Tax News & Views Small Biz Week Roundup

May 3, 2023

National Small Business Week advice from the IRS: Plan now to take advantage of new and existing tax benefits, prepare for reporting changes – IRS. “The Internal Revenue Service today urged business taxpayers to begin planning now to take advantage of tax-saving opportunities and get ready for reporting changes that take effect in 2023.”

Energy Costs:

The Inflation Reduction Act (IRA), enacted last summer, includes provisions that can save small business owners money on energy costs.

Employee Retention Tax Credit:

Eligible employers who overlooked the Employee Retention Credit (ERC) when they filed payroll tax returns for 2020 and 2021 can still claim it by filing an amended federal payroll tax return.


Starting in 2023, businesses and other taxpayers who receive more than $600 in income from third-party settlement organizations, including popular payment apps, may receive Forms 1099-K, Payment Card and Third Party Network Transactions. Typically, they’ll receive these reporting forms during January 2024.


Eide Bailly can help sort this stuff out:

Energy efficiencies can translate into big tax savings.

A trusted advisor can help you take full advantage of energy efficiency credits and deductions. such as 179D, 45L, and Section 48. Eide Bailly is the number one accounting firm offering energy efficiency credits and deductions 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.

Benefit from the Employee Retention Credit

The Employee Retention Credit (ERC) is designed to encourage employers whose businesses have been negatively affected by COVID-19 to keep employees on payroll.

Year-End 1099 Compliance

As year-end approaches, there are several items you should be considering related to 1099 preparation. 


IRS Chief Hones Elevator Pitch Ahead of Major Recruitment Push - Naomi Jagoda, Bloomberg ($):

IRS Commissioner Danny Werfel has a message for prospective IRS employees: The agency may not be your favorite, but it’s critical to the functioning of the US government and now is a key opportunity to improve it.

As the IRS prepares to hire tens of thousands of new employees in the coming years with the $80 billion it received in the Inflation Reduction Act, Werfel is working on his elevator pitch for potential candidates.

'The agency may not be your favorite, but it’s critical to the functioning of the US government and now is a key opportunity to improve it.'

Dude, I don't know if that is a pitch or an apology. 


Florida Storm Victims Receive IRS Deadline Extension, Relief – Bloomberg ($). “Individuals and households that reside in Broward County, Fla., now have until Aug. 15, 2023, to file federal individual and business tax returns and make payments, the IRS said Tuesday.”


Central-Time Filers Missed Eastern-Time Tax Court Deadline - Aysha Bagchi, Bloomberg ($):

Electronic filers at the US Tax Court must abide by deadlines in the Eastern time zone where the court is based, according to a Tuesday ruling.

As a result, Roy A. Nutt and Bonnie W. Nutt’s petition challenging an IRS tax bill must be dismissed, the court held. It noted that, while it may sit anywhere in the US, it maintains its principal office, clerk’s office, and mailing address in Washington, D.C., which is based in the US Eastern time zone


Split DC Circ. Finds IRS Tax Shelter Penalties Timely – Theresa Schliep, Law360 Tax Authority ($). “The Internal Revenue Service wasn't too slow to assess around $256,000 in penalties against a man who promoted abusive tax shelters, a split D.C. Circuit panel ruled Tuesday, finding a three-year deadline for tax assessments didn't apply to the penalty assessment.”


Biden Budget’s Estate Tax Planning Vision ‘Fraught With Peril’ – Jonathan Curry, Tax Notes ($):

A divided Congress shouldn’t lull estate planners into thinking that the score of trust- and estate-related tax proposals in President Biden’s budget is pure fantasy, observers agreed.

The proposals, described in the Treasury Department’s green book released March 9, run the gamut from the seemingly trivial, like a provision to tweak the definition of executor, to the monumental, such as a new 25 percent minimum tax on taxpayers reporting more than $100 million in total income. While the latter might get the most attention, it’s everything in between that should be given a closer look, a panel of estate planners said during a May 2 Leimberg Information Services Inc. webinar.


New York and California lost over $90 billion in income to low-tax states during Covid – Robert Frank, CNBC:

New York and California lost over $90 billion in income during Covid as taxpayers moved to other states, accelerating the trend of high-earners relocating to lower-tax areas.

New data from the Internal Revenue Service shows that New York state lost $25 billion in adjusted gross income due to outmigration in 2021, on top of $20 billion lost in 2020. California reported a net loss of $29 billion in 2021, following a loss of $18 billion in 2020. Combined, the two states lost $92 billion across the two years.


Income tax season sends West Virginia revenue surplus to $1.6B – Steven Allen Adams, The Parkersburg News and Sentinel:

April tax season in West Virginia showered the state in excess revenue, sending the surplus to nearly $1.6 billion with two months left in the 2023 fiscal year.

According to the monthly tax revenue report released by the Senate Finance Committee, year-to-date tax collections of $5.427 billion were 41.3% more than the $3.842 billion estimate by the state Department of Revenue. That leaves the state with $1.585 billion in excess tax revenue.


Minnesota Targets Corporations Shifting Profits to Tax Havens - Michael Bologna, Bloomberg ($):

Multinational corporations paying income taxes in Minnesota would be required to add foreign subsidiaries’ profits to their state returns under a historic tax overhaul bill moving quickly through the state Legislature.

Lawmakers are expected to act on omnibus tax legislation that includes a bold plan to shift Minnesota to mandatory worldwide combined reporting for the calculation of corporate income taxes. The action would make Minnesota the only state to abandon so-called ‘water’s edge’ rules, which permit businesses to exclude foreign affiliates’ income from the combined group when they file their state income tax returns.


Treasury Proposes Rules For Repatriating Intangible Property – Natalie Olivo, Law360 Tax Authority ($):

Treasury proposed the guidance under Internal Revenue Code Section 367(d), a provision that covers intangibles transferred to foreign corporations by U.S. companies, which must make income inclusions reflecting payments that would have been received annually over the useful life of the intangibles. The proposed rules would essentially turn off the application of Section 367(d) for certain situations when the underlying intangibles are brought back to the U.S., according to Treasury.

The document is here.


From the “Setting the Record Straight” file:

No, the IRS still isn’t hiring an ‘army’ of armed auditors—here’s how the agency is actually spending $80 billion – Ryan Ermey, CNBC. This article focuses on the $80 billion the IRS received to get its act together.

So what’s the IRS spending the money on anyway? One thing the agency recently clarified, is that the money won’t be spent to hire an 'army' of armed auditors, as some politicians have claimed.

Let’s set the record straight: An IRS agent doesn’t need a gun to audit a taxpayer. Also, a gun does not need to be present to scare the living daylights out of person who is under audit. The audit itself is scary. And more wealthier taxpayers might be feeling this burn:

More audits for wealthy filers

The biggest sticking point in the funding plan is IRS efforts to close the $600 billion 'tax gap,' the difference between what Americans owe and what they actually pay. To that end, the agency plans to higher more staff in order to ramp up auditing efforts on wealthy families, large corporations and business partnerships.


Today provides an assortment of celebrations:


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