Programming note: Eide Bailly offices will be closed Monday, January 2. Regular programming resumes on Tuesday. If significant tax legislative news happens, we may post an update. Otherwise, happy New Year to all!
IRS issues standard mileage rates for 2023; business use increases 3 cents per mile, irs.gov:
- 65.5 cents per mile driven for business use, up 3 cents from the midyear increase setting the rate for the second half of 2022.
- 22 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, consistent with the increased midyear rate set for the second half of 2022.
- 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2022.
IRS releases frequently asked questions about clean vehicles credits for new, previously owned and commercial clean vehicles, irs.gov. "The Internal Revenue Service today released frequently asked questions (FAQs) about clean vehicle credits for new, previously owned and commercial clean vehicles in Fact Sheet (FS-2022-42)."
EV Credit Guidance Buys Time for Automakers on Battery Rules - Lauren Loricchio, Tax Notes ($):
Treasury will delay until March the release of proposed guidance on the much-anticipated critical mineral and battery component requirements for the new clean vehicle credit.
In the meantime, the credit amount worth up to $7,500 will be determined based on the vehicle’s battery capacity and other criteria, Treasury and the IRS said in Notice 2023-1, 2023-3 IRB 1, released December 29.
White House Offers EU Potential Reprieve on EV Tax Credits - Alexander Rifaat and Lauren Loricchio, Tax Notes ($):
In a white paper released December 29, Treasury suggested it will apply a broad definition of what constitutes a free trade agreement with the United States, which could allow European automakers to become eligible for at least a part of the subsidy.
The department said the term “free trade agreement” wasn’t explicitly defined in the IRA and that it will seek comment to determine an interpretation.
Manufacturers and Models for New Qualified Clean Vehicles Purchased in 2023 or After, irs.gov. "Qualified Manufacturers of the vehicles listed below have indicated that the vehicles are currently eligible for a credit provided other requirements are met. Check back for additions to this list."
Important information if you purchased an EV in 2022. Manufacturers and Models for New Qualified Clean Motor Vehicles Purchased in 2022 and Before, irs.gov.
From the Eide Bailly vault: Pre-Owned Clean Energy Credit
At the end of the day, taxpayers must make informed buying decisions. Beginning in 2023 manufacturers have the responsibility to certify that vehicles comply with the credit.
3 ways to tap billions in new money to go green — starting next month - Shannon Osaka, The Washington Post:
Earlier this year, Congress passed the biggest climate bill in history — cloaked under the name the “Inflation Reduction Act.” But while economists say the bill may not reduce inflation very much, it could do one important thing for a country trying to move away from fossil fuels: Spur millions of households across America to switch over to cleaner energy sources with free money.
The Inflation Reduction Act is more than just clean vehicles. More to come in 2023!
A Look Ahead: Stakeholders Anticipate IRS Plan for New Funding - Lauren Loricchio, Tax Notes ($):
Yellen said the plan should include “details on how resources will be spent over the ten-year horizon on technology, service improvement, and personnel,” as well as “metrics for areas of focus and targets over the course of the coming years that the agency will strive to achieve.”
Desmond, a former IRS chief counsel, told Tax Notes that he thinks the plan, expected to be unveiled in mid-February, will be only the first draft concerning how the funding is going to be used.
IRS Clarifies Audit Protections in R&D Expensing Guidance - Caitlin Mullaney, Tax Notes ($):
The IRS has extended limits on audit protection in new guidance providing taxpayers with updated guidelines on accounting method changes for specified research and development expenditures.
Rev. Proc. 2023-11, 2023-3 IRB 1, issued December 29, further explains the R&D expenditures audit protections provided by the IRS in prior guidance. The agency says that from the start of 2022, audit protection won’t apply to expenditures if a change in accounting method is made for the year immediately following the first year in which section 174 becomes effective.
IRS Tweaks Domestic Filing Exception to Schedules K-2 and K-3 - Kristen A. Parillo, Tax Notes ($):
Final instructions for the 2022 schedules K-2 and K-3 contain several notable changes to a new domestic filing exception that the IRS proposed in its initial drafts.
The list of eligible direct partners has been expanded, and the deadline for partner and shareholder notifications has been pushed back, according to the instructions for completing schedules K-2 and K-3 for tax year 2022.
Brokers Can Wait For Regs To Report Digital Assets - Anna Scott Farrell, Law360 ($). Brokers won't be required to report additional information about sales of digital assets as required by a new law until Treasury and the IRS issue final regulations clarifying which digital assets qualify and giving instructions for reporting, according to an IRS announcement.
Permanent Remote Notarization Relief May Be Coming - Caitlin Mullaney, Tax Notes ($):
Taxpayers would have permanent remote notarization relief options to satisfy the physical presence requirement for participant elections under new IRS proposed regulations.
The proposed regs (REG-114666-22), issued December 29, would allow plan participants to take advantage of remote notarization to satisfy the physical presence requirement for spousal consents, and clarify that protections under reg. section 1.401(a)-21(d) that apply to participant elections made electronically also apply to spousal consents.
The Hill’s Morning Report — Committee to release Trump’s fill tax returns on Friday - The Hill, thehill.com:
Former President Trump’s actual tax returns are set to be released on Friday, following the release last week of six years of tax return information as part of reports into the presidential audit program. The documents revealed that Trump wasn’t being regularly audited by the IRS and was reporting big business losses each year.
The 2022 Tax Offender of the Year - Russ Fox, Taxable Talk. "It’s time once more for that super prestigious award I give out, the Tax Offender of the Year. One year there will be no candidates, but 2022 absolutely isn’t the year. Let’s look first at some who didn’t make the cut."
Tax Court Rejects Bid to Beef Up Whistleblower Award - Mary Katherine Brown, Tax Notes ($). A taxpayer failed to have his IRS whistleblower award determination increased when the Tax Court found there was sufficient evidence that he was involved in or had knowledge of his family’s fraudulent business operations.
Litigant’s Innocent Spouse Claim Barred by Res Judicata - Kristen A. Parillo, Tax Notes ($). "A North Carolina woman who paid little attention to a deficiency case brought by her husband is ineligible for innocent spouse relief because she meaningfully participated in that case through her attorney, the Tax Court held."
Enjoy, it is National Resolution Planning Day. Indulge in some end of the year bacon while you are making your 2023 plans!
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