Tax News & Views IRS Eyes All Roundup

February 24, 2023

IRS Points to Statute in Supreme Court Fight Over Bank Summons - Aysha Bagchi, Bloomberg ($):

A statute authorizing the IRS to demand bank records without giving account holders notice applies even if the account holder isn’t the person who has been assessed a tax liability, the agency told the Supreme Court.

The Internal Revenue Service made that argument in a brief it filed Wednesday, as it gears up for oral arguments at the high court on March 29. The agency will be defending its failure to notify an assessed taxpayer’s wife and law firm when it issued summonses for their bank records.


BTAX OnPoint: IRS Allocates $4 Billion in Energy Project Credits - Lisa Pfenninger, Bloomberg ($):

Energy project developers and investors can apply for a share of the first $4 billion in credits the IRS will allocate to clean energy property projects under the Inflation Reduction Act.

IRS released Notice 2023-18 outlining a four-stage process and timeline for taxpayers to obtain these credits. Applicants must submit a concept paper describing their project to the Energy Department by July 31.

The notice is here.

Energy Efficiency Incentives – Eide Bailly:

A trusted advisor can help you take full advantage of energy efficiency credits and deductions such as 179D and 45L. Eide Bailly is the number one accounting firm offering 179D and 45L services with professional engineers, energy modelers and HERS raters all in-house and at the ready to help you maximize your energy credits and deductions.


Gov't Finalizes Reporting Changes For Benefit Plans – Kat Lucero, Law360 Tax Authority ($):

The U.S. government unveiled Thursday the final set of revisions to forms for reporting employee benefit plans that were authorized under a 2019 law that expanded workers' retirement savings.


Proposed Regs Address Forfeitures in Retirement Plans – Tax Notes:

The IRS has issued proposed regulations (REG-122286-18) that would provide rules regarding the use of forfeitures in qualified retirement plans, including a deadline for the use of forfeitures in defined contribution plans. The proposed regs would affect participants in, beneficiaries of, administrators of, and sponsors of qualified retirement plans.

The reg is here.


Optimistic Taxpayers Feeling TCJA’s Research Amortization Teeth – Nathan Richman, Tax Notes ($):

Taxpayers who thought Congress would delay or reverse the research amortization that took effect for tax years starting in 2022 could now face interest and penalties.

Many taxpayers anticipating an act of Congress didn’t incorporate the changes to section 174 from the Tax Cuts and Jobs Act when preparing and paying their estimated taxes in 2022, even though the new version had taken effect…

Small biz owners stress out at tax time – Michael Cohn, Accounting Today:

Most small-business owners feel stressed when it comes time to do their taxes, according to a new survey.

The survey, released last week by the small-business accounting software company FreshBooks, found that 80% of American small-business owners feel at least some stress at tax time. Nearly 63% of business owners rate their tax time stress at 3 or more on a scale of 5.


Anti-ESG Measure Targeting 401(k) Rule Headed for House Floor – Austin Ramsey and Diego Areas Munhoz, Bloomberg ($):

House Republicans are poised to vote on a measure that would block the US Labor Department from enforcing its ESG retirement investing rule, as Democrats counter by introducing legislation that would codify green 401(k)s into law.

Rep. Andy Barr‘s (R-Ky.) resolution to reverse the DOL rule will hit the floor next week, according to a senior House Republican aide. The rule allows retirement plan decision-makers to consider environmental, social, and corporate governance investment criteria as long as they are in the best financial interest of plan participants.

This bill will not pass the Democratic-controlled Senate. 


Ways and Means GOP Gears Up to Begin IRS Oversight, Hearings - Samantha Handler, Bloomberg ($):

IRS use of technology, the OECD’s global minimum tax and the agency’s treatment of conservative organizations are at the top of the agenda for Republicans now leading the House Ways and Means Subcommittee on Oversight.

It’s important to point out that this is the agenda for a subcommittee, not the full committee. More on the full committee later in this post.


White House aides have discussed Social Security tax, eyeing shortfall – Jeff Stein, Washington Post (emphasis added):

During an hour-long meeting in the Oval Office, before they went to film a video together about student debt, Sen. Bernie Sanders (I-Vt.) pitched President Biden on his vision for hammering the Republican Party over one of the most potent issues in American politics…

In that Jan. 25 meeting, Sanders pushed the president to fully fund Social Security for more than seven decades by expanding payroll taxes on affluent Americans, rather than just on workers’ first $160,000 in earnings, as is the case under current law. Sanders also asked the president to back his proposal — highly unlikely to pass Congress — to not only defend existing benefits but also increase them. He wants to provide another $2,400 per year for every Social Security beneficiary.


Ariz. Gov. Vetoes Bill Prohibiting Local Residential Rent Taxes – Michael Nunes, Law360 Tax Authority ($):

Arizona Gov. Katie Hobbs said Thursday she has vetoed a bill aimed at prohibiting cities and towns from imposing a tax or fee on residential rent payments, saying the bill has no mechanism to carry out its stated aim of providing relief to renters.


Arizona Supreme Court Finds Business Tax Unnecessary Before Lawsuit – Donna Borak, Bloomberg ($):

The Arizona Supreme Court on Thursday affirmed a court of appeals’ decision and tax courts judgment that the state revenue agency wasn’t required to assess taxes on a former business owner before filing a collections lawsuit.

The high court agreed that the Arizona Department of Revenue didn’t have to assess transaction privilege taxes against one of a company’s managing members, Peter Tunkey, and that he was personally liable for the company’s unpaid taxes of $26,000, according to the opinion.


Big Tech’s California Tax Deals Pit Have-Not Cities Versus Haves - Laura Mahoney, Bloomberg ($):

A number of cities in California have reached agreements with big tech retailers to share local sales taxes paid on e-commerce purchases…

Best Buy has been in Dinuba for 17 years, employing around 370 workers, but seven years ago it became even more vital to this 25,000-population city. That’s when the Dinuba facility was designated as Best Buy’s sole point of e-commerce sales in California, meaning that any state resident making an online purchase would pay the local sales tax on their transaction to Dinuba, not the city where they live. That prompted Dinuba — facing a $1.9 million budget deficit — to enter into a 40-year agreement to share those tax proceeds with Best Buy.


Ind. To Allow Pass-Through Entity-Level Tax, Owners' Credit – Zak Kostro, Law360 Tax Authority ($):

Indiana will authorize qualifying pass-through entities to elect to pay tax at the entity level and provide refundable income tax credits to electing entities' owners under a bill signed by the governor.


Company Must Pay Tax Before Challenging Washington’s Instructions - Laura Mahoney, Bloomberg ($). “An asphalt manufacturer and paving company must follow the Washington Department of Revenue’s instructions and pay use tax on its products before it can challenge those instructions in court, the Washington Supreme Court said Thursday.”


Judge Considering Certifying Class in Racketeering Easement Suit - Aysha Bagchi, Bloomberg ($). “A judge overseeing a case against alleged promoters of syndicated conservation easements indicated she sees a ‘consistent pattern’ across transactions that form the basis of the class-action lawsuit.”


Wyo. Lawmakers OK Study Of Property Tax System – Jared Serre, Law360 Tax Authority ($):

The Wyoming Legislature approved a bill requiring a study looking at changing the state's property tax system, sending it to the governor.

H.B. 100, which would investigate a potential change to the tax system based on the sale value of the property, passed both chambers Tuesday, advancing through the Senate by a 20-11 vote before passing the state's House of Representatives by a 60-2 vote.


Global Deal’s 15% Minimum Tax Seeing Pickup Around the World – Danish Meboob and Isabel Gottlieb, Bloomberg ($):

The world’s largest companies are poised to face a 15% minimum tax under a 2021 deal to overhaul global tax rules as more countries begin to implement the measure.

Nearly 140 countries signed onto the OECD-led deal, which included agreement on the minimum tax, known as Pillar Two. The measure is designed to be implemented domestically by governments. After the EU clinched agreement late last year on a directive requiring all its member countries to adopt the rules by the end of this year, a wave of other countries have begun to follow.

‘Momentum is rapidly building around the global minimum tax,’ said Grace Perez-Navarro, director of the OECD’s Center for Tax Policy and Administration.

Washington enacted a different type of 15% minimum tax. Republicans control the House, and it is hard seeing them convert to the OECD minimum tax. Still, some think Congress will have to amend its minimum tax to align with what the OECD has proposed. This would mean Republicans would pass a tax increase, which currently does not seem likely.


From the “Listen!” file:

Next Ways and Means Field Hearing to Focus on Oil, Manufacturing - Samantha Handler, Bloomberg ($):

The House Ways and Means Committee will hold its next field hearing in Oklahoma City, according to a GOP aide to a member on the committee.

The hearing, set for March 7, will focus on the oil and gas, agribusiness, and manufacturing industries, and will discuss tax polices related to those sectors, the aide said. This will be the second field hearing for the committee this Congress, after the panel’s first in West Virginia.

The impetus behind these field hearings is to have “real” people testify before the committee instead of thinktank wonks who normally occupy witness seats in D.C.-based hearing, according to House Ways and Means Chairman Jason Smith (R-Mo) in his Op-Ed that appeared in The Hill newspaper. He wrote:

My experience taught me that the working class is the driving force of America’s economy, and therefore our economic policies — including our tax code, trade policies, and assistance programs — should prioritize the American worker. At the House Ways and Means Committee, we will examine how best to accomplish that goal by taking the conversation outside the Washington echo chamber that has failed to deliver for the American people. We will visit and hear directly from the small businesses, farmers, and workers in their communities about how they are impacted by Washington’s policies.

I enjoy hearing from real people as much as the next guy. But the prior hearing in West Virginia didn’t really put Smith’s words into action. Committee members basically used the hearing to amplify their own agendas. They did not delve into what the witnesses called for.

Eide Bailly coverage of the W. Va. hearing:

On February 6th, the panel held a field hearing in Petersburg, West Virginia. Witnesses testifying before the panel were asked a simple question: Name one thing Congress should pass to help your business thrive?

The responses:

  • Tame inflation
  • Make health care affordable
  • Curb drug abuse, which hurts hiring
  • Promote education
  • Tariff regulation to help supply chains

Despite these responses, several lawmakers vowed to help businesses by extending soon-to-expire tax provisions. Chief among them: Lengthening the life of the pass-thru deduction, which is currently scheduled to expire in 2026.

Pro Tip: When you ask someone for their opinion, maybe listen to it and provide an answer that relates to it.


Historical events for February 24th:

  • 1965: Beatles begin filming "Help" in Bahamas
  • 1979: Highest price ever paid for a pig, $42,500
  • 1982: Wayne Gretzky scores NHL-record 78th goal of season en route to 92
  • 1983: Dow Jones closes above 1100 mark for 1st time
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