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Tax News & Views Deal or No Deal Roundup

Jay Heflin
March 1, 2024
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Key Takeaways

  • Tax bill turns into a tug-of-war
  • Spending plan not helping to move taxes
  • Estate tax and the whole 2025 shebang
  • Audit the rich
  • First female IRS chief counsel
  • IRS needs dial-up
  • Global wealth tax for individuals
  • Real money
  • Toast to The North Star State!

Crapo details wish list for bipartisan tax package, but Wyden balks – Benjamin Guggenheim, Politico Pro ($). This article is about the tax bill that sailed through the House last month but has apparently stalled in the Senate because certain Senators want to amend it.

The legislation contains R&D expensing for domestic firms, expands the 163(j)-interest deduction, ups Bonus Depreciation to 100%, and modifies the Child Tax Credit, among other provisions.

Among many items that [Senate Finance Committee ranking member Mike] Crapo (R-Idaho) would like to see addressed is a fix to a technical glitch that was enacted as part of a sweeping retirement bill in 2022 that could inadvertently disallow “catch-up” contributions in retirement accounts.

He also said he wants to consider adding some traditional tax extenders up for renewal and modify the bill's Child Tax Credit expansion so more benefits go to the working poor with some tax liability.

Senate Finance Chairman Ron Wyden does not seem supportive of Crapo’s changes. The article reports that Wyden "appeared to balk" at the Senator's suggestions. 

The clock is also ticking to pass the bill (emphasis added):

“This is the first time I’ve heard about this new set of comments,” Wyden said. “We’re down to having a few weeks to get this done, and we need policies that add support, not subtract support.”

FWIW: In meetings with Senate tax staffers this week the point was raised that tax bill discussions between Wyden and Crapo have cooled. Not a good sign for enacting the bill.

Passing tax legislation is also not the top priority in Congress.

Capitol Hill Recap: Tax Bill Stuck in the Senate – Jay Heflin, Eide Bailly:

The reason the legislation is stuck is because Senators want to make changes to the bill, but making those changes is not their top priority.

Funding is the top priority.

Lawmakers in both chambers of Congress are staring down a potential partial shutdown of the Federal government on Saturday. Another partial shutdown could occur the following Saturday.

Yesterday, lawmakers temporarily extended funding until later this month. But funding will continue to be the main focus for lawmakers until they agree on a more concrete spending plan. Once a more permanent spending plan is agreed upon, D.C. folks will likely push to add the aforementioned tax bill to it - assuming it can pass the Senate as-is. 

 

Will Estate Tax Exemption Last? Fat Chance, Estate Planner Says – Jonathan Curry, Tax Notes ($): 

For nearly a century, the estate tax exemption has risen without ever going back down. That’s almost certainly going to change in 2026.

“I’m of the opinion that there is at least a 95 percent chance that there is going to be a snapback,” Paul S. Lee of Northern Trust said during a February 29 American Law Institute Continuing Legal Education webinar.

The 2017 Tax Cuts and Jobs Act doubled the estate and gift tax exemption and indexed it to inflation, but only temporarily. If Congress does nothing, by law, the exemption will revert to its pre-TCJA amount on January 1, 2026, though the inflation adjustment will persist.

Rest up: The tax fight in 2025 to extend, modify or let die tax provisions in the 2017 tax reform bill will be a biggie. 

Speaking of the tax reform bill (known as the Tax Cuts and Jobs Act or TCJA):

Biden Will Push Higher Taxes for the Rich in State of the Union – Justin Sink, Bloomberg ($):

President Joe Biden will advocate plans to increase taxes on the wealthy and corporations as well as to lower prescription drug prices in his State of the Union address next week, in what aides describe as an effort to lay out second term proposals for protecting and implementing his economic agenda.

Biden, who will speak before both houses of Congress on Thursday night, is seeking to convince voters that his administration’s achievements merit another four years in office, and the televised speech will give him a high-profile forum to reiterate his arguments.

President Biden supports extending TCJA tax breaks for taxpayers earning $400,000 a year, or less. His proposal will likely be the bare minimum for what could get extended in 2025 (or 2026, based upon history). Before the TCJA was enacted, Congress routinely extended tax extender provisions a year after they expired. 

 

IRS Latest

Make $400,000 and Never Filed Your Taxes? The IRS Will Be in Touch – Ashlea Ebeling and Richard Rubin, Wall Street Journal ($):

High earners who don’t file their taxes are about to hear from the IRS.

The agency said it started sending out more than 125,000 notices to individuals who made $400,000 or more and failed to file returns between 2017 and 2021. Even without a tax return, the IRS has a pretty good idea about their income from forms like W-2s and 1099s.

What to expect after receiving a non-filer compliance alert notice and what to do to resolve – IRS:

What is the CP59?

The recently updated CP59 notice is sent when the IRS has no record that a prior personal tax return(s) has been filed. It provides details on what a taxpayer can do to resolve their non-filing status:

  • File their signed, personal tax return immediately or explain why a return is not required.
  • Complete Form 15103, Form 1040 Return Delinquency, included with the notice to explain:
    • Why they're filing late.
    • Why they don't have to file.
    • That they’ve already filed.

 

Rollinson Confirmed to Chief Counsel Role, Ending 3-Year Vacancy – Cady Stanton, Tax Notes ($):

Marjorie Rollinson will bring a breadth of experience to the role of IRS chief counsel at a time when the agency is expanding initiatives on high-income tax compliance and working on implementing complex clean energy regulations.

The Senate confirmed Rollinson as IRS chief counsel and Treasury assistant general counsel on a 56-41 vote February 29, with six Republicans joining Democrats in supporting her nomination.

 

Actions Need to Be Taken to Address Inaccurate Internet Search Engine Taxpayer Assistance Center Location Information Which Poses a Threat to Employee Safety – Treasury Inspector General for Tax Administration. "Using one of the most popular search engines, TIGTA used specific keyword search terms to determine whether information regarding an IRS office was accurately reflected in the results and identified nearly 600 errors with the IRS information received in our search results."

 

Examination of returns and claims for refund, credit, or abatement; determination of correct tax liability – IRS. “This revenue procedure sets forth the manner in which a public utility may treat certain legislatively authorized transactions entered into by the public utility to recover specified costs through a non-bypassable surcharge to customers within the utility’s historic service area.”

 

Court Side

U.S. Court Finds Against FBAR Defendant but Defers on Repatriation – Alexander Peter, Tax Notes ($):

Even though the non-reporting of a transfer of assets to an offshore foreign bank account was willfully fraudulent, whether there is an obligation to repatriate remains an open question, a U.S. district court has held.

In United States v. Harrington, the U.S. District Court for the District of Colorado found that $1.7 million in foreign bank account reporting penalties, plus interest, additional penalties, and collection costs, was rightly assessed because George Harrington — who died during the proceedings — transferred funds to Europe between 2007 and 2010 and willfully did not disclose them to defraud the U.S. fisc. He also fraudulently conveyed the funds to his wife, Monica Harrington, the court said in its summary judgment. Judge S. Kato Crews deferred a finding on whether Monica must repatriate sufficient foreign funds to pay the penalties, interest, and costs, saying that additional briefing is needed.

 

NY Tax Prep Business Sues IRS to Recover Right to E-File Returns - John Woolley, Bloomberg ($). “New York tax preparation company Zirin Tax Co. Inc. sued the IRS for wrongfully suspending its e-filing identification numbers without adequate explanation after the agency criminally investigated the business for possibly filing fraudulent returns.”

 

International Zone

Global Wealth Tax Plan Could Mirror Pillar 2, G20 Told – Kevin Pinner, Law360 Tax Authority ($):

A global minimum wealth tax featuring a top-up tax and enforcement system similar to the global minimum tax on corporations would reduce the ability of very wealthy individuals to avoid the measure by relocating, according to a presentation made to the Group of 20 nations Thursday…

The report commissioned by the G20 must identify shortcomings of domestic wealth taxes and explore trade-offs between having a small base targeting billionaires with no exemptions or a large base starting with millionaires and exemptions, Quentin Parrinello, Zucman's spokesperson and an adviser at the tax observatory, told Law360 on Thursday.

"A lot of questions need to be addressed," Parrinello said. "The fact that there's interest, that this report is being commissioned, is really a historic step forward."

 

From the “We’re Talking About Real Money” file

CBO: IRS cuts would slash revenue by $44B - Laura Weiss, Punchbowl News ($):

Slashing $20 billion in IRS funding for tax enforcement would cost the federal government $44 billion in revenue over the next decade, according to a new Congressional Budget Office analysis.

The report, requested by Senate Budget Committee Chair Sheldon Whitehouse (D-R.I.), put the cost of cutting IRS funds higher than an estimate released last year.

The report is here.

 

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Happy National Minnesota Day! The Land of 10,000 Lakes! Eide Bailly is also incorporated in Minnesota! High-fives for The North Star State!

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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.

Material discussed is meant to provide general information and it is not to be construed as specific investment, tax or legal advice. Keep in mind that current and historical facts may not be indicative of future results. This is meant for educational purposes only. Information presented should not be considered investment advice or a recommendation to take a particular course of action. Always consult with a financial professional regarding your personal situation before making any financial decisions.