Tax News & Views ERC Claims and Joy Roundup

IRS accelerates work on Employee Retention Credit claims; agency currently processing 400,000 claims worth about $10 billion - IRS:

The Internal Revenue Service announced today continued progress on Employee Retention Credit claims, with processing underway on about 400,000 claims, representing about $10 billion of eligible claims. Work on the claims for small businesses and others is ongoing as the agency continues to navigate a large volume of claims from the complex pandemic-era credit.

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The IRS reminds businesses that have received Employee Retention Credit payments to recheck eligibility requirements and consider the second Employee Retention Credit (ERC) Voluntary Disclosure Program (VDP) to resolve incorrect claims without penalties or interest.

The second ERC-Voluntary Disclosure Program will run through Nov. 22, 2024, and allow businesses to correct improper payments at a 15% discount and avoid future audits, penalties and interest.

Hurricane Damage and Your Taxes. Here's What to Know. - Laura Saunders, The Wall Street Journal:

Under current law, casualty losses—from, say, a hurricane or wildfire—must be from a federally declared disaster to qualify for a deduction. Damage from an isolated event like a house fire doesn’t qualify.

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Key limits lower the amount of deductible losses, however. Taxpayers must subtract Federal Emergency Management Agency and insurance reimbursements from the allowable loss. They must also subtract an amount equal to 10% of their adjusted gross income, or AGI. AGI doesn’t include itemized deductions, so it’s often much larger than taxable income.

In addition, a casualty loss deduction can’t exceed the taxpayer’s cost basis in the asset. For a home, this is often the purchase price, with adjustments for improvements like an addition or a deck. It’s not the home’s market value or assessed value for local taxes.

Federally declared disaster areas.

Help for victims of Hurricane Helene.

Estimated Tax Gap for 2022 Falls to $696B, IRS Says - Asha Glover, Law 360 Tax Authority ($):

According to the report, the projections for 2022 are lower than the $708 billion estimate for the 2021 tax gap, caused by a lower total true tax liability in 2022 than 2021. The IRS estimates that $90 billion of the 2022 tax gap will eventually be paid, either late and voluntarily, or collected through IRS administrative and enforcement activities, according to the report.

Individual income tax contributes the most to the tax gap, by far, at $514 billion, the report said.

On Capitol Hill

Perez Bill Would Provide Credit for Home Skirting Costs - Tax Analysts, Tax Notes ($). "The Lowering Energy Costs for Manufactured Homeowners Act, introduced by Rep. Marie Gluesenkamp Perez, D-Wash., would provide a refundable tax credit for 20 percent of the costs of adding skirting to manufactured homes."

Heinrich Bill Would Create New Homes Tax Credit - Tax Analysts, Tax Notes ($). "The New Homes Tax Credit Act, introduced by Sen. Martin Heinrich, D-N.M., would create a new homes tax credit to stimulate building and renovating houses."

Campaign Trail

Donald Trump Calls for Making Car-Loan Interest Tax Deductible - Joshua Jamerson and Richard Rubin, The Wall Street Journal:

Amid high car prices and interest rates, Trump said that making car-loan interest deductible would make cars more affordable and boost auto production. But the proposal may have limited reach, and it would be counteracted by any tariffs that raise auto prices, either the universal tariffs Trump has proposed or the larger ones he has threatened on some Mexican auto production.

Trump said it would be like the deduction for mortgage interest, which taxpayers claim as an itemized deduction.

Donald Trump rolls out tax breaks, but no specifics, for overseas citizens and auto buyers - Bill Barrow, Adriana Gomez Licon, and Isabella Volmert, AP News:

But so far, the Republican nominee has been vague about how those tax breaks would work or how he would pay for them — other than promising that his plans to impose sweeping tariffs would bring in new government revenue.

Economic analyses of his earlier tax cut ideas estimated they would cost between nearly $6 trillion and $10 trillion over 10 years, depending on which proposals become policy and how they’re implemented. And mainstream economists warn that Trump’s tariff plans — and the expected retaliation from targeted countries — would raise prices for Americans, slash more than a percentage point off the U.S. economy by 2026 and make inflation 2 percentage points higher next year than it otherwise would have been

Trump Proffers Tax Incentives for Car Owners, Manufacturers - Alexander Rifaat, Tax Notes ($):

“U.S.-based carmakers and manufacturers will be rewarded with expanded research and development tax credits . . . where they will be able to write off 100 percent of their cost of heavy machinery and other equipment necessary to build a plant,” Trump said.

That could be a reference to Republicans’ efforts to restore full, immediate R&D expensing, after the Tax Cuts and Jobs Act required that R&D costs be amortized. Republicans in Congress have also been pushing to roll back the TCJA’s limitations on bonus depreciation and net interest expensing.

Tax Trouble

Eighteen individuals and entities charged in international operation targeting widespread fraud and manipulation in the cryptocurrency markets - IRS (defendant names omitted):

Four defendants have pleaded guilty, another defendant has agreed to plead guilty, and authorities apprehended three other defendants in Texas, the United Kingdom and Portugal this week. More than $25 million in cryptocurrency has been seized and multiple trading bots responsible for millions of dollars’ worth of wash trades for approximately 60 different cryptocurrencies have been deactivated.

According to the charging documents, the defendants who created cryptocurrency companies made false statements about their cryptocurrencies (“tokens”) and executed sham trades in those tokens (“wash trades”) to create the appearance of trading activity that would make the tokens look like good investments. These deceptive tactics allegedly attracted new investors and purchasers, which resulted in an increase in the tokens’ trading prices. The defendants are then alleged to have sold their tokens at the artificially inflated prices, a fraud commonly known as a “pump and dump.” The largest of these cryptocurrency companies, (omitted), at one point had a multibillion-dollar market value.

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