Key Takeaways
- 2017 TCJA bet comes through.
- What about tax-free tips and overtime?
- Tariff haters.
- Crapo and the SALT deduction cap.
- UK chancellor says no more tax hikes.
- China: hey, "double-check" your taxes.
- National Men Make Dinner Day.
The Republican Tax-Cut Gamble That Is About to Pay Off - Richard Rubin, Wall Street Journal:
At a minimum, in a divided government, Trump and the new Senate Republican majority will be able to block tax increases and hold a firm negotiating position against a narrowly controlled Democratic House.
“Dramatic tax increases are off the table,” said Rohit Kumar, a former Senate GOP aide now at accounting firm PwC. “The idea that the corporate [tax] rate is going to 28% or even 25% no longer seems like a real thing.”
Trump Win Brings Tax Proposals Into Focus - Alexander Rifaat, Tax Notes ($):
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While [Tax Foundation policy analyst Alex] Muresianu argued that Trump will be in a strong negotiating position for the TCJA extension talks — with the Republicans taking the Senate and possibly keeping the House — he said it will cause some of Trump’s other campaign tax promises, which include the elimination of taxes on gratuities, overtime, and Social Security benefits, to be put on the back burner.
Why Trump’s Plan to Escalate Tariffs Has Many Haters - Brendan Murray, Bloomberg via MSN:
Yes, although in some cases it would be necessary to first have a finding by one of the federal agencies that report to the president. Through a number of statutes, Congress has empowered the US president to modify tariffs to address a variety of concerns. These include a threat to national security, a war or emergency, harms or potential harms to a US industry, and unfair trade practices by a foreign country. While companies might try to fight higher tariffs in court, because of past deference given to presidential powers, such challenges “would face a steep uphill climb,” according to an article posted by the Center for Strategic & International Studies and co-authored by Warren Maruyama, a former general counsel for the Office of the US Trade Representative.
Trump Tax Cuts Come at the Right Time for Stocks. Further Ahead, It Gets Murky. - Jon Sindreu, Wall Street Journal:
His first round of protectionist measures contributed to a global manufacturing recession in 2019, which drove EPS to fall 0.5% for the S&P 500, and 16% for the “industrials” subsector. The impact might be starker this time, particularly if other nations retaliate strongly. Yet vast uncertainty clouds what the final shape of the tariffs will be, or which products could be excluded.
Revenue Estimates of Trump’s Universal Baseline Tariffs - Erica York, Tax Policy Blog. "Revenue raised by tariffs would fall well short of what is needed to fully offset the revenue losses of making the expiring provisions of the 2017 Tax Cuts and Jobs Act (TCJA) permanent."
In the new Congress
Finance Committee Helm Awaits Crapo After GOP Wins Senate - Stephen Cooper, Law360 Tax Authority ($):
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As the presumptive Finance Committee chair, Crapo will take the Senate lead on negotiations to extend provisions of the GOP's Tax Cuts and Jobs Act, which begins to expire at the end of 2025. Crapo's spokesperson declined to issue a statement on the lawmaker's potential chairmanship of the Finance panel. Earlier in the fall, Crapo told Law360 that he favored extending a $10,000 cap on the state and local tax deduction and many other provisions of the 2017 tax overhaul but he that was unwilling to predict what changes to the law Senate Republicans will seek in 2025.
Grading the IRS
Grading the IRS Part 3: Modernization - Debbie Jennings, National Taxpayers Union Foundation. "Grade: D... The IRS is showing some progress on delivering cutting-edge technology, but has not done so at the pace it expected to, and so far the achievements listed in the report card look more like replacing old hardware than implementing new software and backend improvements. While the IRS still has IRA funding for another 8 years, it must begin to implement these changes now so that there can be adequate time for testing, monitoring, and evaluation."
International Terminal
Eide Bailly's International Tax Team and our affiliates at HLB, the Global Advisory and Accounting Network stand ready to help with your worldwide tax planning and compliance needs.
Apple Takes $4.8 Billion Foreign Tax Credit for Ireland Tax Bill - Michael Rapoport, Bloomberg ($):
The total amount payable to Ireland in the wake of the ruling is actually $15.8 billion, and that amount will be offset by the $4.8 billion foreign tax credit and a decrease of $823 million in Apple’s unrecognized tax benefits, the company said in its annual report filed Nov. 1.
Reeves insists she will not be ‘coming back with more tax increases’ - Delphine Strauss and George Parker, Financial Times:
Chancellor Rachel Reeves said on Wednesday she will not “be coming back with more tax increases or more borrowing” before the end of the current parliament, arguing that no further topping up of spending on public services would be needed.
Reeves told MPs that last week’s £40bn tax-raising Budget, which also included £28bn-a-year of new borrowing, was a one-off “reset” and insisted: “We will never need to do a Budget like this again”.
EU Ministers Hail VAT Reform as Major Step in Digital Adaptation - Stephen Gardner, Bloomberg ($):
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The package, proposed by the European Commission in 2022, consists of three main parts: obligations for countries to introduce digital VAT reporting and e-invoicing; single, rather than per-country, VAT registrations for companies within the EU; and a deemed-supplier rule for online platforms via which accommodation and transport services are sold, making them responsible for collecting and remitting VAT.
China piles pressure on rich people and companies to cough up taxes - Chan Ho-him, Ryan McMorrow, Joe Leahy, and Wenjie Ding, Financial Times.
Tax officials in recent months have asked wealthy individuals and companies to carry out “self-inspections” of their tax payments and cough up any deficiencies, as local governments hunt for revenue to refill coffers depleted by a property slump.
Treaty-Shopping - Alex Parker, Things of Caesar ($):
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The principal purpose test is a broad mandate for a tax authority to divine the taxpayer’s true intentions behind a given structure or payment, and to adjust or possibly recharacterize it entirely. In that sense, it’s similar to a general anti-avoidance rule or the U.S. economic substance doctrine. The test asks whether “it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining [a treaty] benefit was one of the principal purposes of any arrangement or transaction.” If so, it nullifies the benefit, unless it is expressly authorized elsewhere in the treaty.
Blogs and Bits
Tax credit & deduction for businesses that make disability accommodations - Kay Bell, Don't Mess With Taxes. "Installing a ramp for wheelchairs is a common accessibility change covered under the tax credit. Other credit examples include creating parking spaces close to the business entrance, providing headphones for those with hearing impairments, making printed material in alternate formats (e.g., large-print, audio, Braille), and rearranging the company’s layout to make it accessible to those who use special equipment."
Your Money in a Second Trump Term: Taxes, Credit Cards and Student Loans - Wall Street Journal. "President Biden’s push to curb credit-card late fees could be sidelined, analysts say. They don’t expect his student-loan relief efforts to survive, either. With a Republican-leaning Congress, President-elect Donald Trump’s 2017 tax cuts are more likely to be extended."
U.S. Tax: American Selling A Principal Residence At Home Or Abroad - Virginia La Torre Jeker, Forbes. "When selling a principal residence, American homeowners can exclude up to $250,000 in gains, or $500,000 for married couples filing jointly. This exclusion applies to homes sold both within the U.S. and overseas, if specific criteria around ownership and use are met."
Exit Tax Explained: The Cost of Renouncing U.S. Citizenship - Olivier Wagner, 1040 Abroad. "For many U.S. expats considering renouncing their citizenship, the exit tax is a major concern. This tax can feel daunting, with fears of high costs and complicated calculations. However, the reality is that most U.S. citizens who renounce won’t actually owe an exit tax."
Related: Eide Bailly Global Mobility Services.
Tax Crime and outdoor recreation
San Antonio couple sentenced to federal prison for tax evasion - IRS (Defendant names omitted, emphasis added):
According to court documents, Defendant wife, and her husband... prepared and signed a false and fraudulent form 1040 joint tax return for calendar year 2016, which was then submitted to the Internal Revenue Service. The fraudulent tax return reported the couple’s sole income as gross receipts or sales from the business Camping and Fishing Outlet as $3,530,473, while she was aware that the true amount of gross receipts exceeded $4 million.
Defendant wife pleaded guilty May 28, 2024, to one count of tax evasion and aiding and abetting. Defendant husband pleaded guilty on April 1, to one count of tax evasion, and was sentenced to 27 months in federal prison on Aug. 28. The husband and wife were also ordered to pay $359,108 in restitution.
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“[Defendants] created false identities and businesses to hide their income from the IRS, but they failed to realize that money always leaves a trail. Their years in prison will give them an opportunity to reflect on their actions,” said Acting Special Agent in Charge Lucy Tan for IRS Criminal Investigation’s Houston Field Office.
Sometimes it's the cover-up that gets you in real trouble.
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