SALT Caucus Pushes Revival of Regressive Tax Break – National Taxpayers Union Foundation:
The SALT deduction overwhelmingly benefits the wealthiest taxpayers. But some politicians who otherwise decry the supposed inequality of the tax code are nonetheless strongly supportive of SALT, framing the SALT cap as a “direct assault on hardworking men and women of labor” or “all about the middle class.”
In 2015, before the TCJA’s passage, 84 percent of SALT’s benefits went to taxpayers with incomes over $100,000, and a mere 3.5 percent went to those with incomes below $50,000. The top 3 percent of filers collected 38 percent of SALT benefits, while the bottom 50 percent collected just 15 percent of SALT benefits. Middle-income filers received a SALT benefit averaging $920.
This press release is included in the Roundup because it is timely. It raises a subject that has attracted lawmakers’ attention: Who benefits from the SALT deduction.
Eide Bailly learned this week that tax staffers are looking into who claims the SALT deduction and how much income they make. If the tax staffers come to the same conclusion as this press release, which is that the SALT deduction “overwhelmingly benefits the wealthiest taxpayers,” it’ll not only be hard to modify it, but the cap could also be extended beyond 2025 to pay for other legislative priorities.
More SALT cap coverage from Eide Bailly is here (scroll down to fifth article).
Sensitive Taxpayer Info at Risk During IRS Shipments, Watchdog Says- Erin Slowey, Bloomberg ($):
The IRS isn’t following its own guidelines when sending sensitive taxpayer information to its Tax Processing Centers, the Treasury Inspector General for Tax Administration said in a new report.
The Form 3210 is a required tracking document that hasn’t been included or prepared correctly during most of the shipments of taxpayer information to and from processing centers, the report said.
Eide Bailly’s own weigh in:
IRS’s Mail-Tracking Woes Right on Brand for Agency – Jonathan Curry, Tax Notes ($):
For tax professionals, the report’s findings are typical of the IRS and their own experiences with absentee documents.
Joe B. Kristan of Eide Bailly LLP said he was initially surprised that the IRS would even need to ship taxpayer documents from one place to another after they’d initially been processed.
‘Thinking about it, though . . . with their multiple old systems that can’t communicate with each other, it’s inevitable. And sometimes packages get lost,’ Kristan said.
Further down the article:
Elyse Katz, also of Eide Bailly, said that in her experience, mail sent to the IRS is ‘constantly lost,’ which is why her office sends all information to the agency by certified mail. Her team also regularly receives letters from the IRS acknowledging that while they received a client’s tax return, they can’t find it and are requesting another copy.
‘A majority of our penalties assessed are removed because it was an IRS error in processing or mail,’ Katz added.
The report is here.
Another IRS issue: Finding it:
IRS Aims to Make Help Centers More Accessible – Lauren Loricchio, Tax Notes ($):
In a report released August 3, the Treasury Inspector General for Tax Administration found that information about the centers — such as hours, phone numbers, and addresses — was hard to find on the IRS’s website, mobile application, and phone lines. It also was hard to find out about special Saturday hours being offered at some of the TACs, TIGTA said.
TIGTA recommended that the IRS update its website and mobile app to display information about TACs in a prominent location, and to ensure that it is searchable and that the information is also provided in Spanish.
The report ($) is here.
IRS Lists Another Dirty Dozen Deal: Monetized Installment Sales – Chandra Wallace, Tax Notes ($):
Proposed regulations from the IRS would identify some monetized installment sales — those that purport to transform the straightforward sale of an appreciated asset into a tax-deferred installment sale — as listed transactions.
The targeted transactions, in which an intermediary and other third parties are used to alter the character of the sale for tax purposes, were named in the IRS’s annual “Dirty Dozen” list of potentially abusive tax arrangements March 31. The proposed regs (REG-109348-22), issued August 3, would require participants in those transactions and their material advisers to file disclosures with the IRS and subject them to significant penalties for failure to disclose.
IRS Issues Consolidated Returns Cleanup Rules - Genevieve Douglas, Bloomberg ($). “The IRS released a proposal to update regulations for corporations filing consolidated returns by revising and removing outdated text.”
IRS Crypto Broker Rules Are Months Overdue: The Delay, Explained - Lauren Vella and Samantha Handler, Bloomberg ($). “Former IRS and Treasury employees told Bloomberg Tax the delay could be because of a disagreement within the federal government. Others say the IRS is taking its time to get right the regulations governing a financial instrument as complex as cryptocurrency.”
‘I think it’s exceedingly difficult to regulate something that you don’t even get to use, and crypto is such a hands-on type of technology,’ said Jason Schwartz, a partner at Fried Frank who co-heads the firm’s digital assets practice. ‘I think it’s really an uphill battle for the IRS. I feel for them.’
Prior Roundup coverage of crypto reported that the federal government is losing money from the delay. The Roundup is here (third article from top).
Home energy audits may qualify for an Energy Efficient Home Improvement Credit – IRS:
The IRS issued Notice 2023-59 today regarding the requirements for home energy audits for taxpayers that want to claim the Energy Efficient Home Improvement Credit.
The Inflation Reduction Act of 2022 created several clean energy credits. Each of these credits has requirements for the type of clean energy property or service purchased and how they are claimed. This includes a non-refundable Energy Efficient Home Improvement Credit for the purchase and installation of certain energy efficient improvements in taxpayers' principal residences.
The Notice is here.
Taxpayer Can Toss Retirement Plan Qualification Petition – Kristen Parillo, Tax Notes ($). “The Tax Court has added petitions for retirement plan declaratory judgment to the list of non-deficiency cases that taxpayers may voluntarily dismiss without triggering a rule mandating a decision in the IRS’s favor.”
‘We hold it is within the Court’s discretion to grant motions for voluntary dismissal in nondeficiency cases filed pursuant to section 7476,’ the Tax Court concluded in an August 3 division opinion in Joseph E. Abe, DDS Inc. v. Commissioner.
Alaska Attorney’s Properties Sold Over $2 Million Tax Debts - Jeffery Leon, Bloomberg ($):
The United States is proceeding in selling several properties owned by an Alaska attorney to recoup $2 million in back taxes.
Defense attorney, Phillip Weidner, partner at Phillip Paul Weidner and Associates, fraudulently deeded twelve properties he owned in Alaska to a fictitious entity called the ‘Phillip Weidner Family Limited Partnership,’ and accrued $2.1 million in unpaid income taxes from 2010 to 2016 and 2018, the federal government says. Properties Weidner owned included the historic Fairview Inn in Talkeetna, Alaska.
Most Of Co.'s Fracking Material Tax Exempt, Ohio Justices Say – Jaqueline McCool, Law360 Tax Authority ($). “Most of a fracking company's equipment purchases were not subject to Ohio sales and use tax because the equipment is used directly in the production of crude oil and natural gas, the state Supreme Court ruled Wednesday.”
Real Estate Business Beats New York Franchise Tax Assessment - Perry Cooper, Bloomberg ($):
A real estate investment management business was right not to include its subsidiary that owned half of the King of Prussia Mall in Pennsylvania on its New York tax returns, a New York judge ruled.
Lendlease Americas Holdings Inc. wasn’t engaged in a unitary business with Yarmouth Lend Lease KOP Inc. from June 2008 to June 2009, Administrative Law Judge Winifred M. Maloney of the New York Division of Tax Appeals ruled in an opinion released Thursday. As a result, Lendlease is off the hook for nearly half a million dollars in additional corporate franchise taxes, interest, and penalties.
Digital Products Group Seeks Engagement With Business Community - Michael Bologna, Bloomberg ($):
A multistate effort aimed at harmonizing states’ taxation of digital goods will refocus its project goals and research processes to capture several important new topics including sourcing, apportionment, and exemptions for business-to-business transactions.
Gil Brewer, chairman of the Multistate Tax Commission’s work group for sales taxes on digital goods, directed the staff to update the project’s recent research to reflect themes that emerged during a meeting Thursday. Much of the meeting focused on a proposal from business community representatives calling on the work group to embrace three broad principles they hope will direct the project in the coming months.
US Pans Swiss Couple's Claims Of IRS Trickery At DC Circ. – Anna Scott Farrell, Law360 Tax Authority ($). “A Swiss couple fighting $500,000 in tax penalties for understating their income wrongly claimed the Internal Revenue Service tricked them and failed to properly issue the penalties, the U.S. government told the D.C. Circuit on Thursday, urging it to uphold the fines.”
From the “Why Aren’t You Gambling More” file:
N.Y. Casinos Miss Tax Revenue Targets Ahead of City Expansion - Danielle Muoio Dunn, Bloomberg ($):
None of the four Las Vegas-style casinos built upstate met the revenue targets that the state Gaming Facility Location Board had projected for 2019, the first year the casinos were all expected to be fully operational, according to DiNapoli. Only one, Tioga Downs Casino, finally met the state’s tax distribution target for local governments in 2022.
New York casinos are taxed based on their gross gaming revenue, or the total amount left after paying winners and deducting promotional credits. The state retains 80% of the tax distributions and splits the remaining 20% to local governments in the region surrounding the casinos.
It’s Friday and the day is planned! It’s National Water Balloon Day, and International Beer Day, as well as National Chocolate Chip Cookie Day. First, have a water balloon fight, next kickback with some international beers and re-live the joys of the water balloon fight, then fill your tummy with chocolate chip cookies while finishing your international beer and reminiscing about the balloon that hit you in the face (hit you in a fun, good way).
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