Tax News & Views Money Fight Roundup

January 3, 2023

New Congress Kicks Off With IRS Debate - Alex Clearfield, Bloomberg ($):

The new Republican majority in the US House of Representatives takes office today as lawmakers kick off the 118th Congress.

Most of today will be focused on organizing business, including the election of the speaker and debate on a rules package.

Action is also planned on five other measures, starting today with a bill that would rescind money provided last year to the IRS.

Legislation that rescinds IRS money is likely to pass the House, but not the Senate, which means it will not become law. But before any legislation gets a vote on the House floor, lawmakers must choose a Speaker, which could be time consuming. It is currently unclear when House lawmakers will be able to debate and vote on legislation.


How Does the IRS Plan to Spend the $80 Billion? - Naomi Jagoda, Bloomberg ($):

The IRS has started to use some of the funding to improve taxpayer services for the upcoming filing season. [Treasury Secretary Janet] Yellen’s memo said the plan should be developed before the agency spends funds for other purposes. Beyond that directive, Treasury and the IRS have provided little information about what the plan will say, or how the funds will be used beyond improvements for the filing season.

IRS Will Use New Resources To Increase Scrutiny In 2023 – Kathleen Saunders Gregor, Elizabeth Smith and Cait Leonard, Law260 Tax Authority ($):

While the IRS' exact plans for the $80 billion of increased funding over the next 10 years are not yet known, at least $45 billion will be used to increase enforcement efforts.

Danny Werfel Poised to Return to IRS and Lead Its $80 Billion Transformation – Richard Rubin, Wall Street Journal ($):

Danny Werfel spent most of his public-sector career deep in the details of federal government operations and his private-sector career in the behind-the-scenes world of consultants.

His next turn will be in the harsh political spotlight. 

Mr. Werfel, President Biden’s pick to run the Internal Revenue Service, aims to return to the job he had for seven months in 2013 as acting commissioner. If confirmed by the Senate, Mr. Werfel will be charged with executing the controversial $80 billion expansion of the agency that lawmakers approved in an effort to boost enforcement and modernize aging technology.


Federal Tax Policy To Watch In 2023 – Stephen Cooper, Law360 Tax Authority ($):

A divided Congress will return to Capitol Hill in late January with little hope of eking out a comprehensive bipartisan tax agenda that can reach President Joe Biden's desk during the last two years of his presidency.

Maybe. Economic tumult can change political agendas. In 2010, lawmakers who ran for office opposing the extension of the Bush-era tax cuts extended them to avoid worsening a historically bad recession. The fate of tax cuts is basically in wait-and-see mode.  


Retirement Plan Exemptions Revamp Tops Regulators’ 2023 Lineup - Austin Ramsey, Bloomberg ($):

A pair of proposed regulations the US Labor Department has carried over into the new year may upend the process retirement plan providers use to temporarily skirt conflict-of-interest laws, but critics have complained those rules also make benefits more expensive and hard to deliver.

DOL’s Employee Benefits Security Administration proposed two new rules last year that would toughen the standards service providers use to qualify as “gold-standard” professional asset managers, reducing the pool of independent service providers plans can hire.


Top Five US Supreme Court Cases to Watch in the New Year - Lydia Wheeler, Bloomberg ($).

Here is one of them:

Student Loans

President Joe Biden’s plan to wipe out over $400 billion in student loan debt for some 40 million Americans is also on tap for argument Feb. 28.

Federal Tax Cases To Watch In 2023 – Kat Lucero, Law360 Tax Authority ($):

FBAR Penalties

The Supreme Court heard oral arguments in November in a case that involves the maximum $10,000 penalty for the nonwillful failure to disclose foreign bank accounts on Reports of Foreign Bank and Financial Accounts, known as FBARs. The Bank Secrecy Act of 1970 established the reporting requirement to curb tax evasion and money laundering crimes.

Further down the article:

IRS Bank Summons Disclosure

The Supreme Court has also agreed to examine a case that involves whether the IRS was right to issue summonses seeking the banking records of two law firms and a tax debtor's spouse without notifying them in its investigation into the debtor's $2 million tax bill.

Once again, further down the article:

APA Challenges in Conservation Easements

The legal battle rages on between taxpayers and the IRS over a 2016 notice that requires the disclosure of certain potentially abusive conservation easement deals. The IRS vowed last month to continue defending the guidance following recent federal court decisions that have invalidated the notice. Some courts have said the agency failed to meet public comment requirements under the Administrative Procedure Act  when it issued the notice.


Taxes fall, wages rise as new laws take effect across U.S. – Associated Press:

Taxes will fall and minimum wages rise for residents in numerous states as a variety of new laws take effect Sunday that could impact people’s finances and, in some cases, their personal liberties.

Some new laws could affect access to abortion. Others will ease restrictions on marijuana and concealed guns, or eliminate the need to pay to get out of jail.


New year brings 6% sales tax to dozens of Kentucky services – Web Staff, Lex18:

Effective today, over 30 new service categories are now subject to a 6% sales tax.

The changes come after House Bill 8 passed in 2022. The bill lowers income taxes from 5 to 4.5%, but expands sales taxes to a variety of services, from personal fitness training to rideshares to cosmetic surgery and more.


Percentage, Weight, Potency: State Cannabis Taxes Explained - Angélica Serrano-Román, Bloomberg ($):

How do states tax cannabis?

States take a diverse approach to taxation, but there are three key types of cannabis taxes: a percentage-of-price tax, a weight-based tax, and a potency-based tax. The majority of the states use percentage-of-price or apply it in conjunction with another tax, as in the case of New York, Nevada, Maine, Illinois, and Colorado.


Another Telework Tax Challenge Rejected by Ohio Appeals Court - Perry Cooper, Bloomberg ($). “The Ohio General Assembly properly used its tax authority to temporarily allow municipalities to tax the income of telecommuters working remotely for in-city employers during the Covid-19 pandemic, a state appeals court ruled.”


Texas High Court Rejects Challenges to Expiring Tax Incentives – Perry Cooper, Bloomberg ($). “The Texas Supreme Court declined to force the state comptroller to process applications for an expiring program that offers school district property tax abatements for new business developments.”


International Tax Policy To Watch In 2023 – Dylan Moroses and Kevin Pinner, Law360 Tax Authority ($):

The Organization for Economic Cooperation and Development, which saw its global minimum tax adopted by the European Union in December, is expected to publish new details this year about the other component of its massive tax revamp, on profit reallocation among jurisdictions. While broad implementation of the reallocation regime, known as Pillar One, is far off and uncertain, countries are now in a position to consider how to place the minimum tax, known as Pillar Two, into their domestic laws.


Tax Transparency Moves Forward, but Backlash Looms – Mindy Herzfeld, Tax Notes ($):

Tax transparency has two components: transparency regarding tax (and income) data and transparency regarding the owners of corporate entities, especially those who regularly move funds and assets across borders. To address the latter, Congress passed the Corporate Transparency Act in 2021. That law was the result of years of activist and lawmaker attempts to fight cross-border money laundering and illicit financing through greater access to beneficial ownership information. Proponents of the law claim that it balances the goal of cracking down on illegal activities against the potential burden the rules could impose because they cast a wide net, while also protecting access to the information.


From the “Hoist with His Own Petard” file:

Trump’s Tax Law Echoed Through His Finances During White House Years – Richard Rubin, Wall Street Journal ($):

The tax law that Donald Trump signed in late 2017 echoed through his finances in the following years, limiting some tax benefits for him and opening some tax-planning opportunities, according to the former president’s tax returns.

Like many other taxpayers from high-tax states such as New York, Mr. Trump was affected by the $10,000 limit on deducting state and local taxesthat was imposed by the wider tax law he championed. In 2018, for example, while he was in the White House, he reported paying over $10 million in state and local taxes but could only deduct the $10,000.


Notable events that occurred in the past on January 3rd, according to Wikipedia:

  • 1933 – Minnie D. Craig becomes the first woman elected as Speaker of the North Dakota House of Representatives, the first woman to hold a Speaker position anywhere in the United States.
  • 1959: Alaska is admitted as the 49th U.S. state.
  • 1993: In Moscow, Russia, George H. W. Bush and Boris Yeltsin sign the second Strategic Arms Reduction Treaty (START)

It is also National Drinking Straw Day! On January 3, 1888, Marvin C. Stone received a patent for paper straws that enabled people to drink liquids without raising the glass, according to National Day Calendar.

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