Tax News & Views Happy Cinco De Mayo Roundup

May 5, 2023

IRS Seeks Suggestions for Next Priority Guidance Plan - Isabel Gottlieb, Bloomberg ($):

The IRS is asking for recommendations from the public on new items to include on its next priority guidance plan.

The IRS releases an annual priority guidance plan describing the projects on which it intends to work. The 2023-2024 plan will highlight projects on the agency’s list from July 1, 2023, through June 30, 2024, it said in the notice.

The Notice is here.

Comments are due by June 9th.


Lack Of Confirmed Top Atty Could Hinder IRS Guidance Push – David van den Berg, Law360 Tax Authority ($):

In a strategic operating plan released last month that details how the IRS intends to use the $80 billion funding boost provided by the Inflation Reduction Act, the agency proposed an initiative to get out more guidance in a more timely manner. Under the plan, legal specialists would be added in the 2024 fiscal year at the IRS Office of Chief Counsel and the U.S. Department of the Treasury's Office of Tax Policy to support the publishing of formal and informal guidance. The plan also said the agency will find and roll out new strategies to provide taxpayers greater certainty and new forms of informal guidance will be considered.

However, President Joe Biden has not nominated anyone to serve as IRS chief counsel since taking office. Observers who spoke with Law360 said having a confirmed office holder in place would help the agency allocate resources, set priorities and guide strategy. That leader would also have political capital to use in making changes, they said.


IRS-Tea Party Episode Continues to Stir Debate – Fred Stokeld, Tax Notes ($):

Ten years after the IRS acknowledged it had inappropriately given extra scrutiny to applications for tax-exempt status submitted by conservative organizations, debate continues as to what happened and how things stand today, with observers on the political right and left suggesting that more guidance on exempt organizations and political activity could help prevent such controversies from happening again.

Although passions seem less intense than they were in 2013 and beyond after then-IRS Exempt Organizations Director Lois Lerner acknowledged the agency had mishandled the exemption applications of Tea Party groups and other right-of-center nonprofits seeking section 501(c)(4) status, strong opinions about the episode persist and sometimes are voiced during debates about the IRS.

Why harken-back ten years to reminisce about IRS shenanigans when there are current shenanigans?

Senate Finance Republicans Call for Investigations of Alleged IRS Misconduct – Senate Finance Republicans:

The senators’ request is grounded in two news reports:

  • An IRS employee visited the home of journalist Matt Taibbi to discuss Taibbi’s tax returns the same day he testified before the House Judiciary Committee’s Select Subcommittee on the Weaponization of the Federal Government, raising questions about IRS procedures and operations; and
  • A career IRS criminal supervisory special agent alleging preferential treatment of a high-profile, controversial, and politically connected subject, with information that would contradict sworn congressional testimony given by a senior political appointee. 


Cardin Legacy - Samantha Handler, Bloomberg ($):

Sen. Ben Cardin (D-Md.), who announced this week that he’s retiring, told reporters that he’s “optimistic” on both his legacy of bipartisan partnerships living on and Congress passing housing tax bills this year...

Now, Cardin said he’s turning to housing tax legislation for one of his last bipartisan deals. There’s been a “broad discussion” between House and Senate Republicans and Democrats on housing tax bills, though other tax measures like the research and development break and Child Tax Credit have been sticking points with both parties, he said.

This conversation has been going on for months. The biggest challenge is that some lawmakers want to include in the housing legislation the Big Three (R&D expensing, expanding 163(j), and upping Bonus Depreciation to 100%). Other lawmakers – who support the Big Three – refuse to do so unless an expanded Child Tax Credit (CTC) is also added to the bill (which won’t pass the House).

Rumor Mill: House Republicans might add a CTC expansion and the Big Three to an FAA reauthorization bill, but the CTC expansion might not be large enough to satisfy the pro-CTC group.


Wyden Statement on Harlan Crow’s Gifts to Clarence Thomas – Senate Finance Committee. “U.S. Senator Ron Wyden, D-Ore., today issued the following statement on a new report by ProPublica of billionaire Republican activist Harlan Crow’s financial largesse benefitting Supreme Court Justice Clarence Thomas and his family.”

‘With every new revelation in this case, it becomes clearer that Harlan Crow has been subsidizing an extravagant lifestyle that Justice Thomas and his family could not otherwise afford. This is a foul breach of ethics standards, which are already far too low when it comes to the Supreme Court. I gave Mr. Crow until May 8th to provide a full account of the gifts he provided to Justice Thomas’s family. Should he fail to comply, I will explore using other tools at the committee’s disposal to obtain this critical information.’ 

This situation could become a tax story if the donations are considered income and not accounted for on a tax return. 

Oops, spoke too soon:

Wyden May Pursue Harlan Crow’s Tax Records – Alexander Riffaat, Tax Notes ($):

The Senate’s top taxwriter suggested he is prepared to seek the tax returns of the billionaire real estate developer at the center of a brewing political storm involving gifts bestowed on Supreme Court Justice Clarence Thomas.


Ruling Striking Covid Aid Limits Survives Full Court Review Bid - Perry Cooper, Bloomberg ($). “The full US Court of Appeals for the Sixth Circuit won’t reconsider a decision striking down the federal government’s limits on how states may use $195 billion in Covid pandemic aid as too vague to be enforced.”


Battle Over Taxing Digital Ads Goes Before Maryland Justices - Perry Cooper, Bloomberg ($). “Maryland’s first-in-the-nation levy on digital advertising is slated for argument Friday before the state’s Supreme Court, which will consider whether it is a legal way to tax tech giants’ activity within state borders.”


Slower US State Revenue Puts Spotlight on Record Rainy Day Funds - Shruti Date Singh, Bloomberg ($):

Record reserve funds built by US states in the past two years are likely to be needed as tax receipts slow, federal pandemic aid dwindles and the economy heads toward a recession.

California already is projecting a massive deficit for next year and Illinois posted a “stunning” $1.84 billion drop in April receipts from a year ago. The National Association of State Budget Officers says most states are planning for softer revenue growth or slight declines for fiscal 2023 and 2024, after double-digit percentage increases for two consecutive years.


California Bill Excluding Forgiven Student Debt From State Tax Passes - Laura Mahoney, Bloomberg ($):

Forgiven student loan debt and other pandemic-related financial relief for students would be exempt from California income tax under a bill lawmakers passed Thursday.

The bill solidifies the position lawmakers and Gov. Gavin Newsom (D) have taken since President Joe Biden offered student loan debt relief to certain borrowers based on their income. Newsom asked lawmakers in January to enact the measure, although Biden’s forgiveness plan is stalled in federal court.


The New Supreme Court Majority and Tax - Jasper  Cummings, Jr., Tax Notes ($):

Cummings examines recent Supreme Court decisions and argues that the Court’s indirect swipe at Chevron deference will undermine Treasury’s power to enforce the tax laws, most importantly in the international tax regulations and other overbroad regulations.


From the “Aww, They Do Care” file:

The IRS Needs a Tech Overhaul. Even the GOP Is Rooting for Them - Chris Cioffi, Bloomberg ($):

Republicans have hammered the IRS for years for overreach and repeated false claims about hiring armed agents, but they are more sympathetic to the agency’s tech problems—which often land on their doorsteps.

Most agree with a broad consensus both inside and outside of the agency that it needs to rid itself of systems dating from when computers used magnetic tapes. And when House Republicans voted for a debt limit bill that rescinded nearly all of the tax-and-climate law’s $80 billion in multiyear funding for the agency, they made exceptions for billions designated to improve tech and customer service.

Defunding the IRS was (or is) a huge priority of congressional Republicans. Before being indicted on money laundering and conspiracy charges, former House Speaker Tom DeLay (R-Texas) regularly used to say that he wanted to defund the IRS and make it so small that he could drown it in a bathtub.


Happy Cinco De Mayo! It only comes once a year so celebrate!

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