Tax News & Views ERCs Away Roundup

By Jay Heflin
September 25, 2023

Make Covid Credit Claims Even During IRS Pause, Tax Pros Say - Erin Slowey, Bloomberg ($):

An IRS pause in processing new employee retention credit claims won’t deter eligible taxpayers from continuing to file, as the deadline to submit amended returns approaches, tax professionals said.

The pandemic-era employee retention credit is helping hundreds of thousands of businesses still struggling with labor shortages recover from the pandemic. Some taxpayers are just now coming up for air after being swamped by misinformation about whether they qualify for the credit designed to help them keep employees on their payrolls.

Background on what went down:

IRS Pauses Processing of New ERC Claims – Joe Kristan, Eide Bailly:

Amid rising concerns about a flood of improper Employee Retention Credit claims, the Internal Revenue Service today announced an immediate moratorium through at least the end of the year on processing new claims for the pandemic-era relief program to protect honest small business owners from scams.

IRS Commissioner Danny Werfel ordered the immediate moratorium, beginning today, to run through at least Dec. 31 following growing concerns inside the tax agency, from tax professionals as well as media reports that a substantial share of new claims from the aging program are ineligible and increasingly putting businesses at financial risk by being pressured and scammed by aggressive promoters and marketing.

The IRS document is here.

IRS to target ‘unscrupulous’ tax preparers amid crackdown of small business tax credit – Kate Dore, CNBC:

Roughly one year after Congress approved tens of billions in IRS funding, the agency has unveiled plans to crack down on tax preparers with “questionable practices.” The news comes amid heightened scrutiny of a popular small business tax credit…

The plan is part of the agency’s elevated focus on employee retention credit claims, according to April Walker, lead manager for tax practice and ethics with the American Institute of CPAs.


IRS Mea Culpa Could Prompt Easement Program Revamp – Kat Lucero, Law360 Tax Authority ($):

The IRS' admission of wrongdoing for covering up backdated evidence in a high-profile conservation easement case in Georgia could motivate the agency to revamp its oversight of the charitable tax deduction, which has been hotly contested in federal courts.

The Internal Revenue Service recently admitted that it did not hold itself to the highest standards of integrity in trying to cover up the backdated penalty lead sheet in a case known as LakePoint Land II LLC v. Commissioner in the U.S. Tax Court.


A Tax Break Worth the Hassles – Laura Saunders, Wall Street Journal ($):

Older Americans can still reap tax breaks from donating to charity, even if they aren’t itemizing deductions. The secret: a ‘qualified charitable distribution’ from a traditional IRA.


Shutdown saga continues:

House GOP Mulls Stopgap for 14 to 60 Days to Stave Off Shutdown - Maeve Sheehey and Erik Wasson, Bloomberg ($):

Republicans are eyeing a stopgap government funding measure that would range from 14 to 60 days, according to Representative Garret Graves, an ally of House Speaker Kevin McCarthy.

They don’t yet have a spending plan that they can pass with just Republican support:

House Republicans are racing to draft a new continuing resolution that can get enough support within their conference to pass this week.

The revised stopgap under discussion would cut domestic spending temporarily by 27%, compared to 8% in the initial one, lawmakers said. It would include a House immigration and border security bill and set up a debt commission to study entitlement cuts.

Which won’t pass the Senate.

A partial shutdown of the federal government is looking more and more likely. Article below includes one of our own:

Looming Shutdown Threatens to Derail IRS’s Progress – Jonathan Curry, Tax Notes ($):

Now that it appears the IRS won’t be able to make it through a possible government shutdown unscathed, observers say a disruption to the agency’s operations could be disastrous.

“A shutdown now, when the IRS is in this fragile state and barely catching up, would be a nail in the coffin,” Elyse Katz of Eide Bailly LLP told Tax Notes.

The IRS was reportedly going to announce that it would reprise the shutdown contingency plan it developed last year at this time. Under that plan, it would be unfazed by a government shutdown by siphoning money from the additional, long-term funding it received in the Inflation Reduction Act.

But that announcement never came. Instead, the National Treasury Employees Union said September 21 that the IRS is developing a plan for a partial shutdown that would entail furloughing some of its workforce. Details had yet to be announced by press time.

BTW, the spending that is being cut really isn’t the problem.

What’s driving a possible shutdown? A fraction of the federal budget – Jeff Stein and Marianna Sotomayor, Washington Post:

Conservatives want to pare federal discretionary spending back to 2022 levels, which would mean cutting more than $100 billion from agency budgets each year.

That’s a lot of money, but hitting the goal would require severe cuts to a small portion of the federal budget — mostly programs that provide services like education, medical research and aid for families in poverty. The government’s biggest annual expense, though, and the main projected drivers of U.S. debt, are the retirement programs Medicare and Social Security. The United States spends more than $6 trillion every year. McCarthy’s caucus is tying itself in knots over how to make cuts from domestic discretionary spending, which accounts for less than one-sixth of that total.

According to experts who scrutinize congressional spending, climbing out of this debt hole would require redoing how the federal government takes-in money and how it spends it. That would likely include a new form of taxation, like the enactment of a Value Added Tax, or VAT.


Biden’s IRS Chief Counsel Pick Faces Senate Finance Next Week - Chris Cioffi, Bloomberg ($):

President Joe Biden’s pick to be the Internal Revenue Service’s top legal adviser will appear before the Senate Finance Committee [this] Thursday, moving her closer to filling a key role in helping implement pieces of last year’s tax-and-climate law, a Friday committee notice read.

IRS Chief Counsel nominee Marjorie Rollinson, who worked for Ernst & Young LLP for nearly three decades and previously spent time in the chief counsel’s office, was nominated for the role in June. If confirmed, Rollinson would take over the office tasked with providing legal advice to the IRS.


Records Show Moore as More Than Transition Tax Small Shareholder – Andrew Velarde, Tax Notes ($):

Charles Moore appears to have been far more involved in the company at the center of the transition tax Supreme Court constitutional challenge than was previously revealed, according to Indian financial filings.

Tax Notes obtained the financial and annual statements of KisanKraft Machine Tools Pvt. Ltd., an Indian farming supply company, for the years between 2012 and 2020 (fiscal 2013fiscal 2014fiscal 2015fiscal 2016fiscal 20182017 annual return2019 annual return2020 annual returndirector designation). These documents show that Moore was not only a director of the company from 2012 to 2017 but that he also received the equivalent of thousands of dollars in travel expense reimbursements and apparently temporarily provided the company with a large infusion of cash in the form of share application money.

Why this matters:

Throughout the litigation, Moore has painted a picture of himself as a minority shareholder in KisanKraft who had no control over the company's ability to make distributions and no involvement in its management. 

Tax world shudders as Supreme Court prepares for ‘repatriation’ tax case – Brian Faler, Politico ($):

As the Supreme Court prepares to take up a rare tax case, much of Washington’s tax world has a plea for the justices: Please tread carefully.

There is widespread trepidation the court’s conservative majority will use a case challenging the constitutionality of a 2017 tax on big corporations as a way to slam the door on the possibility of a wealth tax — and, in the process, inadvertently wreak havoc in the code.


From the Tolerate It file:

The IRS Is Going to Know if You Sold Taylor Swift ‘Eras’ Tickets – Anne Steele and Ashlea Ebeling, Wall Street Journal ($):

If you cashed in this summer by reselling tickets to Taylor Swift’s “Eras Tour” or Lionel Messi’s first games in a bubblegum-pink jersey, brace yourself to pay taxes. 

A new law requires ticketing platforms like Ticketmaster and StubHub to give the Internal Revenue Service information on users who sold more than $600 worth of tickets this year. 

Other Taylor Swift tracks I could have used for the file name were Death by a Thousand Cuts or This Is Why We Can't Have Nice Things.

This filing requirement was supposed to go into effect in 2022, but it was postponed until 2023. Lawmakers want to postpone it again, but that would require passing a tax bill, which, currently, does not seem likely. 

New IRS rule on reselling concert, sporting event tickets could impact large number of Americans – Eric Revell, Fox News:

Lawmakers in Congress are considering changes to the reporting threshold, although it’s unclear whether any changes will be made before filing season for the 2023 tax season arrives.


Happy National One-Hit Wonder Day! Stealers Wheel where are you? The song Stuck in the Middle with You will live forever!

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