Tax News & Views Deadlocks, Beans, and Shortbread Roundup

January 6, 2023

Speaker Standoff Strands Constituents Seeking Help With IRS - Lauren Loricchio, Tax Notes ($):

The IRS has taken the position that it can’t share taxpayer information with members-elect of the House or their staff until the members are officially sworn in, although the Taxpayer Advocate Service can accept cases from them.


Section 6103 bars the IRS from releasing taxpayer information but doesn’t prevent the agency from receiving information from external parties. There is an exception that allows the IRS to share taxpayer returns or case information with written consent from the taxpayer, but because members of Congress haven’t been sworn in yet, there is a question whether the technical requirements of a privacy release form would be satisfied.


House Speaker Battle Could Slow Constituents' Tax Help - Stephen Cooper, Law360 Tax Authority:

A spokesman for National Taxpayer Advocate Erin Collins didn't immediately respond to a request for comment on the impact of the speaker's race on providing taxpayer services to lawmakers' offices.

TAS' change in providing tax services for Hill constituents comes as the IRS continues working through its pandemic-induced tax return backlog. The agency will still have filings to sort through going into the 2023 filing season, according to a recent report from the Treasury Inspector General for Tax Administration, the IRS' federal watchdog. TIGTA estimated that the IRS still had 10.5 million tax returns remaining to be processed, compared with a high of 20.5 million in June.  


Retirement income no longer taxed in Iowa - Andy Hallman, Southeast Iowa Union. "To qualify for this retirement income exclusion, Iowa residents must be at least 55 years old on Dec. 31 of the tax year, disabled, or be a surviving spouse or survivor with insurable interest of someone who would have qualified."

IRS announces tax relief for victims of Hurricane Nicole - IRS. " The declaration permits the IRS to postpone certain tax-filing and tax-payment deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after November 7, 2022, and before March 15, 2023, are granted additional time to file through March 15, 2023."


The Age of Digital Services Taxes? - Alex Parker, Things of Caesar:

If there’s one thing (almost) everyone agrees on, it’s that Pillar One is dead. The Organization for Economic Cooperation and Development’s plan to reallocate income from digital (and other) transactions faces long odds for enactment, despite the 140-country agreement announced back in the summer of 2021. With a multilateral treaty necessary for passage–and with Republicans solidly opposed to the proposal, controlling well over the one-third of the Senate necessary to block treaty ratification–the U.S. is almost certainly out. And as goes the U.S., so goes the world, it would seem.

But there’s no real agreement on what will happen. Will the OECD go back to the drawing board and come up with a simpler plan? Or will digital services taxes, the unilateral levies which Pillar One was supposed to replace, become a permanent part of the global tax landscape–possibly expanding to cover more transactions? And, potentially, provoking trade wars with the U.S., which has previously threatened retaliatory tariffs over DSTs, claiming they target American tech firms?

The debate over the structure of international taxes can be eye-glazing for those who don't spend a lot of time in the field, but it is a big deal. Alex Parker's articles are a great place for non-specialists to get familiar with the issues. 


10 good reasons why LLCs should not elect to be S corporations - Paul Iannone and Danny Pannese, The Tax Adviser. "Reason 1: Many LLC operating agreements contain language that can inadvertently result in the termination of the S election. If the operating agreement’s language is not revised beforehand, the LLC’s Subchapter S election may end up being involuntarily terminated."


RALs are still around, but be sure they're worth the cost - Kay Bell, Don't Mess With Taxes. "Easing of worst practices: Yes, RALs are still around. This quicker tax cash option gets filers at least some of their expected federal tax refund as a short-term loan."

RAL = "refund anticipation loan."

Incremental Cost Safe Harbors Provided for Qualified Commercial Clean Vehicle Credit - Ed Zollars, Current Federal Tax Developments. "The qualified commercial clean vehicle credit at IRC §45W added by the Inflation Reduction Act of 2022 that takes effect beginning in 2023 requires taxpayers to reference the incremental cost of their qualified vehicle as one of the factors that can limit the credit.  However, in no case can the credit exceed $7,500 for a vehicle with a gross vehicle weight of less than 14,000 pounds, so if the incremental cost is more than $7,500 then it would not serve to limit the amount of the credit."

3 After-Year-End Tax Strategies For Small Businesses - Amber Gray Fenner, Forbes. "The good news is that there are a few tax optimization strategies that are available to small business owners after the tax year ends."


IRS Announces 2023 Standard Mileage Rates and Vehicle Value Limitations - Thomson Reuters Tax & Accounting. "For 2023, the business standard mileage rate is 65.5 cents per mile..."

IRS Requests Comments on Forms 3520 and 3520-A - Daniel Price, Procedurally Taxing:

One detail in the recent request for public comment on Forms 3520 and 3520-A caught my attention: the estimated number of annual respondents. According to the IRS’ estimate published in the Federal Register, only 1,820 respondents will complete Forms 3520 and 3520-A. But that estimate is grossly understated...

Over the last decade, awareness of Forms 3520 and 3520-A has grown exponentially. A decade after the 2012 stats, the actual number of annual filers (respondents) of Form 3520 likely exceeds 50,000, and I would not be surprised by a combined annual filing for Forms 3520 and 3520-A of over 75,000. 

Forms 3520 and 3520-A are required for beneficiaries and grantors of foreign trusts. They are also required when you have a foreign gift or inheritance. Penalties for failing to file the forms start at $10,000, which can certainly spark awareness. 

Related: Eide Bailly Penalty Help


NFT Investors Dump Cratered Tokens in Tax Write-Off Marketplaces - Michael Bologna, Bloomberg ($):

After launching in November, the website Unsellable grabbed nearly 18,000 NFTs, acting on its mission to prop up beleaguered NFT investors and build “the world’s largest collection of worthless NFTs.” Another platform, NFT Loss Harvestooor, developed by the cryptocurrency tax software company CoinLedger Inc., launched a few weeks later and purchased 5,000 NFTs, collectively valued at $1.3 million at the height of a bull market. After sending those tokens to “the NFT graveyard,” CoinLedger customers could tap up to $380,000 in tax savings according to the company.


Kirk Phillips, managing director of consulting firm Global Crypto Advisors, called the platforms the digital economy equivalent of a “flea market,” offering a badly needed tool to bolster a sagging class of assets.

Markets in everything.


Architect of nationwide college admissions scheme sentenced to more than three years in prison - IRS (Defendant name omitted):

Defendant was also ordered to pay restitution in the amount of $10,668,841 to the Internal Revenue Service and to forfeit specific assets with a value in excess of $5.3 million and approximately $3.4 million in the form of a forfeiture money judgment. In March 2019, Defendant pleaded guilty to racketeering conspiracy, money laundering conspiracy, conspiracy to defraud the United States and obstruction of justice.


Between approximately 2011 and February 2019, Defendant conspired with dozens of parents, athletic coaches, a university athletics administrator, and others, to use bribery and other forms of fraud to secure the admission of students to colleges and universities including Georgetown, Stanford, UCLA, USC, the University of Texas, Wake Forest and Yale. The conspiracy involved paying off test proctors and administrators to permit cheating on college entrance exams and bribing university athletic coaches and administrators to designate applicants as purported athletic recruits based on fabricated credentials.

To conceal the scheme, Defendant used the Key Worldwide Foundation to disguise bribe payments as purported charitable contributions, thereby enabling clients to deduct the bribes from their federal income taxes. In total, Defendant accepted more than $25 million from his clients as part of the scheme – of which he paid bribes totaling more than $7 million and transferred, spent, or otherwise used more than $15 million for his own benefit.

This is the "Varsity Blues" admission scandal. Claiming charitable deductions for bribing your kids into an elite school was the boldest piece of the puzzle.


One is healthy, but the other is so delicious. Today is both National Bean Day and National Shortbread Day. Decisions, decisions...

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