Biden to Urge 25% Billionaire Tax, Levies on Rich Investors - Laura Davison and Justin Sink, Bloomberg via Washington Post:
Biden’s budget request to Congress, which is slated to be released Thursday, calls for a 25% minimum tax on billionaires, according to a White House official familiar with the proposal who declined to be named because the plan is not yet public. The plan would also nearly double the capital gains tax rate for investment to 39.6% from 20% and raise income levies on corporations and wealthy Americans.
The proposal, which is largely a reprise of Biden’s multi-trillion dollar Build Back Better economic package, has little chance of passing Congress, particularly now that Republicans control the House of Representatives. Biden was unable to pass similar tax increases when Democrats enjoyed control of both chambers of Congress, instead settling for slimmed down legislation focusing on energy and health policy known as the Inflation Reduction Act.
Biden set to unveil more than $2 trillion in tax hikes in budget - Alexander Bolton, The Hill:
Biden is expected to reintroduce two staples of his 2021 Build Back Better agenda, raising the top marginal income tax rate from 37 percent to 39.6 percent and raising the corporate tax rate from 21 percent to 28 percent.
The president has little chance of enacting the proposed tax hikes given Republican control of the House but they serve as a starting negotiating position in talks with Speaker Kevin McCarthy (R-Calif.) to raise the debt limit.
Biden Budget to Propose Saving Hundreds of Billions by Cutting Drug Prices, Fraud - Andrew Restuccia, Richard Rubin, and Stephanie Armour, Wall Street Journal. "As he did in last year’s budget, Mr. Biden would end what are known as like-kind real-estate transactions, in which owners can defer capital gains from one property transaction by investing in another. Those didn’t get much attention in Congress."
Werfel Clears One Senate Hurdle, but Final Vote Delayed - Doug Sword and Cady Stanton, Tax Notes ($). "Six Republicans joined 45 Democrats and independents in voting March 8 to end debate and move to a final vote on Werfel’s confirmation. The final vote had been scheduled for that evening but was delayed little more than an hour before it was to begin. The vote is now scheduled to take place March 9."
IRS begins new Digital Intake initiative; Form 940 scanning process off to strong start; other forms to start soon - IRS. "In a major step in the new Digital Intake scanning initiative, the IRS has already scanned more than 120,000 paper Forms 940 since the start of 2023, this is a twenty-fold increase compared to all of 2022. This effort will expand soon to include scanning of Forms 1040 as well as Forms 941. The scanning effort is part of a multi-form, multi-solution scanning initiative known as Digital Intake."
IRS Says It Plans to Expand Scanning of Paper Returns - Lauren Loricchio, Tax Notes ($):
In May 2022 National Taxpayer Advocate Erin Collins took the unusual step of issuing a directive urging the IRS to quickly adopt scanning technology to process paper returns more efficiently for the 2023 tax filing season and beyond.
The directive notes that more than 20 years ago, the Taxpayer Advocate Service recommended that the IRS adopt scanning technology similar to what was being used by several state tax agencies. Collins said if the IRS had adopted similar technology, the backlog amassed during the pandemic probably wouldn’t exist.
Better 20 years late than never.
StubHub Owes $8.5M Tax On Ticket Resales, Wis. Board Rules - Sanjay Talwani, Law360 Tax Authority:
In a ruling released Tuesday, the Wisconsin Tax Appeals Commission upheld a sales tax assessment by the state Department of Revenue against StubHub, a subsidiary of eBay, on about $154 million worth of ticket resales from 2008 to 2013. The commission rejected the argument by StubHub, which operates an online secondary marketplace connecting ticket holders with buyers, that it functioned like "an open-air market" and the ticket holders were liable for the tax.
The commission also rejected StubHub's argument that it was only transferring tickets, physical or electronic, and not the actual admissions to events, which the company said were provided by other parties who should be subject to the tax. The commission said StubHub's "novel" argument would mean that only venues themselves could be subject to the tax.
Related: Eide Bailly State and Local Tax Services.
The IRS offers easy and convenient options to make federal tax payments - IRS:
Anyone who needs to pay their federal tax bill has several ways to send a payment to IRS quickly and securely. Knowing the options to make payments helps taxpayers meet their tax obligations.
Here are several ways people who owe taxes can pay it. They can:
-Pay when they e-file using electronic funds withdrawal to draw the payment directly from their bank account.
-Sign into their Online Account to pay their 2022 balance or make estimated tax payments. Taxpayers can also see their payment history, any scheduled or pending payments, and other account details.
-Use IRS Direct Pay to pay electronically directly from their checking or savings account. They can choose to receive email notifications about their payments when they pay this way.
-Pay using a payment processor by credit card, debit card or digital wallet. Taxpayers can make these payments online for a fee.
-Make a cash payment at more than 60,000 participating retail locations nationwide. To pay with cash, taxpayers should visit IRS.gov and follow the instructions.
IRS Warns On W-2 Scams Making The Rounds On Social Media - Kelly Phillips Erb, Forbes. "Many of these schemes are making the rounds on social media and being shared widely. I’ve also seen posts and reels suggesting that you can claim your dog as a dependent (you cannot) and make personal expenses deductible by putting your home into an LLC (this has the potential to be problematic for many reasons)."
Tax filing resources for U.S. service members - Kay Bell, Don't Mess With Taxes. "The IRS' Armed Forces' Tax Guide is a good place to start. The 39-page PDF document, officially known as IRS Publication 3, covers the such things special rules for military personnel serving abroad, filing deadline extensions, unreimbursed moving expenses (a tax benefit now available only to service members), and reserve component travel expenses"
IRS Warns Of Employee Retention Credit Claim Fraud - Robert Wood, Forbes. "The IRS has been warning about this scheme since last fall, but the credit claims continue to pour in. The IRS says tax professionals are being pressured to claim credits improperly. People and businesses can avoid this scheme, and by not filing improper claims in the first place. If the business filed an income tax return deducting qualified wages before it filed an employment tax return claiming the credit, the business should file an amended income tax return to correct any overstated wage deduction."
Donating Timeshares To Charity: Legal, Tax And Practical Considerations -Bryan Clontz, Forbes. "Many donors think an easy way “out” of a timeshare might be to donate it to a charity. For a host of reasons, this is not usually a good idea. And it is usually an even worse idea for charities to accept them. There are a number of reasons why."
IRS Issues Final Regs on Electronic Filing; Lower Thresholds Don't Apply Until 2024 - Parker Tax Pro Library. "The IRS issued final regulations amending the rules for filing electronically that affect persons required to file partnership returns, corporate income tax returns, unrelated business income tax returns, withholding tax returns, certain information returns, registration statements, disclosure statements, notifications, actuarial reports, and certain excise tax returns. The final regulations, which reflect changes made by the Taxpayer First Act (TFA), reduce the electronic filing threshold from 250 returns to 10 or more returns, and apply to returns and other documents required to be filed during calendar year 2024."
A closer look at the IRS’s new tip reporting initiative - National Association of Tax Professionals. "According to the IRS, the SITCA program would take advantage of improvements in electronic payment settlement methods as well as advancements in point-of-sale (POS), time and attendance systems that have occurred since the agency began working with employers to improve tip reporting during the 1990s. Just like with the current programs, employers who participate in SITCA program receive protection from liability under the rules that define tips as part of an employee’s pay for the years they are compliant."
Musings on Structure Planning For Closely-Held Foreign Entities - International Tax Blog. "The US allows a foreign tax credit for income taxes paid by a US person. The ability to claim foreign tax credits can reduce the multiple layers of tax. However, there are many limitations on claiming foreign tax credits. There is no guarantee that double or triple taxation can be avoided in every circumstance."
FBAR and FATCA: Reporting Foreign Accounts as a US Expat - 1040 Abroad. "Keep in mind – if your balance hits $10,000 for a short amount of time (like one day, or even just one minute), you’ll still need to file the FBAR."
The US Tax Trap: International Marriage, Community Property and the Mobile Couple - Virginia La Torre Jeker, US Tax Talk. " Many individuals involved in an international marriage or in 'migrations' are unaware of the potential US tax consequences that can result when community property rules come into play as a result of their unique facts. The impact of community property laws can be unexpected and diverse. The fact of the matter is that community property laws may affect a couple if they have ever lived in a community property jurisdiction at any time."
Taxpayers’ Failure to File Form 3520 and Form 3520-A Results in Extended Statute of Limitations Period: the Cautionary Tale of Fairbank - Matthew Roberts, Freeman Law. "As a reminder to the readers, section 6048 of the Code requires taxpayers to file certain foreign information returns with the IRS if they engage in certain transactions with a foreign trust or if they have certain interests in the foreign trust. To the extent these reporting rules apply, the taxpayer must file both IRS Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Foreign Gifts, and IRS Form 3520-A, Annual Information Return of Foreign Trust with a U.S. Owner. Taxpayers who fail to timely and properly file these forms may be assessed significant civil penalties. In addition, and as mentioned supra, the failure to file these returns may result in an extension of the general three-year statute of limitations period for the IRS to make an assessment."
Related: Eide Bailly Foreign Trust & Estate Tax Compliance Services.
Tax Court Can't Review Man's Whistleblower Award Denial - Emlyn Cameron, Law360 Tax Authority ($). "The U.S. Tax Court on Wednesday dismissed a Mississippi man's case seeking review of the denial of his whistleblower claim for 30% of the revenue collected by an Internal Revenue Service offshore voluntary disclosure program."
The 2011 IRS Offshore Voluntary Disclosure Initiative was part of a big IRS drive - still ongoing - to ferret out offshore income sources of U.S. taxpayers. The whistleblower said he should get the 30% award because his "collaboration with federal agents in securing the highly publicized arrest and cooperation of Swiss banker Renzo Gadola led to widespread participation in OVDI."
Worth a try, anyway.
Schooled. A Pennsylvania executive tried some self-help for financing college costs. The IRS noticed (Defendant name removed):
For calendar years 2012 through 2017, the defendant and his spouse, who served as the company's Treasurer, jointly filed annual Form 1040 federal income tax returns with the Internal Revenue Service (IRS).
The defendant admitted in Court that during the relevant time period, payments were made from company accounts for college expenses, which were falsely categorized as business expenses using fictitious vendor names. The return preparer for Mr. Defendant and his spouse was not informed about these college expense payments, and the payments were not included as taxable income on Form 1040 returns that were ultimately filed with the IRS. Thus, the defendant willfully made and subscribed Form 1040 returns for calendar years 2012 through 2017 that materially underreported his taxable income. In connection with his guilty plea, the defendant agreed to pay restitution to the IRS in the amount of $159,982.00, plus interest.
As noted in an item above, some social media folks will tell you that once you have a business, everything is deductible. It doesn't work that way.
Paddlefish, or Barbie? Today is National American Paddlefish Day and National Barbie Day. Celebrate whichever brings you joy.