Tax News & Views I AM Smiling Debt Deal Roundup

May 31, 2023

Debt-Limit Deal Faces Final Test in Congress to Avert US Default - Billy House, Steven Dennis, and Laura Litvan, Bloomberg ($):

Wednesday passage in the House is critical to getting the bill through the Senate before the Monday deadline.

Senate Republican leader Mitch McConnell of Kentucky supports the deal, and has a long track record of finding Republican votes for agreements like this one. But only one other Republican — Senator Mitt Romney of Utah — publicly supported the bill by Monday night, and they need at least seven more to overcome an anticipated filibuster.

Punchbowl News: "McCarthy doesn’t appear to have a full-scale revolt on his hands, but he has a healthy pocket of conservative Republican opposition to the package. That will make passing the rule — the procedural hurdle that sets the terms for debate and allows the leadership to bring a bill to the floor — difficult. And he may need Democratic support to do it."


Debt Limit Bill Attracts Long-Shot Tax Amendments - Doug Sword, Tax Notes: "The debt limit bill headed to the House floor for a potential May 31 vote attracted a bevy of tax-related amendments, ranging from a restoration of the 39.6 percent top marginal individual tax rate to an IRS hiring freeze."

None are expected to make it onto the final bill.


What a $21.4 billion budget cut may mean for the IRS - Benjamin Guggenheim, Politico. "The agency still has some $60 billion to spend over the next 10 years to improve taxpayer services, upgrade its IT and expand its enforcement for complex partnerships and large corporations, and the administration says it does not expect the $21.4 billion cut to affect the agency’s near-term plans."


Minn. Creates Family Leave Plan With Payroll Tax - Sanjay Talwani, Law360 Tax Authority ($).

Democratic Gov. Tim Walz signed H.F. 2 into law Thursday. Under the bill, most employees in the state will be eligible for up to 20 weeks of annual paid family and medical leave starting Jan. 1, 2026. To pay for the program after its initial startup, most employee payrolls up to $160,200 will be taxed at 0.7%, half of it paid by the employee and half through a withholding by the employer.


For employers with fewer than 30 employees and less than $3 million in annual revenue, the state will make available grants of up to $3,000 per employee and $6,000 per employer toward the costs of replacing workers on leave under the program. The grants will be capped at $5 million statewide each year.


Oklahoma Legislation Would Repeal Corporate Franchise Tax - Emily Hollingsworth, Tax Notes ($):

H.B. 1039, which would take effect July 1, would eliminate the annual corporate franchise tax that applies to corporations, associations, joint-stock companies, and business trusts that do business in the state. According to the Oklahoma Tax Commission, the franchise tax equals $1.25 of each $1,000 of capital that’s invested or used in the state, and “foreign corporations are additionally assessed at $100 per year.”


Meanwhile, H.B. 1040 would — for tax years beginning on or after January 1, 2024 — increase the income amount for the second-highest tax bracket for joint filers, heads of household, and surviving spouses. Under the bill, the 3.75 percent income tax rate would apply to a $4,600 slice of income, rather than $2,400. The top income tax rate of 4.75 percent would apply to income exceeding $4,600.


IRS reminds U.S. taxpayers living and working abroad to file their 2022 tax return by June 15 - IRS.

The Internal Revenue Service today reminded American taxpayers living and working outside the U.S. to file their 2022 federal income tax return by Thursday, June 15. This deadline applies to both U.S. citizens and resident aliens abroad, including those with dual citizenship.

A taxpayer qualifies for the June 15 filing deadline if:

  • Both their tax home and abode are outside the United States or Puerto Rico, or
  • They are serving in the military outside the U.S. and Puerto Rico on the regular due date of their tax return.

Qualifying taxpayers should attach a statement to the return indicating which of these two situations applies.


Taxpayers who can't meet the June 15 due date can request an automatic six-month extension by filing Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. The IRS encourages anyone needing the additional time to make their request electronically. Several electronic options are available at

Related: Eide Bailly Global Mobility Services.


IRS Watchdog Wants More Global High-Wealth Audits - Nathan Richman, Tax Notes ($):

The IRS Large Business and International Division left experienced revenue agents on lower-income cases while resources for productive global high-wealth audits withered, according to the Treasury Inspector General for Tax Administration.


TIGTA noted that nearly three-quarters of audits closed by the most experienced auditors working on WEIIC cases involved taxpayers with less than $200,000 of total positive income. “While WEIIC’s most experienced revenue agents are examining mostly taxpayers with TPI below $200,000, the LB&I Division’s resources devoted to [global high-wealth] taxpayers continued to decrease,” the report said.

"WEIIC" is "withholding, exchange, and international individual compliance."

Link: TIGTA report.


Belgium Comes to the Rescue of American Expats in Tax Hell - Andreas Kluth, Bloomberg via Washington Post:

This unique [U.S. only] feature of basing taxation on citizenship rather than residence also means that whenever the US (like any other country) wants to go after domestic tax dodgers, it ends up ensnaring ordinary and law-abiding Americans overseas. That’s what happened with the Obama-era Foreign Account Tax Compliance Act, which forces non-US banks and brokers to report the financial information of US citizens and Green Card holders to the IRS. 


Separately, Fabien Lehagre, president of the Association of Accidental Americans, is crowd-funding a multi-prong legal challenge against FATCA and citizenship-based taxation, with cases pending in France, Luxembourg, the Netherlands and elsewhere in the European Union. He’s also behind the case that came before Belgium’s Data Protection Agency. 


Tax breaks that can help businesses with hiring - Kay Bell, Don't Mess With Taxes. "The Work Opportunity Tax Credit is available to employers for hiring individuals who have consistently faced significant barriers to employment. Qualifying workers come from a variety of sectors, including veterans and people with disabilities."

More on reliance on a tax professional for penalty relief - Thomas Gorczynski, Tom Talks Taxes. "In closing, when a taxpayer is assessed a penalty for failing to file a tax return, and the preparer failed to file an extension as expected, or electronically transmit a return that the taxpayer authorized, there currently is no case law supporting relief using reliance on a tax professional."

Property Tax Strict Foreclosure – A Final Update - Anna Gooch, Procedurally Taxing. "The Court’s unanimous decision in Tyler not only effectively ends the practice of strict foreclosure for unpaid property tax, but it also suggests that the Court is dedicating itself to the protection of taxpayer rights, at the federal, state, and local levels."


Employee Repayment of Compensation - Update - David Repp, Iowa Tax Cafe. "If the employee repays the compensation in the same year as received, the employer simply reverses everything and generally treats the transaction as never occurring.  This may not be intuitive in its implementation."

Expensing of Machinery and Equipment Should Be Made Permanent - Stephen Entin, Tax Foundation. "Unfortunately, inflation continues to damage investment by eroding the value of the depreciation deductions, which raises the after-tax cost of investment. The present value of $100 in depreciation deductions for a 7-year machine is $89 at zero inflation, $81 at 3 percent inflation, and $76 at 5 percent inflation. In contrast, expensing protects write-offs from inflation."


Man Who Defrauded Women on Social Media Enters Guilty Plea - Rebekah Barton, TaxBuzz. "The co-conspirator allegedly made first contact, developing friendships with the women via the social media platforms. As the victims began to trust the perpetrator, he would sometimes ask them to use Google Hangouts instead, seemingly as a bid to "prove" they were dealing with a trustworthy, authentic person."

Alleged Tax Fraud Mastermind Gets More Jail Time For Role In Billion Dollar Scheme - Kelly Phillips Erb, Forbes. "A German lawyer widely regarded as the mastermind of a massive tax fraud scheme has been sentenced to an additional eight years and three months in jail. Hanno Berger had already received an eight-year jail sentence last December for his role in the cum-ex scheme, which has been called 'the biggest tax theft in the history of Europe.'"


Reality show cast member pleads guilty to 15 felonies, admits multiple frauds - IRS:

A reality show cast member and St. Louis, Missouri area radio personality on Wednesday pleaded guilty to 15 federal felonies and admitted committing tax fraud, bank fraud, insurance fraud and three separate pandemic fraud schemes.

Brittish "Cierrah" Williams pleaded guilty in front of U.S. District Judge Henry E. Autrey to five counts of misuse of a Social Security number, four counts of bank fraud, three counts of making false statements to the IRS and three counts of wire fraud.


On Jan. 3, 2022, Williams applied for the California COVID-19 Rent Relief program, falsely claiming that she was a California resident with a total annual household income of $50,000 and that she couldn't pay her rent due to a "Reduction in hours of work" due to the pandemic, her plea agreement says. She had stopped paying rent in July of 2021. She received $27,801.

Williams' $3,803 rent was more than reimbursed by a $4,000 payment from the network that produces "Basketball Wives LA," and her work hours and pay were not reduced by the pandemic, Williams admitted in her plea.

Her financial life would make a better reality show than the basketball wife thing.


Bah. Humbug. It's National Smile Day!

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