Tax News & Views Focus On 1099-K Roundup

By Jay Heflin
August 21, 2023

Lawmakers weigh tax rule ‘backslide’ for Venmo, PayPal users, says analyst. What it means for you – Kate Dore, CNBC:

Before this year, you may have received Form 1099-K if you had more than 200 transactions worth an aggregate above $20,000. But the 2023 threshold is just $600, and even a single transaction can trigger the form.

That change is expected to result in a flood of Forms 1099-K in early 2024 when taxpayers typically receive so-called 'information returns' from employers and financial institutions. Duplicate copies go to the IRS.

If there is a tax bill this year, delaying the lower threshold for reporting will likely be included in it.


Why Child-Care Prices Are Rising at Nearly Twice the Overall Inflation Rate – Christian Robles, Wall Street Journal ($):

While overall inflation has fallen significantly since last year, families with young children still face sharp increases in one of their biggest expenses—child care.

The national average price of daycare and preschool services rose 6% in July from a year before, the Labor Department reported recently. That was nearly double the overall inflation rate of 3.2%, which was down from its recent peak of 9.1% in June last year.

Congressional efforts are underway to try to include tax breaks for employees and businesses where daycare is offered.

How the child care cliff could yank back the labor market – Eleanor Mueller and Sam Sutton, Politico Morning Money:

One potential compromise: a tax package. Advocates including the First Five Years Fund are pushing for tax provisions that could incentivize employers to help fill the gap — a solution that groups like the U.S. Chamber of Commerce favor over additional spending. Reps. Salud Carbajal (D-Calif.) and Lori Chavez-DeRemer (R-Ore.) introduced a related bill last month.

A summary of the Child Care Investment Act is here. Will it go anywhere? Unclear. The current effort in Congress is to expand the Child Tax Credit, which states are already doing:

States expand child tax credits as Congress drags its feet - Andrew Desiderio, Punchbowl News ($) (scroll down for article):

Several states are embracing an expansion of the child tax credit, a popular pandemic-era program credited with significantly slashing child poverty. But its prospects for renewal face long odds in Congress, despite bipartisan support.

Colorado, Oregon and Minnesotarecently adopted their own programs after the federal expansion lapsed at the end of 2021. Now, a bipartisan odd couple, Sens. Ron Johnson(R-Wis.) and Michael Bennet (D-Colo.), is looking for ways to revive it in Washington.

The two senators had an unusual 10-minute exchange about the child tax credit at a subcommittee hearing in July. And just before the recess, Johnson told us he hopes Congress will restart discussions around the issue when lawmakers return next month.

The Senators discussed this topic during a Senate Finance Committee hearing. One of the biggest sticking points discussed was what sort of work requirement should be added to a Child Tax Credit bill.


BofA’s $580 Million Renewable Tax Credit Deal Is One of Many - Katherine Doherty, Bloomberg ($). “Bank of America plans to facilitate the sale of tax credits to taxable investors who can then use them to reduce their tax bills and make progress on their clean-energy targets. By taking on this broker role, the bank aims to rally more capital for energy transition initiatives amid a global effort to curb emissions, according to Karen Fang, the lender’s global head of sustainable finance.”

‘Our job is to make the transferable tax credit market behave like other capital markets for origination from sellers to distribution to end buyers,’ Fang said in an interview. ‘The more credits that we can help project developers sell to taxable entities including oil gas companies, consumer product companies or financial services companies, the more capital we can raise for the clean energy transition. We should treat this process no differently than underwriting and distributing stocks and bonds.’


IRS Explains Timing of Employee Retention Credit and Refunds – Tax Notes ($):

The IRS provided information on the timing of refunds resulting from employee retention credit claims, explaining that an employer’s deduction for qualified wages is reduced by the amount of the ERC in the tax year in which the qualified wages were paid or incurred and not the year the ERC was received.


Hawaii wildfire victims qualify for tax relief; Oct. 16 deadline, other dates postponed to Feb. 15 – IRS:

The Internal Revenue Service today announced expansive tax relief for Hawaii wildfire victims in Maui and Hawaii counties. These taxpayers now have until Feb. 15, 2024, to file various federal individual and business tax returns and make tax payments.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). This means that individuals and households that reside or have a business in these counties qualify for tax relief. The current list of eligible localities is always available on the disaster relief page on


Crypto Tax Guidance Confusion Heralds Court Battles to Come - Caleb Harshberger, Bloomberg ($). “IRS actions on crypto staking and absent promised regulations from Treasury are expected to spark new legal fights over arguments about proper categorization of crypto rewards.”  


Employer Contributions to Tuition Plans Are Taxable to Employee – Tax Notes ($). “The IRS outlined the rules on the treatment of employer contributions to a qualified tuition program on behalf of a designated beneficiary, saying that the contributions are treated as a taxable fringe benefit to the employee and would be deductible as wages or compensation by the employer.”


Spendthrift Trust’ Gains Must Be Reported as Income, IRS Says - Michael Rapoport, Bloomberg ($):

Non-grantor, irrevocable “spendthrift” trusts must report their capital gains and extraordinary dividends as taxable income, in spite of what some promoters have claimed, the IRS said Friday.

The promoters’ claims are based on mistaken interpretations of Section 643, and all such trusts should be examined to make sure they’re reporting all of their taxable income, the IRS’s Office of Chief Counsel said in an Aug. 9 legal advice memorandum released Friday.


Easement Litigants Allege Penalty Backdating in Three More Cases – Kristen Parillo, Tax Notes ($):

Emails between an IRS examiner and his manager show that they backdated penalty approval forms during audits of three syndicated easement partnerships, according to Tax Court documents filed by the partnerships.

The backdating allegations and email exchanges are included in a first request for admissions filed with the Tax Court on August 16 by each of the petitioners in Arden Row Assets LLC v. Commissioner, Basswood Aggregates LLC v. Commissioner, and Delwood Resources LLC v. Commissioner.

IRS accused (again) of backdating penalty approval documents – Benjamin Guggenheim, Politico Morning Tax:

According to filings summited to the Tax Court by the partnerships, a revenue agent at the IRS emailed his supervisor on July 12, 2021, asking for approval for penalties against the partnerships — but without detailing exactly what penalties he planned to assess or the rationale the IRS planned on asserting for the penalties.

Two days later, the supervisor replied via emails with the note, 'I approve penalties,' in the subject line and the names of the respective partnerships in the bodies of the emails.

A good while later, on March 11, 2022, the revenue agent followed up with his supervisor with 'lead sheets' outlining penalties for each partnership and requested that his supervisor sign not with the date of March 11, 2022, but with the older date of July 14, 2021.


Minnesota DOR Issues Information on Applicability of New Cannabis Tax on Sale of Cannabis Products – Bloomberg ($). “The Minnesota Department of Revenue (DOR) June 21 issued information on the cannabis tax. In May 2023, the state legalized the sale and use of recreational cannabis in the state and the DOR required all sellers of taxable cannabis products to register with it to remit the new cannabis tax, starting July 1.”


Five Years of CbC Reporting Yields Disappointing Results – Martin Sullivan, Tax Notes ($):

How much does profit shifting reduce revenue to the U.S. treasury? Did the Tax Cuts and Jobs Act reduce profit shifting? How much will the OECD’s pillar 2 minimum tax affect U.S. revenue?

Before we can answer those important questions, we must first have the answer to another: How much profit of U.S. multinationals is in low-tax jurisdictions? We are sorry to report the answer to that is we’re not sure. And the detailed data compiled by the IRS from country-by-country reports filed by more than 1,000 of the largest U.S. multinational businesses isn’t much help.


From the “You Can’t Take It With You” file:

The Moves Wealthy Families Are Making to Skirt Estate Taxes – Ashlea Ebeling, Wall Street Journal ($):

The Trump tax cuts of 2017 temporarily doubled the base amount individuals could give away without paying estate taxes to $10 million. These cuts are due to expire in 2026, pushing wealthy Americans to move fast. 

They gave away $182.6 billion in 2021, more than double the $75.2 billion the year before, according to recently published Internal Revenue Service statistics. Almost $100 billion of those gifts were made via trusts, some of which can last for generations. Another $14.8 billion went to charity.


Happy National Senior Citizens Day! The term is defined much differently when compared to “olden” times.


Traditionally, once a person turns 65 they are defined as a ‘senior citizen’, but the meaning of what it means to be a senior citizen is much different today. There are a couple of ways to define entering the ‘senior’ stage of life. It can be defined by milestones based on age and it can be defined by attitude.


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