IRS Failed to Send Child Tax Credit Payments to Millions of Households - Richard Rubin, Wall Street Journal:
The Internal Revenue Service sent $1.1 billion in advanced child tax credit payments during 2021 to people who shouldn’t have gotten them, and failed to send $3.7 billion to eligible households, according to an inspector general’s audit released on Tuesday.
The audit found 1.5 million taxpayers received the payments in error, and the IRS didn’t send payments to 4.1 million eligible households. Still, the agency was 98% accurate in sending more than 175 million child tax credit payments, made as part of the government’s response to the economic challenges of the coronavirus pandemic, the report by the Treasury Inspector General for Tax Administration said.
Many people who received payments they shouldn’t have gotten were required to pay the money back on the 2021 tax returns they filed in early 2022.
Corporate tax cuts triggered as Iowa announces nearly $2 billion surplus - Robin Opsahl, Iowa Capital Dispatch:
The growth of Iowa’s budget surplus to nearly $2 billion in fiscal year 2022 will trigger corporate tax cuts passed during this year’s legislative session, Gov. Kim Reynolds announced Tuesday.
That increase enacts corporate tax cuts passed during the 2022 legislative session. When Iowa hit $700 million in corporate income tax receipts, the law lowers the corporate tax rate from 9.8% to 8.4% and reduces the number of corporate tax rates from three to two.
If this change had been effective in 2022, Iowa would have had the 9th highest corporation income tax rate, instead of the third highest. Rates above 8.4% are found in Alaska, California, Illinois, Maine, Minnesota, New Jersey, Pennsylvania, and Vermont.
The IRS is offering relief to any area designated for individual or public assistance by the Federal Emergency Management Agency (FEMA). This means that individuals and households that reside or have a business in the Regional Education Attendance Areas of Bering Strait, Kashunamiut, Lower Kuskokwim and Lower Yukon, in Alaska qualify for tax relief. Other areas added later will also qualify for this relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov.
The tax relief postpones various tax filing and payment deadlines that occurred starting on September 15, 2022. As a result, affected individuals and businesses will have until February 15, 2023, to file returns and pay any taxes that were originally due during this period.
This means individuals who had a valid extension to file their 2021 return due to run out on October 17, 2022, will now have until February 15, 2023, to file.
Loan Forgiveness Program Creates Tax Headaches, Suit Says - Anna Scott Farrell, Law360 Tax Authority ($): "Frank Garrison, a lawyer for the nonprofit Pacific Legal Foundation, which is also representing him in the suit, claimed he will owe more than $1,000 in additional state taxes when the government automatically cancels a portion of his debt because he lives in a state that taxes loan cancelation as income."
Indiana DOR: Forgiven Student Loans Subject to State, Local Tax - Emily Hollingsworth, Tax Notes ($). "'Recipients of the Biden-Harris Administration’s Student Debt Relief Plan to forgive up to $20,000 of student loan debt will need to pay state and local taxes on the amount forgiven under IC 6-3-1-3.5(a)(30),' the Department of Revenue said in a September 23 bulletin. 'Taxpayers will be required to include the amount of general student loan relief in their Indiana adjusted gross income (AGI).'"
EV Tax Credits to Spur More Vehicle Sales Are Entering a Critical Phase - Amara Omeokwe, Wall Street Journal:
The changes to the EV tax credits come amid sharp price increases for new vehicles. New-vehicle prices were up 10.1% in August from a year earlier, according to the Labor Department, outpacing the overall annual inflation rate of 8.3%. The average electric-vehicle price is more than $60,000.
Auto manufacturers likely will find it challenging to comply with the new rules immediately. The industry has historically been reliant on China and other countries for EV batteries and the processing of minerals that go into them.
Millionaires Are the Fastest-Growing Income Group, IRS Data Show - Doug Sword, Tax Notes ($):
In all, 387,840 individual filers reported that their AGI was $1 million or more, compared with 274,879 for a similar period the year before.
Meanwhile, the number of filers with zero or negative AGI dove 37 percent in 2021, or by nearly 1.5 million filers. That category had ballooned in the pandemic’s first year, tripling to 3.91 million.
Colorado DOR Proposes Rules on New Retail Delivery Fee - Emily Hollingsworth, Tax Notes ($). "The retail delivery fee, which took effect July 1, is a 27-cent charge applied to retailers or marketplace facilitators that collect the sales or use tax on tangible personal property that is mailed, shipped, or delivered by motor vehicle to a purchaser in Colorado."Calif. Gov. Vetoes Voiding Tax-Exempt Status Over Insurrection - Zak Kostro, Law360 Tax Authority ($):
"Extremist groups that participate in anti-government acts such as those that took place during the insurrection on Jan. 6, 2021, should be renounced and investigated for their participation," Newsom said in a veto message. "However, there are issues that should be evaluated through the judicial system with due process and a right to a hearing. For these reasons, I am returning S.B. 834 without my signature."
Related: How to Protect your Tax-Exempt Status.
IRS stepping up crypto info and tax collection - Kay Bell, Don't Mess With Taxes. "Last week, the IRS obtained a so-called John Doe summons requiring M.Y. Safra Bank to produce information about U.S. taxpayers who may have failed to report to the IRS, and pay taxes on, cryptocurrency transactions."
IRS Wins Ex-Parte Petition for Another Crypto John Doe Summons - Andrew Mirisis, Freeman Law. "This follows similar IRS’s John Doe summonses against Coinbase, Inc., Circle Internet Financial, and Payward Ventures, Inc. d/b/a Kraken."
IRS maintains watchful eye over cryptocurrency - Wolters Kluwer Tax & Accounting. "Cryptocurrency continues to be a high-priority topic at the Internal Revenue Service and its handling as a taxable asset will evolve with the markets that use it."
Related: New Tax Guidance Issued on Cryptocurrency Transactions.
Farm and Ranch Estate Planning In 2022 (and 2023) - Roger McEowen, Agricultural Law and Taxation Blog. "As noted above, the TCJA’s increase in the exemption could cause an existing formula clause to “overfund” the credit shelter trust with up to the full federal exemption amount of $12.06 million. This formula could potentially result in a smaller bequest for the benefit of the surviving spouse to the marital trust than was intended, or even no bequest for the surviving spouse at all. It all depends on the value of assets that the couple holds. The point is that couples should review any existing formula clauses in their current estate plans to ensure they are still appropriate given the increase in the federal exemption amount."
This IRS Tax Form Can Cost You 24% - Robert Wood, Forbes. "An IRS Form W-9 verifies your taxpayer ID number, typically your Social Security Number, or for a company, your employer identification number. Before paying you, many companies will ask for this form so they can issue you an IRS Form 1099. If you want to be paid, refusing to hand over a Form W-9 can be a mistake. The IRS says that anytime a payor thinks they may have to report a payment on an IRS Form 1099, they should ask for a Form W-9. If they fail to get one signed, they may have to withhold taxes on the payment, even if you are not an employee."
States Can Help Reduce the Burdens of Harmful Fines and Fees. Here’s How. - Aravind Boddupalli and Kim Rueben, TaxVox. "Fines and fees make up a small share of state and local revenue overall, but can be devastating for low-income residents, especially Black, Latine, and Native American households, who are disproportionately affected by criminal legal systems. These penalties, such as traffic tickets and court costs, also create harmful incentives for police departments and courts to pursue revenue generation, which can undermine trust and negatively impact public safety."
The piece includes links to a wonderful interactive map that allows you to see what states and municipalities rely on speed traps, etc. for their fiscal health. Central Iowa drivers will be unsurprised.