Tax News & Views Movin' On Up Roundup

March 3, 2023

Werfel Advances to Full Senate With Finance Committee Approval – Cady Stanton, Tax Notes ($):

The Senate Finance Committee advanced the nomination of Daniel Werfel to be the next IRS commissioner by a vote of 17 to 9, drawing bipartisan support.

It’ll be a short honeymoon:

Werfel’s committee vote comes as the IRS is nearly two weeks past a deadline to report to Treasury on its plan for the additional funds. In a February 16 statement, the IRS said it ‘expects to deliver the plan to the Secretary in [the] coming weeks.’

But first things first:

Werfel committed to issuing a report within 60 days of his confirmation on why the IRS is auditing Black taxpayers at higher rates, in response to findings from Stanford University’s Institute for Economic Policy Research.

Statement from Senate Finance Chairman Ron Wyden (D-Ore.):

'Too much of the burden of audits falls on working Americans, and wealthy tax cheats know the odds are they’ll get away with ripping off everybody else scot free. Democrats gave the IRS new resources to rebalance the system and make it more fair by going after tax cheating by the wealthy and corporations. There’s no doubt that Mr. Werfel understands the challenge, and he’s also going to ensure the IRS continues making progress improving customer service.'

A floor vote on the nomination has not been announced. 

More on what Congress did this week:

Capitol Hill Recap: Wait for It! – Jay Heflin, Eide Bailly. “Lawmakers on Capitol Hill made strides this week in moving forward some agenda items, but not everything.”


Smith, Schweikert Push IRS for Information and Accountability on Improper Disclosure of Confidential Taxpayer Information – House Ways and Means Committee. Republicans on the panel are calling for the IRS to explain how private taxpayer information was publicly released.

Not once, but twice, the IRS posted on its website information from a form used by certain retirement account holders. These disclosures impacted the private information of over 100,000 taxpayers, raising serious concerns about the agency’s ability to carry out its mission...

Expect the Committee to hold hearings on this issue. 


New Easement Law May Render IRS Reporting Rule Unneeded – Kat Lucero, Law360 Tax Authority ($). “A new law authorizing the IRS to limit deductions for so-called syndicated conservation easements may undercut the usefulness of a proposed regulation that would mandate reporting for such transactions, some experts said, while others said the measures may work well in tandem.”


Multistate Tax Group Downplays Fear of Big Digital Tax Hikes – Michael Bologna, Bloomberg ($):

The leader of a multistate effort aimed at uniformity in the tax treatment of digital goods and services sought to assuage business sector worries that the group is essentially engineering a massive tax increase.

Gil Brewer, chair of the Multistate Tax Commission’s work group on sales tax on digital products, joked Thursday that tax attorneys representing tech companies have accused him of convening a process ‘promoting the largest tax increase in history.’ But he assured more than 70 tax administrators and representatives of taxpayer groups attending a virtual work group meeting that ‘we aren’t doing this to try to convince everyone to tax every electron that passes over the internet.’

This quote reminds me of another quote by President Ronald Reagan:

'The nine most terrifying words in the English language are: ‘I'm from the Government, and I'm here to help.’


Minn. Court Says Goodwill Store Exempt From Property Tax – Michael Nunes, Law360 Tax Authority ($). “The Minnesota Tax Court ruled that a Goodwill thrift store should be refunded property taxes paid in 2020 and 2021 as the organization qualified for a charitable exemption due to its job training programs and sustainability goals.”


California Tax Deadline Delayed Again, Complicating Budget Planning – Laura Mahoney, Bloomberg ($). “Most California individuals and businesses have until Oct. 16 to file and pay both federal and state income taxes for 2022 and part of 2023 because of the wave of winter storms. It’s welcome news to taxpayers, but complicates the job for budget-writing lawmakers trying to figure out how much money the state will be taking in.”


Mont. Lawmakers OK Top Income Tax Rate Cut, EITC Boost – Michael Nunes, Law360 Tax Authority ($). “Montana lawmakers approved a bill to reduce the state's top marginal individual income tax rate and increase an earned income tax credit as part of a bill headed next to the governor.”


Resolution to EV Tax Credit Rift With EU Coming Soon: Granholm – Ari Natter, Bloomberg ($). “Energy Secretary Jennifer Granholm says she sees a resolution coming to a rift with the European Union and the UK over domestic content requirements related to a US subsidy for electric vehicles emerging ‘within a short period of time.’”

Further down the article:

  • Granholm said the administration was working on how to uphold the intent of the electric vehicle tax credit in the Inflation Reduction Act without alienating US allies.


Foreign Account Penalty Lawsuits Loom After SCOTUS IRS Ruling – Aysha Bagchi, Bloomberg ($). “Following a Supreme Court ruling that the IRS has been over-penalizing people for non-willfully failing to report their foreign accounts, practitioners are hoping courts will further curb the IRS penalties in both willful and non-willful cases.”


From the “investigations on the right and left of me” file:

Ocasio-Cortez’s ‘Tax the Rich’ Dress May Have Broken House Rules – Billy House, Bloomberg ($):

A congressional watchdog says that progressive Democrat Alexandria Ocasio-Cortez might have broken House rules when she attended the 2021 Met Gala in New York in a rented designer gown, which attracted as much if not more attention than anything the celebrities alongside her were wearing.

The New York congresswoman made a surprise appearance at the event, which comingles the fashion and entertainment worlds, walking up a staircase at the Metropolitan Museum of Art in a Brother Vellies white strapless dress with ‘Tax the Rich’ in big bright red letters running down the back.

It is a very pretty dress:

Rep. Alexandria Ocasio-Cortez responds to backlash over 'Tax the Rich' Met  Gala gown - ABC News

Photo from ABC News.

Bottom line: She apparently didn’t pay the full price for the gown and other payments were delayed (i.e., not paid yet), which makes them gifts that are not allowed under congressional rules. From the report:

Representative Alexandria Ocasio-Cortez may have accepted impermissible gifts associated with her attendance at the Met Gala in 2021. If Rep. Ocasio-Cortez accepted impermissible gifts, then she may have violated House rules, standards of conduct, and federal law.

Investigations galore:

Santos Under House Ethics Investigation For Financial Claims And Sexual Misconduct Allegation - Nicholas Reimann, Forbes.

The House Ethics Committee announced Thursday it formed a panel to investigate the spate of misconduct claims surrounding freshman Rep. George Santos (R-N.Y.), a process House Speaker Kevin McCarthy (R-Calif.) has said will lead to Santos’ removal from Congress if wrongdoing is found.

It's hard to believe Santos will be kicked out of Congress. A Democrat could replace him, which would shrink the GOP's already small House majority. Still, the list of grievances is long and include fundraising and salary offenses. Taxes, at some point, will likely be a part of the investigation.


Happy National Employee Appreciation Day!

National Day Calendar:

Employees are one of a company’s greatest assets. Recognition and appreciation are known as some of the key motivational factors in the workplace.


Expand Full Article

We're Here to Help

We are here to help
From business growth to compliance and digital optimization, Eide Bailly is here to help you thrive and embrace opportunity.
Speak to our specialists