Tax News & Views Data Situation Roundup

July 13, 2023

‘Reckless’ Tax Prep Data Sharing Demands Probe, Democrats Say - Chris Cioffi, Bloomberg ($):

Democratic lawmakers led by Sen. Elizabeth Warren (D-Mass.) called on federal officials to investigate whether tax prep companies like H&R Block Inc. and tech giants Meta and Google broke the law when they shared sensitive information millions of taxpayers entered into their websites.

Democrats’ calls coincided with the release of a report from Warren and the other lawmakers alleging TaxAct, TaxSlayer, and H&R Block were “reckless” about data sharing practices by including website code that silently transmitted data to tech giants Meta Platforms Inc. and Google. The practices might have violated taxpayer rights as well as privacy laws, opening them to billions of dollars in liability, the lawmakers said.

Tax prep sites gave millions of taxpayers’ info to Facebook and Google – Julie Zauzmer Weil, Washington Post:

About 10 million people type their personal financial information into H&R Block, TaxSlayer and TaxAct websites every year to prepare their taxes, trusting the companies to keep their information safe. Instead, the companies shared that personal information with Google and Facebook, some going as far back as 2011, members of Congress wrote in a new report.

The congressional investigation, led by Sen. Elizabeth Warren (D-Mass.), follows a report last year about such data-sharing with Facebook by the technology journalism website The Markup. Warren and six other lawmakers wrote to the Justice Department on Tuesday urging criminal charges against the tax companies for violating laws that prevent tax preparers from sharing their clients’ personal information.

Last year's report is here.

Eide Bailly's coverage on the most recent report:

Capitol Hill Recap: Are taxes on the legislative agenda? – Jay Heflin, Eide Bailly:

The report shows that the information shared includes full names, email, personal addresses, gender, filing status, AGI, refund amount, dependents’ names, taxes owed – to name a few.

Warren sits on the tax-writing Senate Finance Committee and has a seat on its Taxation and IRS Oversight Subcommittee. The odds seem quite likely that the findings from this report will get a hearing.

The background work for a hearing has already begun:

Lawmakers Seek Probe Into Preparers Sharing Info With Tech Firms – Cady Stanton, Tax Notes ($):

The bicameral group of seven, including Senate Finance Committee member Elizabeth Warren, D-Mass., and committee Chair Ron Wyden, D-Ore., released a report July 12 disclosing that the tax preparation companies have been transmitting financial information to tech firms through code called the Meta Pixel.

The lawmakers also wrote to the heads of the IRS, Federal Trade Commission, and Justice Department, and to the Treasury Inspector General for Tax Administration, encouraging the agencies to ‘fully investigate this matter and prosecute any company or individuals who violated the law.’

The report is here.


Regarding the legislative agenda, from the Recap:

Congress has until September 30th to pass tax legislation before the congressional year ends. Between then and now, the House and Senate are in session together for roughly 20 days. In that timeframe, the legislative priorities that congressional leaders want to pass are:

  • Spending bills for the next fiscal year, which begins on October 1, 2023. Failure to do this by October will force the federal government to partially shutdown.
  • The National Defense Authorization Act, which has passed Congress along bipartisan lines for over 60 years. (Tax amendments could be added to the bill.)
  • Farm legislation, which provides funds to farms and oversees food access in communities.
  • Aviation legislation that provides funding and rules for air traffic in U.S. (This bill is expected to include tax provisions, like gas taxes.)
  • Creating rules for artificial intelligence.

Passing a tax bill before September is not a high priority on Capitol Hill. 

One lawmaker defined the tax bills as a priority, just less than the others mentioned above.

GOP Tax Bill Vote Unlikely Before August, Majority Leader Says - Samantha Handler, Bloomberg ($):

A full House vote on the GOP’s tax package isn’t likely in the coming weeks, House Majority Leader Steve Scalise (R-La.) said.

Scalise told reporters Wednesday morning that appropriations bills and reauthorization of the National Defense Authorization Act are taking precedence before the August recess.

Lawmakers on the House Ways and Means Committee have suggested that passing the tax bill in September is a long shot. 


Nearly 1.5 million taxpayers are ‘leaving money on the table’ as key tax deadline nears, advisor says – Kate Dore, CNBC:

There’s a key tax deadline approaching for past-due filers, with an estimated $1.5 billion in unclaimed refunds up for grabs.

Nearly 1.5 million taxpayers still have pending refunds from 2019, with a median payment worth $893, according to the IRS. The last chance to file or amend 2019 returns to claim your money is July 17.


Lummis, Gillibrand Revamp US Crypto Bill to Stiffen Oversight - Allyson Versprille, Bloomberg ($):

Now, the senators are revamping their prior effort by including measures they say will help prevent another FTX, whose founder Sam Bankman-Fried has since been criminally charged and faces accusations that he mishandled billions of dollars of customer funds. The bill would require firms to segregate client assets and impose third-party custody requirements, according to a document detailing the updates to the legislative proposal. It would also create new advertising standards for marketing crypto and require exchanges to show proof that they have enough assets to cover customer balances.

The effort is ambitious, creating a framework to give the Commodity Futures Trading Commission more authority to oversee certain tokens and addressing everything from sanctions compliance and taxes to stablecoin regulation.

Senators can introduce tax legislation, but for it to become law it has to start in the House (there are loopholes to this, but they haven’t happen recently).


Estate Tax Properly Imposed on Checks Cashed After Giver Died - Perry Cooper, Bloomberg ($):

The IRS correctly determined that an estate owes $132,000 in taxes on seven checks cashed after the giver died, the Third Circuit affirmed Wednesday.

Although Pennsylvania law considers gifts complete when they’re prompted by the giver’s belief that his death is impending, ‘there is nothing to show that the decedent contemplated death when the checks were written on his behalf,’ Judge Patty Shwartz wrote for the court in an unpublished opinion. ‘Thus, the value of the seven remaining checks was improperly excluded from the gross estate.’


Washington Capital Gains Tax Rules Coming by October Deadline - Laura Mahoney, Bloomberg ($):

Final rules governing Washington state’s new excise tax on capital gains should be in place before the Oct. 16 deadline for taxpayers who have received extensions to file their first returns, state Department of Revenue officials said Wednesday.

The agency wants feedback as soon as possible on its draft rules, the officials said during an online public meeting to discuss the draft. The department plans to respond to comments, issue a formal proposed rule, hold a public hearing, and finalize the rules by the filing deadline, said Assistant Director Timothy Jennrich.


Boston Offers Tax Breaks to Turn Empty Office Glut Into Housing - Skylar Woodhouse and Amanda Albright, Bloomberg ($). “Boston Mayor Michelle Wu is offering hefty tax breaks to companies to turn offices into housing, the latest example of a city seeking to address the challenges of remote work hitting downtowns and a lack of affordable residences.”


Treasury Official to Discuss Pillar Two at Upcoming Hearing - Samantha Handler, Bloomberg ($):

Michael Plowgian, the Treasury Department’s deputy assistant secretary for international affairs, will appear before the House Ways and Means Committee on details of a massive global tax agreement.

Republicans want to discuss issues surrounding Pillar Two of the Organization for Economic Cooperation and Development global tax agreement with the ‘chief tax negotiator’ at an upcoming hearing. Plowgian, who has been Treasury’s lead negotiator at OECD talks, will be the witness, a Republican aide told Bloomberg Tax.

Pillar Two, particularly the undertaxed profits rule or UTPR, will be one of the top issues discussed, Rep. Kevin Hern (R-Okla.) confirmed on Wednesday. UTPR kicks in if a company’s headquarter country hasn’t adopted Pillar Two and the company is paying below a 15% rate of tax, letting other countries tax the company to bring its rate up to the minimum.


Lawmakers Float Taiwan Double Taxation Fix to Spur Investment - Chris Cioffi, Bloomberg ($):

Congress’ top taxwriters proposed bipartisan legislation Wednesday aimed at alleviating double taxation bedeviling US and Taiwanese companies.

Party leaders in both the House and Senate released a discussion draft of legislation they hope will provide treaty-like benefits to businesses looking for cross-border investment. The bill would reduce withholding taxes on dividends, interest, and royalties paid on cross-border investments and mitigate barriers for smaller businesses to make those investments.

The discussion draft is here

The summary is here.


Global Digital Tax Freeze Extended Through 2024, OECD Says – Natalie Olivo, Law360 Tax Authority ($):

Countries have agreed to extend a standstill on new digital services taxes through 2024 as they work toward signing a multilateral treaty that will cover a reallocation of international taxing rights known as Pillar One, the OECD said Wednesday.

The current standstill on new digital measures will continue through Dec. 31, 2024 — assuming enough countries sign a multilateral convention to implement Pillar One before the end of 2023, according to an outcome statement issued Wednesday by the Organization for Economic Cooperation and Development. Specifically, the multilateral convention, or MLC, must be signed at that point by at least 30 jurisdictions accounting for at least 60% of ultimate parent entities of companies that fall within Pillar One's scope, the OECD said.


From the “Inside the Beltway” file:

Monthly Budget Review: June 2023 – Congressional Budget Office:

The federal budget deficit was $1.4 trillion in the first nine months of fiscal year 2023, the Congressional Budget Office estimates—$875 billion more than the shortfall recorded during the same period last year. Revenues were 11 percent lower and outlays were 10 percent higher from October through June than they were during the same period in fiscal year 2022.

There are basically two schools of thought when it comes to handling deficits:

  • School of thought #1: Congress has a spending problem and not a tax problem: Cut spending.
  • School of thought #2: The rich don’t pay their fair share of taxes: Increase their taxes.

These schools of thought are as old as the hills. The one that wins is usually determined by the political party who controls Washington. Right now, we have a divided Washington, so nothing is likely to happen when it comes to reducing the deficit.


Happy National Barbershop Music Appreciation Day! This art form is not as popular as it used to be, but still is beloved by those who enjoy it.

Houston Tidelanders:

Barbershop remains a fan favorite and while not as popular as it used to be, is still is sung by thousands. Both men and women in quartets and choruses across the US sing in the barbershop style.

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