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Tax News & Views Airs its Continuing Resolution Grievances Roundup

By Joe Kristan
December 23, 2024
Grok-generated festivus pole

Key Takeaways

  • Continuing resolution drops CTA break, adds farm bill extension.
  • Biden signs bill. 
  • 2025 covered compensation base set.
  • One million $1,400 checks going out.
  • Tax policy battles within Team Trump.
  • Festivus.

Publication note. Tax News & Views will be silent until next Monday for the holidays, absent something big happening. Best holiday wishes to all!

 

Extension to BOI reporting deadline removed from budget bill - Martha Waggoner, The Tax Adviser:

The bill passed Friday night to avert a federal government shutdown didn't include a one-year extension to the deadline for companies to file beneficial ownership information (BOI) reports. The extension had been included in an initial version of the bill.

Meanwhile, a nationwide court injunction preventing enforcement of the BOI reporting requirement remains in effect pending appeal.

Related: Corporate Transparency Act Disclosures Paused

Biden Signs Revised Plan to Avert Government Shutdown - Katy Stech Ferek, Siobhan Hughes, Lindsay Wise, Wall Street Journal:

The proposal would extend government funding until March 14, while also providing $100 billion in disaster relief and $10 billion in economic aid for farmers. The bill also includes a one-year extension of the farm bill, the cornerstone of U.S. food and agriculture policy, and fully funds the reconstruction of the collapsed Francis Scott Key Bridge in Baltimore.

The bill strips out a series of other provisions that were included in the bipartisan deal that Trump shot down, such as restrictions on investments in China, a pay raise for lawmakers, a crackdown on “junk fees” for tickets and hotel rooms, and the transfer of a football stadium site to the Washington, D.C., government. The Senate then approved the stadium provision as a separate piece of legislation early Saturday.

 

Continuing Resolution – Farm Related Provisions; and Social Security Legislation - Roger McEowen, Agricultural Law and Taxation Blog. "The Act funds the government temporarily and extends the Farm Bill. The economic and disaster relief for farmers will be beneficial as farmers renegotiate existing operating loans with lenders. However, the inability of the Congress to remove the debt ceiling could provide difficulties in the provision or extension of current tax law and the creation of new tax breaks designed to primarily benefit lower to middle income taxpayers."

 

Treasury and IRS

IRS Sets 2025 Wage Base For Covered Compensation - Kat Lucero, Law360 Tax Authority ($):

The taxable wage base used to calculate covered compensation for employee retirement plans will be $176,100 for 2025 tax year, the Internal Revenue Service announced in a revenue ruling Friday. 

That amount is up from the current 2024 wage base of $168,600.

 

Tax Preparer Proposed Regs Revise Practice Rules - Tyrah Burris, Mary Katherine Browne, and Chandra Wallace, Tax Notes ($):

The proposed regs would also eliminate section 10.27, which banned contingent fee arrangements for the preparation of tax returns and claims for refunds... 

Instead, the proposed rules would deem charging a contingent fee in “connection with the preparation of an original or amended tax return or claim for refund or credit prepared prior to the examination of the tax return” to be disreputable conduct that could subject a practitioner to sanctions, according to the regulations.

The proposed regs seek to address technological competency for practitioners by deeming it a best practice to create a data security policy to protect client information and respond to data breaches.

 

A million taxpayers will soon receive up to $1,400 from the IRS. Who are they and why now? - Susan Haigh, Associated Press via Yahoo! Finance:

The IRS said it's distributing about $2.4 billion to taxpayers who failed to claim a Recovery Rebate Credit on their 2021 tax returns. People who missed one of the COVID stimulus payments or had received less than the full amount were able to claim the credit. But the IRS on Friday said it discovered many eligible taxpayers hadn't done so.

...

Eligible taxpayers don't have to take any action. The payments will go out automatically this month and should arrive by direct deposit or check by late January 2025. They'll be sent to the bank account listed on the taxpayer's 2023 return or to the address IRS has on file.

 

The coming year in tax policy.

A last lesson of 2024: Next year could get difficult - Bernie Becker, Politico:

Plenty of GOP lawmakers also made it clear last week that restraining spending was going to be top of mind during 2025 — and for some, that focus trumped even the concern that trillions of dollars in tax cuts would expire at the end of next year.

That’s going to make it plenty difficult for Republicans to settle on a price tag for their fiscal package or packages next year, in which the GOP will also seek new border security measures, among other things.

And in many ways, a lot of the details of a potential tax bill will flow from those decisions, like what possible offsets might need to be used, which of Trump’s targeted tax cut ideas from the campaign could be in the mix and for how long Republicans might be able to extend or enact tax cuts.

 

Steve Bannon supports increasing taxes on the wealthy - Filip Timotija, The Hill:

“I’m for a dramatic increase in corporate taxes. We have to increase taxes on the wealthy. For getting our guys’s taxes cut, we’ve got to cut spending, which they’re gonna resist. Where does the tax revenue come from? Corporations and the wealthy,” Bannon said during an interview with Semafor that was published Friday

...

“And — I hate to say it, you’re gonna have populous tax cuts — on no tax on tips, no tax on Social Security, no tax — no tax on overtime. To make up that gap, I hate to say this, I know it, you got a bunch of still Republican orthodox folks out here. You’re gonna have to raise taxes on the wealthy,” Bannon said Sunday

Democrats open door to tax negotiations with divided GOP - Tobias Burns, The Hill. "While it will be tough for Democrats to get anything they want in a GOP tax bill, the narrow Republican majority along with substantial divisions within the conference are making some Democrats hopeful about bipartisanship on tax."

Health Savings Accounts Poised for Comeback Under Republicans - Lauren Clason, Bloomberg ($):

Health savings accounts let high-deductible health plan enrollees use tax-free dollars on certain medical expenses. The money rolls over annually and can be invested tax-free for higher returns. Twenty-two percent of employers surveyed by the Kaiser Family Foundation offered HSA-eligible plans in 2024.

Advocates see the tax-advantaged accounts as a vehicle to increase both health care access and conscious spending for high-deductible plan members, who pay more out-of-pocket before insurance kicks in. Lawmakers from both parties have proposed bills to allow patients to use HSAs for everything from gym memberships and menstrual products to funeral expenses and veterinary bills.

 

Blogs and Bits

Despite Trump and Musk dooming the original short-term federal funding bill, Congress averts government shutdown - Kay Bell, Don't Mess With Taxes. "Although the final passage and presidential signature came after Uncle Sam technically ran out of money to keep all his offices open, since the fiscal fail was on a Saturday there will be no practical effects."

TCJA Anniversary, Government Scorekeepers, Reconciliation Strategy - Adam Michel and Joshua Loucks, Liberty Taxed. "The TCJA was both a tax cut—cutting taxes at every income level—and the most significant tax simplification in 30 years—saving Americans as much as $5.4 billion by streamlining taxpaying for about 30 million taxpayers. The tax cuts—particularly the business tax cuts—resulted in additional investment, higher wages, declining inequality, and a larger economy."

7th Anniversary of Tax Cuts and Jobs Act Enactment - Annette Nellen, 21st Century Taxation. "Most of the individual tax cuts and tax increases were only put into the TCJA for 2018 through 2025."

Paul Daugerdas' 15 Year Sentence is Commuted with Only Around 9 Years' Incarceration Served - Jack Townsend, Federal Tax Crimes. "I learned today that, on December 12, 2024, President Biden commuted the sentence of Paul Daugerdas who, as described in the DOJ press release for his sentencing 'was sentenced today in Manhattan federal court to serve 15 years in prison for orchestrating a massive fraudulent tax shelter scheme in which he and his co-conspirators designed, marketed and implemented fraudulent tax shelters used by wealthy individuals to evade over $1.6 billion in taxes owed to the Internal Revenue Service (IRS).' I have written often on the Daugerdas saga here (in relevance order, but can be sorted by reverse chronological)."

 

Covid Fraud and Ty Cobb

Springfield business owner sentenced for $14 million fraud scheme - IRS (Defendant name omitted, emphasis added):

A Springfield, Mo., business owner was sentenced in federal court today for his role in a nearly $14 million wire fraud conspiracy that utilized his businesses, as well as fake businesses, to fraudulently receive loans under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Defendant was sentenced by U.S. District Judge Stephen R. Bough to two years in federal prison without parole. The court also ordered Defendant to pay $8,173,736 in restitution. Defendant also must forfeit to the government personal property and real estate purchased with the proceeds of the wire fraud conspiracy as asserted in two civil forfeiture complaints. That property includes four parcels of real estate in Springfield, six vehicles, a yacht, two Rolex watches, five additional pieces of valuable jewelry, a 1952 Topps Jackie Robinson baseball card, a 1980-1981 Topps Larry Bird, Julius Erving, and Magic Johnson card (signed by all three players), and a 1909-1911 Ty Cobb baseball card.

Defendant and another person, a San Antonio, Texas, resident identified in court documents as “Individual-1,” applied for PPP loans and Economic Injury Disaster loans and grants for various businesses they controlled. The conspirators made material misrepresentations about the businesses in the applications, including the purpose of the funding, and submitted fake and forged documents as a part of the application process.

...

For example, in January 2020 Defendant and Individual-1 set up a business, Diagnostic Equipment, Inc., for the purpose of representing it as a legitimate business, when in fact it was not and did not have any business operations...

On April 25, 2021, Defendant submitted a fraudulent PPP loan application for Diagnostic Equipment for a second round of PPP loans. Defendant received $1,054,494 in PPP loan proceeds and spent $150,000 for a corporate suite sponsorship with the Kansas City Chiefs, spent $213,000 to pay a loan on a 2021 Galeon 470SKY Yacht, spent $30,000 for construction on his personal residence, and spent $12,180 on sports memorabilia.

If they ever succeed in eliminating tax and government loan fraud, the effect on the sports memorabilia and fancy watch markets may be catastrophic.

 

What day is it?

It's Festivus, the fake holiday invented by writers of the old Seinfeld show. May all of your grievances be aired, and may you display remarkable feats of strength. 

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About the Author(s)

Joe Kristan

Joe B. Kristan, CPA

Partner
After 38 years centered on tax consulting for closely held businesses and their owners, Joe is joining Eide Bailly's National Tax Office. Joe's responsibilities include communication, process improvement and training. He is a principal contributor to the Eide Bailly Tax News and Views blog, providing daily updates on tax reform and other tax news. Joe is a Certified Public Accountant and a member of the AICPA Tax Section and Iowa Society of Public Accountants.

Any opinions expressed or implied are those of the author and not necessarily those of Eide Bailly. Opinions found in linked items are those of the authors of the linked item, not of your bloggers or of Eide Bailly. “$” means link may be behind a paywall. Items here do not constitute tax advice.