Tax News & Views Batting a Thousand Roundup

June 13, 2022

IRS Touts Perfect Record in Prosecuting Pandemic Fraud – Nathan Richman, Tax Notes ($). “Every case the IRS Criminal Investigation division has referred for prosecution on fraud involving pandemic relief programs has resulted in a conviction, according to CI Chief Jim Lee.”

Further down the article: 

‘You’re seeing from the sentences [that] the judges don’t like COVID fraud. The country was going through a disaster, and our clients tried to take advantage,’ Frank Agostino of Agostino & Associates PC said. Anyone facing the possibility that CI could find their untoward behavior should make a beeline for the IRS’s voluntary disclosure practice because the cases are easy to prosecute and can lead to long sentences, he added.


Watchdog Warning – Butch Maier and Patrick Ambrosio, Bloomberg ($). “A Treasury Department watchdog on Friday released public service announcements cautioning the public about IRS impersonation scams. The scams rely on impersonators who either claim to be IRS employees on the phone or create fake official-looking letters and emails. They try to trick taxpayers into providing personal information that can be used for identity theft or send money via debit card, wire transfer, or gift card to settle fake tax bills.”

‘If you receive a suspicious phone call from someone claiming to be from the IRS, just hang up,’ J. Russell George, the Treasury Inspector General for Tax Administration, said in a statement.

The IRS is sending millions of tax payment letters this month. Don't ignore them – Aimee Picchi, CBS News. “The IRS this month will send millions of letters to taxpayers whom it believes underpaid the tax agency. It's important to pay attention to this letter — called a CP14 — because ignoring it could lead to penalties…”

In sum, an IRS letter could be real or fake. I'm glad I was able to clear that up...


IRS whistleblower awards plunge – Michael Cohn, Accounting Today. “The Internal Revenue Service gave out far less money last year to tax whistleblowers than in recent years and collected much less as well, according to a new report.”

Further down the article: 

‘Today’s report on the IRS whistleblower program is dispiriting — with the numbers of dollars collected thanks to the program falling to $245 million — down from $1.44 billion just three years ago,’ said Dean Zerbe, a partner at the Houston-based law firm Zerbe, Miller, Fingeret, Frank & Jadav, in an emailed statement. ‘Awards to whistleblowers have dropped to $34.5 million — almost a tenth of where the program was in 2018. There is not enough lipstick in the world to make these numbers pretty.’


Employers Fear Fallout From Biden Bid to Expand Health Subsidies – Sara Hansard, Bloomberg ($). “An IRS proposal that would allow more family members to get Obamacare subsidies shouldn’t result in fines on companies that don’t provide affordable family coverage, large employers are telling the agency.”


Changes Are Underway for Leveraged Spin Guidance, IRS Says – Chandra Wallace, Tax Notes ($). “The new guidance would replace Rev. Proc. 2018-53, 2018-43 IRS 667, and is 'very far along,' Robert Wellen, IRS associate chief counsel (corporate), said June 9 at a conference sponsored by the Texas Federal Tax Institute in San Antonio. Once that project is complete, Treasury and the IRS will turn their focus to replacing the guidance in Rev. Proc. 2017-52, 2017-41 IRB 283, he said, and ‘the aspiration is to have all this done by the end of the year.’”


Proposed Semiconductor Credit Is a Small Piece of a Big Puzzle – Martin Sullivan, Tax Notes ($):

A big and controversial question is whether tax provisions should be added in any final agreement. Besides the addition of a credit for semiconductors, there is strong bipartisan support for repealing the required five-year amortization of research expenses (enacted as part of the Tax Cuts and Jobs Act) that took effect this year.

Left-leaning Democrats are strongly opposed to enacting a business tax cut without an accompanying tax cut for families, such as an extension of the expanded child credit (which Sen. Joe Manchin III, D-W.Va., opposes). Many right-leaning Republicans are opposed on principle to industrial policies that support specific industries. Yet other members who could support the tax measures are opposed to their inclusion because it could cause an avalanche of requests for additional tax measures that could upset the underlying bill.

The legislation being discussed is what many call the "Semiconductor bill" or the "China trade bill." Lawmakers from both chambers are discussing it, and those talks are slow going. A big unknown is if the bill will include tax provisions, BUT, it currently looks like they will not be included. The reason for non-inclusion is because including them would "cause an avalanche of requests for additional tax measures that could upset the underlying bill," as the article states.  


Congress’ Crypto Reporting Rules Draw Constitutional Challenge - Patrick Ambrosio, Bloomberg ($). “The complaint, filed Friday by cryptocurrency consultant Dan Carman, challenges the expansion of tax code Section 6050I to cover Bitcoin and other digital assets. That section of the tax code requires businesses that receive more than $10,000 in cash in a transaction or series of related transactions to disclose various information to the IRS, including identifying details of the client.”


Democrat Mark-to-Market Policies Seen as a Double Tax – Benjamin Guggenheim, Tax Notes ($). “Taxation of unrealized gains may be an increasingly popular policy proposal for Democrats in Congress, but potential issues with the tax extend well beyond difficulties with valuation and liquidity, according to one observer.”

Noting the billionaire’s tax proposed by Senate Finance Committee Chair Ron Wyden, D-Ore., and a 20 percent minimum tax on wealthy households included in President Biden’s 2023 budget, Ryan McCormick of the Real Estate Roundtable said Democrat-led proposals intended to tax the unrealized gains of the wealthy are ‘almost a double tax.’

‘You’re taxing the appreciated value today,’ McCormick said June 10 during a conference hosted by the New York University School of Professional Studies. ‘And you’re going to tax the income that’s generated by the asset in the future.’


Employer-Paid Abortion Travel Coverage Triggers Tax Consequences – Joyce Cutler and Keshia Clukey, Bloomberg ($). “Employers looking to provide safe harbor by covering workers’ out-of-state travel costs for abortion services must also navigate tax and benefits laws and consider employees’ potential tax burden, attorneys said.”


Tax on the Hill: Inflation Tax, SECURE 2.0 Help, LIHTC Reg – Doug Sword, Tax Notes ($). “Senate Finance Committee negotiators are going to need some priorities’ from the administration to finish their work on the SECURE 2.0 retirement bill, committee member Benjamin L. Cardin, D-Md., told Treasury Secretary Janet Yellen.”

Further down the article:

‘We need your push here to get to the finish line because there’s a lot of stakeholders and a lot of interest groups,’ Cardin told Yellen. ‘And we’ve got to come together in a relatively short period of time in order to get a bill passed.’

Passage for the bill requires the support from lawmakers in both political parties. The House-passed Secure 2.0 act got that in spades. The Senate, apparently, is having trouble achieving that. 


Senate Reviews State Sales Tax Burdens on Small Businesses – Michael Bologna, Bloomberg ($). “Four years after the US Supreme Court upended the world of state and local taxes with its South Dakota v. Wayfair ruling, e-commerce retailers and tax agencies are still going through some growing pains."

“One sign of that: The Senate Finance Committee has scheduled a June 14 hearing to examine Wayfair’s impact on businesses and remote sales. Scheduled witnesses include: James McTigue, director of tax policy at the Government Accountability Office; Craig Johnson, executive director of the Streamlined Sales Tax Governing Board; and e-commerce business owner Michelle Huie, chief executive officer of VIM & VIGR Compression Legwear in Missoula, Montana.”

Eide Bailly will be covering this hearing and will report on it.


Idaho Democratic legislators to governor: Call special session for gas tax holiday – Kelcie Moseley-Morris, Idaho Capital Sun. “Two Democratic legislators delivered a letter Wednesday to Idaho Gov. Brad Little’s office asking him to call a special legislative session to consider a six-month holiday on the gas tax, according to a news release.”

‘(House and Senate Democrats) call on you to convene a special legislative session to enact a 6-month gas tax holiday or equivalent rebate,’ the letter said. ‘Taking this action in the coming weeks would give everyday Idahoans relief at the gas pump totaling 32 cents per gallon.’


Michigan Governor Whitmer Vetoes $2.5 Billion Income Tax Cut – Alex Ebert, Bloomberg ($). “Michiganders won’t see a roughly $2.5 billion income tax cut following Gov. Gretchen Whitmer‘s (D) veto of a tax-overhaul bill Friday."

“The measure (H.B. 4568) would have dropped Michigan’s personal income tax to 4% from 4.25% while simultaneously increasing personal exemptions and the state’s earned income tax credit. But it was unconstitutional because the bill’s content was far removed from the original purpose and title of the measure, a tax filing extension, Whitmer said in her veto letter.”


NYC Spends to Curb Rats, Ease Rent in Record $101 Billion Budget – Fola Akinnibi and Martin Braun, Bloomberg ($). “New York Mayor Eric Adams and the City Council have agreed to a record $101.1 billion budget, with lawmakers boosting funding for rental assistance, public safety, parks, cultural institutions and immigrant families.”


Mississippi Freight Trucking Company Hit With PPP Fraud Suit - Daniel Seiden, Bloomberg ($):

A Mississippi-based freight trucking company and its owner made false statements to the US government to receive a Paycheck Protection Program loan to which it wasn’t entitled, according to the government’s complaint filed Friday.


Puerto Rico Pursues Long-Sought Overhaul of Tangled Tax System - Angélica Serrano-Román, Bloomberg ($). “After years of tweaks and modifications, Puerto Rico is pushing for a major overhaul of a tax system that’s been dubbed 'grossly unfair' and inequitable.”


June 15 is tax deadline for filers abroad, estimated tax payers, and some Puerto Rico residents – Kay Bell, Don’t Mess With Taxes:

You thought you'd get a break from taxes when summer arrived, didn't you? Sorry.

June, the first month of summer, also includes tax deadlines for some taxpayers.

If you're a U.S. taxpayer who is living and working abroad, including members of the Armed Forces posted overseas, June 15 is your Tax Day. You must file your 2021 tax return by then.

June 15 also is the due date for the second estimated tax payment of 2022. This applies to folks who make money that isn't subject to withholding tax.

And some folks in Puerto Rico who suffered through major flooding back in February now face a postponed Tax Day that's also June 15.


US May Feel Pressure To Enact Int'l Min. Tax Deal, Eventually – Natalie Olivo, Law360 Tax Authority ($). “U.S. legislation that would comply with a global minimum tax agreement currently faces an unclear path forward, but lawmakers may ultimately sign on if the alternative puts U.S. revenue up for grabs and sparks potential backlash from multinational corporations.”


Kind of a Simon Says situation:

IRS Denies a Taxpayer Permission to Make a Late 3115 Filing After Failing to Request Permission Years Earlier – Ed Zollars, Current Federal Tax Developments, “Not understanding and following proper procedures can come back to haunt taxpayers, even if they do something that they would have been allowed to do if they had followed the proper procedures.  In PLR 202223011 the IRS denied the taxpayer’s request to file a Form 3115 for an overall accounting method change from the cash to accrual basis it had made without asking for permission years earlier.”

From the article:

IRC 446 covers acceptable accounting methods to be used by the taxpayer for computing income and deductions under the IRC.  However, IRC §446(e) requires that anytime the taxpayer wishes to change an accounting method, the taxpayer must obtain the consent of the IRS:

(e) Requirement respecting change of accounting method. Except as otherwise expressly provided in this chapter, a taxpayer who changes the method of accounting on the basis of which he regularly computes his income in keeping his books shall, before computing his taxable income under the new method, secure the consent of the Secretary.

Note that the provision says nothing about not needing the consent of the IRS to change from an inappropriate method of accounting to an appropriate (or even required) one, nor that the consent is not necessary to change to a method that better reflects income.  Rather, all changes of an accounting method can only be made with the permission of the IRS.


It’s National Kitchen Klutzes of America Day! Oh, the stories I could tell.

Expand Full Article

We're Here to Help

We are here to help
From business growth to compliance and digital optimization, Eide Bailly is here to help you thrive and embrace opportunity.
Speak to our specialists