son In $20 Million Lottery Scam - Rebekah Barton, TaxBuzz. "The Watertown-based duo...conducted a 'ten-percenting' scheme, which involved fraudulently cashing winning Massachusetts state lottery tickets on behalf of the actual gamblers to avoid taxes and receive tax refunds, rather than paying taxes on their lottery earnings."

Confusion Over New Rules for Inherited IRAs - John Richman, Tax School Blog. "The SECURE Act sharply curtailed the stretch IRA. It shortened the period for distributions from the balance of the beneficiary’s life to 10 years. Except for surviving spouses and eligible designated beneficiaries, the new law required beneficiaries of IRAs to withdraw all remaining funds within 10 calendar years of the calendar year of the original owner’s death, assuming they died after the required beginning date."

Related: IRS Waives RMD Penalty for Certain Inherited Retirement Accounts.


Corporate Tax Rates around the World, 2022 - Christina Enache, Tax Policy Blog. "The worldwide average statutory corporate income tax rate, measured across 180 jurisdictions, is 23.37 percent. When weighted by GDP, the average statutory rate is 25.43 percent."

Playing Russian Roulette With The Federal Debt - Leonard Burman, TaxVox. "The consequences of breaching the debt limit range from bad to catastrophic. At best, it is a waste of taxpayer money. At worst, it risks the ability of the US to borrow, when the federal government will need $1.2 trillion in loans to keep running this year."

Will the “Blogger Rule” Join the “Fatty Rule” as Litigation over IRC 6015(e)(7) Continues? (Part Two) - Christine Spiedel, Procedurally Taxing. "In Part One I introduced the pending case Thomas v. Commissioner, in which a taxpayer seeks to exclude some of her blog posts from evidence in her innocent spouse trial."

My blog posts, in contrast, should be treated as decisive authority. 


Owner of trucking companies sentenced to 10 years in prison for conspiracy in fatal tanker explosion, tax evasion and COVID fraud - IRS (Defendant name omitted):

On May 6, 2014, NDSI management ordered workers to do welding work on a tanker that had not been fully cleaned of the crude oil inside of it. This resulted in an explosion that killed a company welder and severely injured a second worker.

For the next four years, Defendant and other employees of NDSI and WDI conspired to obstruct a federal investigation into the explosion by making multiple false statements to local, state and federal officials to conceal that NDSI had conducted illegal welding repairs, that Defendant controlled NDSI and WDI, and that the deceased and injured employees worked for him. For example, on the day of the fatal explosion, when investigators arrived at NDSI, Defendant identified himself as being a customer service representative with another company and said the welders were employed by an outside tank-repair company.


As part of the conspiracy and to further conceal his control of NDSI and WDI, Defendant did not file income tax returns for the years 2012 through 2017. Defendant failed to report to the federal government at least $1,174,173 in income from the trucking companies. He used that income to pay for personal expenses – including renting a large home in Corona for at least $12,000 per month and using company accounts to make $200,000 in tuition payments at his children's private high schools and universities.


In April 2020, while free on bond in the explosion case, Defendant directed another trucking company he controlled, the Ontario-based Western Distribution LLC, to apply for a $436,390 PPP loan. After the loan was funded, Defendant directed Western Distribution in May and June of 2020 to immediately spend the PPP funds. Rather than use the funds to keep the company's employees on staff, Defendant laid off most of the company's employees, but rehired many of them in late 2020.

I suppose the "Employer of the Month" award is out of the question.


Be good. Today is More Good Today Day. "More Good Today Day is a special holiday celebrated on December 14 every year in the U.S. The holiday aims to encourage more people to practice kindness and generosity. It reminds people to take the time to think about the people around them and help in any way they can."

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