IRS’s Eyes Set on IRIS Expansion – Jonathan Curry, Tax Notes ($):
Easy, free online filing of Forms 1099 via the IRS’s information returns intake system (IRIS) this year was just the beginning of what the IRS has planned for its new portal.
The IRS hopes to have an array of new forms ready to go on IRIS by the start of 2024, according to Kyle Kampschroer, a project manager in the IRS Small Business/Self-Employed Division.
On the agency’s wish list:
- Form 3921, ‘Exercise of an Incentive Stock Option Under Section 422(b)’;
- Form 3922, ‘Transfer of Stock Acquired Through an Employee Stock Purchase Plan Under Section 423(c)’;
- Form 5498 series, ‘IRA Contribution Information,’ with the exception of Form 5498-QA, ‘ABLE Account Contribution Information’;
- Form 1098 series, ‘Mortgage Interest Statement,’ with the exception of Form 1098-MA, ‘Mortgage Assistance Payments’;
- Form 1097-BTC, ‘Bond Tax Credit’; and
- Form W-2G, ‘Certain Gambling Winnings.’
IRS Shifts Tactics on ‘Dirty Dozen’ Suspected Tax Dodges - Naomi Jagoda, Bloomberg ($):
In recent months, the agency has issued a series of proposed rules to identify schemes it considers suspect as listed transactions. More could be coming on the horizon.
The proposed rules take aim at certain syndicated conservation easements, micro-captive insurance transactions, and transactions in Maltese retirement plans. The Biden administration’s unified agenda last month included new items on proposed rules identifying certain charitable remainder annuity trusts and monetized installment sales as listed transactions.
O-Zone Investment Not Reaching Poorest Areas, Treasury Says – Alexander Rifaat, Tax Notes ($). “A Treasury report examining preliminary data on Opportunity Zones suggests the program is failing to attract investment in the poorest communities.”
The document is here.
HHS Targets ‘Junk’ Health Insurance With New Proposed Rule - Tony Pugh, Bloomberg ($):
The Biden administration on Friday issued a long-awaited proposed rule that would restrict the sale and availability of “short-term limited-duration insurance” plans, which critics say are a cheaper, but lower-quality offering that diminishes the consumer protections in the Affordable Care Act…
It also aims to clarify the tax treatment of certain benefit payments in fixed amounts received under employer-provided accident and health plans.
The document is here.
The White House fact sheet is here.
Millions of high earners pay this investment income tax every year. Here’s how to avoid it – Kate Dore, CNBC:
Higher earners are more likely to owe an extra levy on investment earnings than a decade ago. But there are ways to reduce your tax bill, experts say.
Enacted as part of the Affordable Care Act health-care expansion, the 3.8% net investment income tax applies to capital gains, interest, dividends, rents and more once your so-called modified adjusted gross income, or MAGI, exceeds certain thresholds. MAGI can be higher than adjusted gross income because it adds back the foreign earned income exclusion.
While dozens of tax code provisions adjust for inflation every year, the thresholds for net investment income tax have remained the same since 2013 — MAGI above $200,000 for single filers and $250,000 for married couples filing together.
New Jersey and Minnesota: Two Models for Taxing Offshore Income - Michael Bologna, Bloomberg ($):
New Jersey and Minnesota, states where Democrats control the governors’ mansions and both legislative chambers, came to opposite conclusions over the best way to tax GILTI—global intangible low-taxed income, a new category of foreign income recognized under the 2017 federal tax law.
This week New Jersey Gov. Phil Murphy signed a bill largely abandoning his state’s authority to tax GILTI, a feature of the state’s corporate business tax for five years. This came close on the heels of Minnesota Gov. Tim Walz’s signature on legislation directing the state to extend the reach of its corporate income tax code to GILTI for the first time.
NJ Law Lets Orsted Retain Federal Wind Energy Tax Credits – Sanjay Talwani, Law360 Tax Authority ($):
Danish energy giant Orsted will benefit from legislation in New Jersey to promote wind energy signed Thursday by Democratic Gov. Phil Murphy that will allow it to retain certain federal tax credits it previously had to pass on to ratepayers.
Murphy signed S. 4019 into law, authorizing certain wind projects approved prior to July 1, 2019, to retain federal tax credits authorized under the Inflation Reduction Act and other federal laws without passing those credits on to customers.
Massachusetts Condo Isn’t Worth $0, State Tax Tribunal Says - Richard Tzul, Bloomberg ($):
The Massachusetts Appellate Tax Board rejected a resident’s claim that his property tax value was zero instead of the assessed values of $490,200 and $408,000 for fiscal 2020 and 2021, in an opinion issued Thursday.
Nicholas Mango, the owner of a two-story condominium unit in the coastal town of Marblehead, Mass., argued his unit was uninhabitable and therefore worthless, which was in sharp contrast to the tax valuations provided by municipal assessors.
Colo. Sales Tax Fixes Helpful, But More Needed, Tax Pros Say – Sanjay Talwani, Law360 Tax Authority ($). “Despite years of efforts and millions of dollars in infrastructure upgrades, Colorado's sales and use tax regime still needs improvement before it provides the functionality desired by taxpayers and lessens the threat of litigation, practitioners say.”
Illinois FY23 Revenue at Record on Corporate Income, Sales Taxes - Shruti Date Singh, Bloomberg ($). “The state finished fiscal 2023 with base general funds revenue of $50.7 billion, up 0.7% from the previous years, according to a report emailed on Thursday.”
No Research Credits for Mere Adaptations, Tax Court Says – Chandra Wallace, Tax Notes ($):
Projects that involved the building of custom air pollution control systems for manufacturing plants didn’t involve sufficient uncertainty for related costs and wages to be creditable qualified research expenses (QREs), the Tax Court held.
In a July 6 memorandum opinion in Betz v. Commissioner, Tax Court Judge Joseph W. Nega found that the IRS properly disallowed section 41 research credits because the taxpayers failed to show that functional products custom-built for customers were ‘pilot models’ or to adequately substantiate the connection between employee wages and qualifying research.
Oil Industry Wants to Avert Big Minimum Tax Hit on Green Credits - Isabel Gottlieb, Bloomberg ($):
The US should negotiate a favorable global minimum tax treatment for US green energy credits, the American Petroleum Institute told the Treasury Department in a letter on Wednesday.
The oil and natural gas industry ‘could potentially invest billions of dollars’ in clean energy projects through transferable credits, API said.
But under Pillar Two, the globally agreed minimum tax, US multinationals could see their low-taxed US income taxed by other countries if they fall below the 15% minimum rate because they took certain kinds of tax credits. It’s not yet clear how transferable credits will be categorized.
Couple Challenges Legality of IRS John Doe Summons to Swiss Bank - Aysha Bagchi, Bloomberg ($):
A John Doe summons served on a Swiss bank for the records of unnamed taxpayers was improperly used by the IRS to extend the government’s timeline for issuing a tax bill, a couple argued in their appeal of six-figure tax penalties.
The improper purpose means the summons was illegal and invalid, Johannes Lamprecht and Linda Lamprecht said in their Wednesday filing to the US Court of Appeals for the D.C. Circuit. Without a valid summons to extend the deadline, the Internal Revenue Service exceeded the six years it had to issue the penalties, they said.
A lot is at stake here, including $500,000 in penalties for under-reporting income.
From “The Folks are Back in Town” file:
ANALYSIS: Lawyer Work-From-Home Options Decrease During Endemic - Jessica Blaemire, Bloomberg ($):
As the Covid-19 pandemic becomes an endemic, masks and sanitizing stations aren’t the only things disappearing from law firms and corporations. The flexibility to work from home (WFH) is also diminishing as return-to-office (RTO) policies requiring in-office days increase, according to a recent Bloomberg Law survey.
At the beginning of 2023, Bloomberg Law asked 868 attorneys about their ‘current workplace situation.’ Almost a quarter (24%) of overall respondents to the 2022 Workload & Hours Survey (H2) reported that they were fully in office. This percentage is double the percentage (12%) reported in spring 2022. And it isn’t just law firms pushing for RTO—both in-house and law firm attorneys reported an increase.
Folks I know at CPA firms in DC are experiencing the same thing. As am I. Two years ago the metro train I rode to work was basically empty. Now, it's packed and no one is wearing a mask.
Air Guitar Alert! It’s National Day of Rock ‘n’ Roll and National Dive Bar Day! Get to your favorite bar, load up its jukebox with quarters (or dollars), and rock out playing air guitar while displaying the white man’s overbite! (Please refer to “When Harry met Sally” for instructions on white man’s overbite.)
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