Tax News & Views 90 Days to Disclose, One to be Neighborly Roundup

By Joe Kristan, CPA
September 28, 2023
Bing image of "someone playing drums in the backyard at night."

Treasury to Give New Companies More Time on Ownership Info - Michael Rapoport, Bloomberg ($):

The Treasury Department has proposed giving newly formed companies more time to report their ownership information, acknowledging that the pending new requirements to do so are “novel” and that companies will need to get up to speed.


The proposed rule (RIN 1506-AB62) issued Wednesday would give companies created or registered in 2024 a 90-day period after they’re formed—up from the current 30 days —to report their ownership information. Existing companies would still have a year after the requirements take effect to file their initial report.

New Entity Beneficial Owner Reporting Deadline Extended to 90 Days - Andrew Velarde Tax Notes ($) "Both the newly proposed regs and the final rules relate to the Corporate Transparency Act. FinCEN’s final rules addressed reporting requirements, definitions, exemptions, and timing of reports. Reporting is necessary for both domestic and foreign companies and requires information such as names, addresses, and identifying numbers from the reporting entity, the beneficial owner, and the company applicant."

The new bill has broad exemptions, which will leave most of the reporting burden on small or inactive LLCs and corporations. A $500 daily penalty will apply for failure to report new companies or ownership changes in existing ones, starting next year.

FinCEN Issues Proposed Rule Applicable Only to Entities Formed or Registered in 2024 to Delay Initial Beneficial Ownership Report Filing Deadline by 60 Days - Ed Zollars, Current Federal Tax Developments. "The release further clarifies that this rule change would solely impact entities created or registered in 2024. Due dates for initial reports for entities created or registered before or after 2024 would remain unchanged.


IRS Provides Info on Energy Efficient Home Credit Requirements - Mary Katherine Browne, Tax Notes ($):

The Inflation Reduction Act retroactively extended eligibility for the credit for dwelling units acquired after December 31, 2021, by retaining the credit requirements in place before the enactment of the act. For dwellings acquired after 2022, the IRA added new energy efficiency standards and credit amounts, some of which are increased if contractors meet prevailing wage requirements. The credit is available for dwelling units acquired before January 2033.

The notice clarifies applicable credit amounts for various kinds of dwelling units. For a single-family home that is eligible to participate in the Energy Star residential construction program or the Energy Star new homes program, taxpayers can receive a credit of $5,000 if the home meets “zero energy ready home” program requirements under section 45L(c)(1)(B), and $2,500 if the home fails to meet zero energy ready home program requirements but meets dwelling unit requirements in section 45L(c)(2).

Link: Notice 2023-65; IRS press release.

Related: Energy-Efficient Home Builders Benefit From the Extension of Section 45L Credit.


Schumer Pledges Quick Action on Pot Banking After Committee Vote - Wesley Elmore, Tax Notes ($). "Senate Majority Leader Charles E. Schumer, D-N.Y., has promised to bring a bipartisan cannabis banking bill to the floor for a vote “as quickly as possible” following its passage September 27 by a key committee."

The road to weed banking is getting shorter — and bumpier - Punchbowl News:

It’s a significant milestone for the cannabis sector. This was the first time that the Senate has taken any formal vote on cannabis banking reform after more than a decade of advocacy.

But already, the politics surrounding the high-profile issue are starting to get tougher to manage. Progressives and conservatives are pulling hard (and in opposite directions) to expand the bill’s scope. The bigger this bill gets, the harder it will be to meet the Senate’s 60-vote threshold on passing anything of substance.

Current laws make it difficult for legal cannabis businesses to use the banking system. The tax law in many cases requires electronic payments, which are hard to do without a bank account. Bringing bags of cash to the IRS to pay taxes has obvious logistical and security issues. 


Moore Could Upend Tax Code, Says Paul Ryan - Alexander Rifaat, Tax Notes ($):

Former House Speaker Paul Ryan warned the taxpayers in the Moore v. United States Supreme Court case to “be careful what you ask for” and said a ruling in their favor would wreck the tax code.


“I’m not for a wealth tax, but I think if you use this as the argument to spike a wealth tax, you’re going to basically get rid of, I don’t know, a third of the code,” Ryan said.


Earlier Government Shutdowns Offer A Glimpse Of What Taxpayers Might Expect From IRS, Other Agencies - Kelly Phillips Erb, Forbes. "Remember that huge IRS backlog? It's easy to think back and assume that the problems began with the pandemic, but they had started well before that. The last government shutdown started the IRS on its path to a massive paper logjam. Here's a look at what happened. Could it happen again?"

New IRS bots available to help resolve tax payment notices - Kay Bell, Don't Mess With Taxes. "Specifically, the technology should help quickly answer basic questions for people who get notices about possibly underreporting their taxes. Those are CP2000CP2501, and CP3219A mailings that tell taxpayers the information the IRS received from third parties doesn't match what they reported on their tax filings."


Lesson From The Tax Court: Supervisory Approval Of Automated Penalties - Bryan Camp, TaxProf Blog. "What an IRS employee may not do individually, the IRS may do institutionally: proposed a maximum penalty with no review."

IRS Successfully Expands Equitable Tolling in Bankruptcy - Keith Fogg, Tax Notes/Procedurally Taxing. "The case provides yet another example of the importance of timely filing and the problems that can arise from failing to do so."

IRS Properly Referred Case to DOJ Before Rejecting Proposed Installment Agreement - Parker Tax Pro Library. "In a case of first impression, the Second Circuit held that the IRS properly referred a taxpayers' unpaid assessment to the Department of Justice for the commencement of a civil action before formally rejecting their proposed installment agreement, even though Reg. Sec. 301.6331-4(b)(2) prohibits referrals so long as a taxpayer-proposed installment agreement remains pending."

Related: Eide Bailly IRS Dispute Resolution and Collections.


Investing in a US Partnership? – A Bevy of Tax Issues for the Foreign Investor - Virginia La Torre Jeker, US Tax Talk. "If the US  partnership has taxable income that is considered effectively connected with the conduct of a trade or business within the United States (“effectively connected income”, or “ECI”) that is allocable to a foreign partner, US tax law mandates that the partnership report and pay to the US Internal Revenue Service (IRS) a withholding tax under IRC Section 1446 ."

Related: Eide Bailly International Tax Services.


This Ford vs. GM Feud Could Shape the Future of EVs in America - Andrew Duehren, Wall Street Journal. "The pair are lobbying over the terms of a $7,500 tax credit for consumers who purchase new electric vehicles. Starting next year, buyers can’t use the credit on cars that contain battery components from any source that the U.S. deems a 'foreign entity of concern,' a vague term meant to reduce American reliance on Chinese batteries and materials." 

USITC Report Highlights Trade-Offs of Using Tariffs - Erica York, Tax Policy Blog. "The assessment of the tariffs former president Donald Trump imposed in 2018 and 2019 is clear: the policies have had a negative effect on American’s welfare. While the net impact has clearly been negative, the losses and gains have not been felt the same by everyone in the economy. Indeed, a recent report from the United States International Trade Commission (USITC) highlights a pattern of protected industry gain and downstream industry loss."


Docs Show Hunter Biden Hid Foreign Income, GOP Reps. Say - Asha Glover, Law360 Tax Authority ($). "According to the documents the lawmakers released, Biden failed to report nearly $599,000 in taxable income for 2014 and 2018, resulting in nearly $232,000 in additional tax that has not been paid to the Internal Revenue Service. He also failed to report nearly $40,000 in additional income he had taken from one of his children's Section 529 education savings plan in 2019, the Republicans said."


Accountant Owes $5.7M Penalties For Barred Meal Deductions - Anna Scott Farrell, Law360 Tax Authority ($): 

An accountant who helped mariners take illegal meal deductions must pay nearly $5.7 million in tax penalties after failing to respond to a federal government lawsuit seeking to hold him accountable for fines issued 15 years ago, a California federal judge said.
[The accountant] wrongly believed that sailors were allowed to take the full daily travel deduction for meals and incidental expenses while sailing aboard ships for their jobs, even if the meals were provided by their employers free of charge — the common practice in the industry, the appeals court said.

That's a big number. 


Two tax shelter promoters found guilty in billion-dollar syndicated conservation easement tax scheme - IRS (Defendant names omitted):

The evidence proved that Defendants used the funds raised from their taxpayer clients to buy land and property holding companies and then had the tax shelters cause the companies to donate the land or a conservation easement over the land – often within days or weeks of purchase. To reach the inflated fair market value of the donations, Defendants primarily used appraisals of the conservation easements and fee simple land donations at valuations often more than 10 times higher than what Defendants actually paid to acquire the property.

The evidence further showed that Defendants backdated or instructed others to backdate false documents to present to the IRS, including subscription agreements, payment documents, engagement letters and other records.

The investors in these deals are finding out what "too good to be true" means.


Ask your neighbors why they don't like you playing drums in your backyard at midnight. It's both National Good Neighbor Day and National Ask a Stupid Question Day.

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