Tax News & Views Nowhere to Hide Roundup

January 20, 2023

Tax-the-Rich Blue States Want to Leave Wealthy ‘Nowhere to Hide’ – Laura Mahoney, Donna Borak and Michael Bologna, Bloomberg ($):

Progressive lawmakers in a handful of blue states joined forces Thursday in a campaign to fire up energy for tax-the-rich policies in state capitols.

The effort is a way for Democratic lawmakers to counter arguments that wealthy residents will move away, and to broadly promote progressive tax policies, especially with Republicans controlling the US House of Representatives.

Bottom line: The group wants states to essentially tax unrealized capital gains, circa Sen. Elizabeth Warren (D-Ma.), so rich people can’t dodge the tax by moving to a non-participating state, according to the article.


The ideas have been floated before, and their prospects for passage are unclear. Lawmakers from four states—California, Illinois, New York, and Washington—are proposing taxes on wealth that would be the first of their kind if enacted, difficult to administer, and vulnerable to legal challenges. Two more measures in New York and proposals in four other states—Hawaii, Maryland, Connecticut, and Minnesota—take more conventional approaches to raising taxes on realized income.

The intention behind the SALT cap was to force people to move from high tax states to low tax states. Initial reports show it didn’t work.

Also, states seem to be looking at tax relief:

Governors Begin Filling in Tax Plan Details, Backing Lawmaker Bills - Angélica Serrano-Román, Bloomberg ($):

With the new year, governors have started laying out their formal budget and policy agendas for upcoming legislative sessions through inaugural addresses, state of the state speeches, and other kickoff events. Minnesota’s governor wants to significantly expand child and family-focused tax credits. Rhode Island’s governor’s future tax plans center on small businesses.

St. Louis Ordered To Issue Tax Refunds To Teleworkers – Paul Williams, Law360 Tax Authority ($). “St. Louis must issue earnings tax refunds to a group of remote workers for days worked outside the city after the start of the COVID-19 pandemic, a Missouri judge ruled Thursday, saying the city improperly applied the tax to telecommuters.”


State Nexus Questions Persist Despite Internet Tax Guidance – Tony Israels, David Landwehr and Jeanette Tolar, Bloomberg ($):

States are continuing to take action after guidance issued by the Multistate Tax Commission in August 2021 regarding whether a seller’s online presence creates nexus for state income taxes.

Further down:

States such as California, New York, New Jersey, and Oregon have started addressing these matters either through changes in statute or through other administrative means. This leaves many unanswered questions, and taxpayers should pay careful attention to activity concerning this topic since it could increase the state filing obligations for many businesses that sell goods.


Iowa DOR Releases Updated Income Tax Guidance on Farm to Food Donation Tax Credit – Bloomberg ($). “The Iowa Department of Revenue Jan. 1 issued updated guidance on the Farm to Food Donation Tax Credit for individual income, corporate income, and trust income tax purposes.”


Manchin Says He Didn’t Know US, EU Lacked Free Trade Agreement - Ari Natter, Bloomberg ($):

Senator Joe Manchin said Thursday he didn’t realize the US and the European Union do not have a free trade agreement when he wrote stringent new requirements for the electric vehicle tax credit that the EU says will unfairly disadvantage its members.

‘I did not realize the EU is not a free trade agreement’ nation, Manchin said in an interview with Bloomberg Television ’s David Westin in Davos, Switzerland. 

There are SO many things to comment on about the above passage, but I'll keep it short: Lawmakers have TONS of resources to find out information. D.C. is full of trade specialists who would have spelled-out EVERYTHING in plain English. That info was literally a phone call away.


Treasury Starts Maneuvering Funds to Avoid Breaching Debt Limit – Christopher Anstey, Bloomberg ($):

The Treasury Department is beginning the use of special measures to avoid a US payments default, after the federal debt limit was reached Thursday.

The department is altering investments in two government-run funds for retirees, in a move that will give the Treasury scope to keep making federal payments while it’s unable to boost the overall level of debt.

There is going to be a big debate in Congress about raising the debt limit that will likely last months. I remember when the debt limit used to be raised without any controversy. In fact, it used to be raised by voice votes in both chambers, which meant it was not a contentious issue.


Treasury Asks Sixth Circuit to Rehear ARPA Funds Dispute – Jeffery Leon, Bloomberg ($):

The US government has asked the Sixth Circuit to rehear its decision allowing Tennessee to challenge limits on how federal Covid-19 aid can be used, disputing the court’s interpretation of a 1981 Supreme Court ruling on the enforcement of federal money restrictions.

The Treasury Department asked the US Court of Appeals for the Sixth Circuit to reexamine its November 2022 ruling that the offset provision—barring states from using pandemic relief funds obtained from the 2021 American Rescue Plan Act, or ARPA, to offset reductions in tax revenue—was too vague and unenforceable. Treasury cited a principle set by the Supreme Court in Pennhurst State School & Hospital v. Halderman, a 1981 ruling that established a doctrine that Congress must provide clear notice about conditions on federal money.


Free Online 1099 Reporting Portal Set to Launch ‘Any Day’ – Chandra Wallace, Tax Notes ($). “The IRS’s new information return intake system (IRIS) is scheduled to launch within the next week, providing taxpayers with a free online portal to prepare and file Forms 1099, according to an agency official.”

Further down:

The agency wanted to launch it with the start of the upcoming filing season, but is first ‘making sure the bugs are out so that folks have the best experience possible when this finally does open,’ Colbert said. The filing season for the 2022 tax year opens January 23.


Tenth Circuit Reverses Tax Court on IRS Penalty Approval - Aysha Bagchi, Bloomberg ($). “The IRS can satisfy a requirement to obtain a supervisor’s approval of penalties at any time up until the agency sends a taxpayer a formal tax bill, a federal appeals court ruled.”


IRS Considering Increasing Limits for Voice Bots, Official Says – Lauren Loricchio, Tax Notes ($):

The IRS is exploring whether to increase limits for voice bots used to facilitate tax payment plans, according to an agency official.

During a January 19 virtual event hosted by the California Society of Enrolled Agents, Marc Zine of the IRS Stakeholder Liaison Office explained that taxpayers can use authenticated voice bots to set up installment agreements and revise payment amounts or dates for existing agreements.


IRS Issues Notice of Superfund Tax Change Request – Tax Notes ($). “The IRS has released a notice of a request under Rev. Proc. 2022-26 to modify the list of taxable substances under the Superfund chemical substance tax. Comments and requests for a public hearing are due by March 20.”


IRS Beats Microsoft's FOIA Suit Over 15-Year Audit – Natalie Olivo, Law360 Tax Authority ($). “The Internal Revenue Service took reasonable steps to search for documents regarding its audit of Microsoft — an exam that began in 2007 and has been described by the agency as "one of the largest" in its history — U.S. District Judge Ricardo Martinez ruled Wednesday. In granting the IRS' motion for summary judgment, he dismissed Microsoft's claims that the IRS insufficiently responded to the company's FOIA requests and failed to justify exemptions for the files it didn't release.”


IRS Plans Guidance on International Aspects of Book Minimum Tax - Michael Rapoport, Bloomberg ($):

The IRS is ‘actively working’ on guidance on the international implications of the new US minimum tax on book income, an IRS official said Thursday,

But the international guidance on the new corporate alternative minimum tax, or CAMT, is ‘not imminent’ and has no timeline for release, said Peter Blessing, associate chief counsel for international in the Office of Chief Counsel at the IRS, speaking at the New York State Bar Association’s annual meeting.


From the “Gonna Pay Now” file:

IRS, Boxer Agree to $5.6 Million Deficiency in Tax Court – Tax Notes:

The Tax Court entered a stipulated decision in boxer Floyd J. Mayweather’s deficiency case in which Mayweather and the IRS agreed he is liable for a $5.6 million tax deficiency and $1.1 million accuracy-related penalty.

For those too young to know, the tease (in bold) is a play on words regarding the title song from the 1970's classic movie "Rocky." If you haven't watched the film, do so. Then you'll understand why the tease is sooooooo funny. 


It’s International Day of Acceptance. I can accept the fact that it is also National Cheese Lover’s Day.

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