Looking for more clues - Bernie Becker, Politico. The Politico Weekly Tax newsletter ponders whether Build Back Better, with its tax hikes, is truly dead, or just resting:
You can see why confidence is creeping up among Democrats. Manchin told Axios that his talks with Senate Majority Leader Chuck Schumer about passing something through budget reconciliation were serious — and perhaps most importantly for our favorite topic, suggested that he’d defer to Sen. Kyrsten Sinema (D-Ariz.) on what makes the cut on the revenue-raising side.
Would it be that wild if Democrats figure out how to clinch a deal that’s always seemed like it should be highly attainable? Probably not. But could you really be shocked if Democrats fall short, after close to half a year of flailing and with the midterms only drawing closer? Also probably not.
I think the chances of pushing even a trimmed back version of Build Back Better through the budget reconciliation process are poor. The Kalshi betting market prices the likelihood of passing a budget reconciliation by September 2 at 36%, which indicates it has a chance. While those odds are higher than the 20% shown on May 22, they still are a long way from being confident.
What the wealthy can fear from a new IRS rule on $600 payments - Lynnley Browning, Financial Planning:
The law, which went into effect this year, is widely seen as having the greatest impact on rank-and-file entrepreneurs who use platforms like Etsy and Airbnb, freelancers, people with side hustles and gig economy workers like Uber drivers who get paid via a mobile payments app.
Notwithstanding the three-figure threshold, rich people are also impacted because they routinely use cash-transfer apps to pay hefty sums to their nannies, babysitters, gardeners, cooks, personal assistants and repairmen, wealth advisors say. Owners of summer cottages rent them out on Airbnb. These transactions are typically well over the $600 threshold, so the new forms can heighten the risk of an audit by the IRS. With the new rule, the affluent are "now on the radar,” said Ken Eyler, the CEO of Aquilance, a financial bookkeeping and bill payment firm for high net worth families.
The "risk of audit" is a lot higher if you aren't reporting the income. These items have always been taxable; the only difference is that it's easier for the IRS to notice if it's not on the return.
New Basis Reporting Form Spotlights Role of Proper Documentation - Kristen Parillo, Tax Notes ($):
The 2022 filing season debut of the IRS’s formalized mechanism for S corporation shareholders to disclose their stock and debt basis computations highlighted the importance of vigilant recordkeeping, according to tax professionals.
“It became glaringly obvious how many S corporation owners haven’t been tracking their basis at all,” said John R. Dundon II of Taxpayer Advocacy Services Inc., a tax preparation and representation firm in Colorado.
The article notes that taxpayers need to track basis in order to determine whether losses are allowable, distributions are taxable, and what the gain or loss is when stock is sold. The only surprising thing about the new IRS Form 7203 is that it wasn't introduced 30 years ago.
FBAR Cases Remain Priority Despite Drop In Investigations - David Hansen, Law360 Tax Authority ($):
Still, a significant number of taxpayers remain unaware of the filing requirement and there is much progress that the agency still needs to make to increase the number of FBAR filings, said Holland & Knight LLP partner Chad Vanderhoef.
"The unfortunate reality is that many taxpayers facing FBAR penalties did not know of the filing requirement," he said. "And the fact that many return preparers similarly lacked awareness exacerbated the problem."
"FBAR" is the federal form requiring taxpayers to report foreign financial accounts. These include the obvious - a Swiss bank account, for example - but they also include some things that you might not think of as foreign accounts - things like foreign retirement plans or cash-value life insurance from a non-U.S. insurer. Non-reporting penalties start at $10,000, so compliance matters.
Related: Offshore Voluntary Disclosure.
DSTs ‘Back on Table’ if U.S. Doesn’t Adopt Pillar 1, MEPs Say - Sara Paez, Tax Notes. "Members of the European Parliament told representatives of large U.S. tech companies that digital services taxes would be 'back on the table' if the United States doesn’t adopt pillar 1 of the OECD tax plan."
Okla. Conforms To Internal Revenue Code - Jaqueline McCool, Law360 Tax Authority ($). "Oklahoma conformed to the Internal Revenue Code by retroactively updating references to the code under a bill signed by the governor."
Unexplained tax revenue growth vexes budget scorekeepers - Peter Cohn, Roll Call. "The term 'unexplained' doesn’t appear too often in official government documents, unless they are dealing with possible paranormal events, like UFOs. Yet the reference is sprinkled throughout the Congressional Budget Office’s latest budget and economic outlook to describe the recent strength in federal tax receipts that’s blown away prior estimates."
You’re Never Too Old to File a Return – Taxes and the Elderly - Erin Collins, NTA Blog. "Taxpayers who are winding down full-time work may think that they can also wind down their tax return filing requirements. However, taxpayers are never too old to have a filing requirement."
Tax Tips From Chrisley Knows Best Tax Evasion Trial - Robert Wood, Forbes. "Keep Personal and Business Separate. Keep business and personal separate if you can. Trying to morph personal matters into business is asking for trouble. For example, don't try to deduct the cost of your divorce because your business is at risk. It is still personal. Likewise, don't try to deduct a miserable vacation with your best client."
With Agatha already arrived, it's time to get ready for the rest of 2022's hurricanes - Kay Bell, Don't Mess With Taxes. "Remember, though, that electrical issues could limit your access, especially immediately after the storm. So have a paper copy of your insurance policy and contact information handy so you can reach out for that help as soon as it's safe to do so."
Lesson From The Tax Court: The Sharp Corners Of The §170 Substantiation Requirements - Bryan Camp, TaxProf Blog. "For contribution of $250 or more, taxpayers must keep adequate records as above, but now must obtain a receipt, called a Contemporaneous Written Acknowledgement (CWA). §170(f)(8). To create a valid CWA, the taxpayer and charity must turn several square corners, most of which are found in §170(f)(8)."
Unraveling the Revenue Sourcing Rules for Sales and Use Taxes - Robert Peters, Bloomberg. "Rules determining which state is entitled to receive sales tax can differ depending on the source, destination, and nature of the product or service offering."
Absent Roe v. Wade, Will “Qualifying Child” Mean More In The Tax Code? - Renu Zaretsky, TaxVox. 'Under the proposed legislation, a woman also could claim the CTC in the taxable year that she miscarries or delivers a stillborn infant. But the bill would deny a credit in the event of a terminated pregnancy, with exceptions for ectopic pregnancies or to prevent the death of a pregnant woman. Even with those exceptions, the credit would be denied if the attending health care provider acts 'within the scope of employment with, self-employment as or with, or volunteer service for, an abortion center.'"
Wisconsin Losing Ground to Tax-Friendly Peers - Katherine Loughead, Tax Policy Blog. " At 7.65 percent, Wisconsin’s rate is the 10th highest in the nation, lower than that of only eight states and the District of Columbia. While Wisconsin is among the 25 states that have lower top individual income tax rates now than in 2012, its competitive standing on income tax rates has fallen nonetheless, from 11th highest in the nation at 7.75 percent in 2012 to 10th highest in the nation in 2022 at 7.65 percent."
Trusts Owe Calif. Income Tax On Sale Of Pabst Unit, Panel Says - Maria Koklanaris, Law360 Tax Authority ($):
In a ruling handed down Friday, the panel representing the Court of Appeal, Fourth Appellate District, Division One, agreed with a trial court that the trusts, shareholders of Pabst, should be denied total refunds of about $3.6 million. Before the trial court, the California Office of Tax Appeals had reached the same conclusion.
The trusts argued that the income they received came from the sale of intangible property, which was goodwill, and cited a state statute governing the sale of intangibles for nonresidents. The sale of goodwill should be sourced outside of California under the statute, the trusts argued. Goodwill is generally characterized as an asset that represents the excess paid, over book value, when one company buys another.
That $3.6 million would buy a round or two of PBR.
Link to opinion: D078790