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Tax News & Views Filing Questions Roundup

Jay Heflin
February 23, 2024
Tax file in a filing cabinet

Key Takeaways

  • Tax bill’s fate sparks filing questions
  • Rooting for the Child Tax Credit
  • Who’s not paying their taxes?
  • Critical minerals conundrum
  • Entitlement woes
  • Tax court stuff
  • Crunch time re: intl tax
  • Please focus on taxes!
  • Banana bread + chocolate = heaven

File Now? Werfel’s One-Size-Fits-All Advice Gets Tax Pro Vetting – Jonathan Curry, Tax Notes ($):

The IRS commissioner’s advice to go ahead and file tax returns even as Congress dithers over what to do about the House-passed tax deal seems increasingly justified as the weeks pass, but the message hasn’t been universally embraced.

When the Tax Relief for American Families and Workers Act of 2024 (H.R. 7024) was first proposed, there appeared to be some urgency to get it enacted before or shortly after the beginning of the 2024 filing season, in part because mid-filing season retroactive tax changes tend to be disruptive. As the weeks have dragged on, a speedy resolution seems increasingly out of reach.

Waiting to file, or filing early only to submit an amended return if the tax bill is enacted, depends on the client, according to our own Joe Kristan, who spoke to Tax Notes about this subject:

“The answer always depends on the client’s needs,” he told Tax Notes. The bill’s proposed changes would largely reduce taxes for taxpayers, and if that results in an increased refund, the refund will arrive much quicker if it stems from an original return filed on extension than from an amended return, he said.

“The IRS is much better at dealing with original filings than amended returns,” Kristan observed. “If you claim a refund on an amended return, you might be waiting for it a long time.”

Tis the Season, yo:

Let us help you relieve your tax headache – Eide Bailly:

Federal, state, local, and international tax burdens and responsibilities consume time and cash flow. Whether you’re an individual, a business, a nonprofit, or handling a trust or estate, proper planning and guidance from a well-versed professional can make managing taxes less painful.

Eide Bailly has the depth of tax resources to help you gain peace of mind. Plus, our professionals are supported by the National Tax Office, allowing clients to dig into specialized tax situations.

 

As for the state of play on the tax bill mentioned in the Tax Notes article, there isn’t a timeline in the Senate for when lawmakers in that chamber will deal with the tax bill. And the outstanding questions are rudimentary: Will the bill be vetted by a committee? Will the bill go straight to the Senate floor? Will the bill be amended either in committee or on the Senate floor? Tax folks are waiting with bated breath to hear the answers to these questions.

Also, the Child Tax Credit is expected to play an outsized role in determining the fate of this tax bill, which includes business tax relief:

Capitol Hill Recap: Think the Child Tax Credit is Not Your Concern, Think Again – Jay Heflin, Eide Bailly:

The years-long effort to enact legislation providing business tax relief has always been tied to modifying the Child Tax Credit that many on Capitol Hill have opposed.

To wit, business relief has been sidelined since 2022 because of opposition to changes to the Child Tax Credit. There is (and always has been) bipartisan, bicameral support for the business tax relief provisions.

 

More IRS Stuff and Other Tidbits

Tax evasion by millionaires and billionaires tops $150 billion a year, says IRS chief – Robert Frank, CNBC:

The nation’s millionaires and billionaires are evading more than $150 billion a year in taxes, adding to growing government deficits and creating a “lack of fairness” in the tax system, according to the head of the Internal Revenue Service.

The IRS, with billions of dollars in new funding from Congress, has launched a sweeping crackdown on wealthy individuals, partnerships and large companies. In an exclusive interview with CNBC, IRS Commissioner Danny Werfel said the agency has launched several programs targeting taxpayers with the most complex returns to root out tax evasion and make sure every taxpayer contributes their fair share.

Yesterday's Roundup covered this topic and is here

 

IRS Critical Mineral Rules Thwart Bid to Rival China, Firms Say - Caleb Harshberger, Bloomberg ($):

Proposed IRS rules excluding domestic critical mineral extraction and certain processing costs from advanced manufacturing credits threaten to undermine US efforts to challenge China’s dominance of the minerals used to make electric vehicles and other green technology, companies said during an IRS hearing Thursday.

Known as Section 45X of the Democrats’ 2022 tax-and-climate law, the credits aim to encourage production of green energy components and technology to boost US supply chains. In proposed guidance, IRS late last year said critical minerals extraction activities and certain processing costs would be excluded from eligibility for credits.

Explainer:

How the Inflation Reduction Act is Boosting Energy Efficiency Incentives – Eide Bailly:

Key Takeaways

  • The Inflation Reduction Act (IRA) of 2022 significantly enhances many clean energy tax credits and deductions.
  • These increased benefits can allow accounting and tax departments to both increase cash flow and contribute to environmental, sustainability and governance (ESG) efforts.
  • An experienced advisor can help evaluate your eligibility and optimize the full potential of these energy-efficient incentives.

 

If you’re nearing retirement don’t read this:

Social Security: Estimated Impact of Hypothetical Solvency Measures – Congressional Research Service:

Social Security has long been a program of high congressional interest both because of the number of people who receive benefits—now and in the future—and because of the program’s projected long-term financial imbalance…

In its 2023 annual report, the Social Security Board of Trustees projected that under current law, Social Security’s revenues and asset reserves will be insufficient to pay full scheduled benefits after 2034. Under the trustees’ intermediate assumptions—their best estimate for the future experience—the magnitude of the changes needed to maintain Social Security solvency increases as the projected insolvency date approaches.

Most of these suggestions revolve around changing benefits/taxes for wealthier taxpayers. 

Retirement Planning Considerations For High-Net-Worth Individuals – Eide Bailly:

For high-net-worth individuals with $1 million or more in investable assets, planning for your wealth journey becomes increasingly important—especially as life expectancy rates continue to rise.

Retirement in particular marks a significant transition where you shift from earning a regular income to relying on savings, investments, and retirement benefits. Without a thoughtful and comprehensive strategy, you may be less likely to maintain the lifestyle you desire.

 

Court Side

Court Finds Tax Cheats Still Owe Years Later – Tax Notes ($). “The Tax Court sustained a determination of deficiencies and fraud penalties against a couple convicted of tax fraud in 2007, agreeing with the IRS that the couple set up sham trusts, that the trusts' income was properly attributable to them, and that their pattern of fraudulent conduct justified the imposition of fraud penalties.”

 

Attys Settle Yacht Donor's Malpractice Suit Over $4.6M Tax Bill – Emily Sawicki, Law360 Tax Authority ($):

A New York law firm and two attorneys have settled what remained of a malpractice suit brought by a former client who alleged faulty legal advice led to her being slapped with a $4.6 million tax bill, with a joint stipulation of dismissal filed Thursday.

Loren M. Ridinger agreed to drop the breach of fiduciary duty, fraud and vicarious liability suit she filed against attorneys Ralph K. Stone, Rachel L. Gould and their former firm, Meister Seelig & Fein LLP, in October 2022, with each side agreeing to pay their own attorney fees and costs.

This suit was dismissed with prejudice, meaning the plaintiff can’t refile this claim in this court again.

 

Syndicated Conservation Easement Grantors Stipulate to Penalties – Erin McManus, Tax Notes ($):

Entities featured in a Senate Finance Committee report as examples of abusive tax shelters settled for a substantially smaller deduction than they reported for an easement contribution.

Under the parties’ stipulation, Tax Court Judge Maurice B. Foley ordered February 6 that the taxpayer was allowed a $30,000 charitable contribution rather than the claimed $18.7 million in Little Pumpkin Creek North LLC v. Commissioner.

 

Conn. Embezzler Gets 2 Years For $1M Mom-And-Pop Ripoff – Brian Steele, Law360 Tax Authority ($): “The former office manager for a family-owned construction business in Connecticut must serve 24 months in prison for stealing nearly $1 million from her employer through a yearslong embezzlement scheme and failing to pay taxes on the money, a federal judge has ruled.”

 

International Zone

Nations Hit Time Crunch to Finish Global Transfer Pricing Rules - Lauren Vella, Bloomberg ($):

Countries involved in the OECD global tax deal negotiations are up against the clock to finish critical work on a part of the international tax deal agreed to by more than 140 countries in 2021.

The international tax deal includes Pillar One, a reallocation of large multinational companies’ residual profits, and a 15% global minimum tax, known as Pillar Two. Pillar Two has already taken effect in dozens of countries, including in the EU at the start of this year. However, Pillar One has evolved at a slower pace.

 

American Citizens Abroad Praises Taxpayer Advocate Annual Report – Tax Notes ($). “American Citizens Abroad, in a February 20 letter to National Taxpayer Advocate Erin M. Collins, praised the advocate’s annual report to Congress for proposing an end to systemic international information return penalties, and the ACA made several recommendations on easing compliance for taxpayers abroad.”

 

Let us help you with your international tax questions:

Global expansion is full of complex decisions. Take the guesswork out of international tax planning with the help of Eide Bailly – Eide Bailly:

Doing business internationally can be complicated, and setting your business up for success includes being mindful of creating a tax efficient model at the outset. Whether you are just starting or have an established multinational business, an experienced advisor can help you make confident decisions in these areas. Specific expertise, including language fluency, in the countries where you operate and/or have sales can help ease the burden and the headaches of determining the right course of action.

 

From the “Are They Even Thinking About Taxes?” file:

Tall order for lawmakers to finish spending bills next week – Aidan Quigley, Roll Call:

Twenty percent of annual appropriations for the current fiscal year are due a week from Friday or portions of the government will shut down. Critical final decisions about those spending bills’ contents or the process for getting them across the finish line haven’t yet been made, however, and lawmakers are still on recess until next week.

The Senate returns Monday, only to face impeachment articles the House adopted seeking removal of Homeland Security Secretary Alejandro Mayorkas from office. The chamber could quickly dismiss the charges or hold a longer trial as some conservatives are demanding; either way, it’s a constitutional prerogative that must be dealt with first.

The House, meanwhile, isn’t back until Wednesday. That means the latest congressional leaders could theoretically release the text and still adhere to House rules requiring the legislation to be publicly available in advance is Monday.

Here’s the deal: Congress is unlikely to get a spending agreement that last the entire year. Instead, they will likely agree on extending funding incrementally, like weekly. If this occurs, the spending battle will continue for quite some time. And when everyone on Capitol Hill is focused on spending – to avoid a partial shutdown of the Federal government – they ain’t thinking about taxes.

 

What Day Is It?

Happy National Banana Bread Day!  Mix in some chocolate chips are we’re talking class A dessert!

 

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About the Author(s)

Jay Heflin Photo

Jay Heflin

Director of Legislative Affairs
Jay brings more than two decades of experience to his job as Director of Tax Legislative Affairs in Eide Bailly’s Washington D.C. office. Jay provides political intelligence and guidance to the firm on the progress of tax legislation on Capitol Hill. Prior to joining the firm, he was a director at the tax lobbying shop Federal Policy Group, LLC, where he tracked tax legislation in Congress and participated in lobbying efforts to amend tax legislation. Before joining the Federal Policy Group, he was a Congressional reporter for several news organizations where his beat was tax policy.