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Tax News & Views Battle Lines Drawn Roundup

Jay Heflin
April 12, 2024
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Key Takeaways

  • Battle line emerges for TCJA extensions.
  • What does the Mortgage Interest deduction do?
  • Plan B on tax filing.
  • Living with tax mistakes.
  • Reg-ing non-profits.
  • Charitable deduction v. credit.
  • Restauranteur heads to Big House.
  • Donation denied.
  • Failing to file tax returns. 
  • Shhh!

TCJA Extension Battle Lines Emerge Among House Taxwriters – Doug Sword, Tax Notes ($):

Republican and Democratic taxwriters sparred over whose tax policies had boosted the economy the most as the formal debate over extending the Tax Cuts and Jobs Act started in the House Ways and Means Committee. 

This initial hearing — the first of likely many — mirrors what is already happening at Washington’s think tanks, where the 2025 tax cliff is a hot topic. One thing economists and others agree on: If the TCJA expires, taxes will go up.

The battle line: $400,000.

There is a set of lawmakers who support extending TCJA tax cuts for taxpayers earning $400,000 or less. There is another set of lawmakers who want to extend all TCJA tax cuts. The battle to extend TCJA tax cuts starts at $400,001.

What’ll it cost?

A straight extension of the TCJA’s individual tax provisions would cost $3.5 trillion over 10 years, according to the Congressional Budget Office. Extending corporate tax breaks from the TCJA would likely add another $1 trillion. Allowing offsets, such as the state and local tax deduction limitation, to expire would drive the cost higher.

If TCJA tax increases are reversed the price tag hovers around $6 trillion over a ten-year period, according to the Committee for a Responsible Federal Budget

 

Do existing tax incentives increase homeownership? – Tax Policy Center:

Q. Do existing tax incentives increase homeownership? 

A. Probably not. The US homeownership rate is lower than in many other developed countries that do not offer similar tax subsidies for homeownership. Beyond a base level, US subsidies mainly support larger homes and second homes. Additionally, evidence suggests that the subsidies raise housing costs, thus dissipating their effectiveness in helping people buy their own homes.

 

Tis The Season

Tax season nears its end, but uncertainties linger – Roger Russell, Accounting Today:

The 2024 filing season, which began with a hint of uncertainty, has progressed into one of the smoothest in recent memory — but the uncertainty still exists, fueled by court decisions and pending legislation.  

The legislation was "pending" at the beginning of filing season and is still pending, while court decisions called into question the Corporate Transparency Act, which, although not a tax issue, is front and center for many accountants that deal with small businesses which come under the purview of the act's beneficial ownership information reporting requirements.

 

Can’t pay or file your taxes by April 15? Here’s what happens if you miss Monday’s deadline – Jeanne Sahadi, CNN:

Most filers have until 11:59 pm Monday, April 15. Some, however, get an extra day or two if they live in Maine, Massachusetts or Washington, DC, due to observed holidays. 

And others who live or work in federally declared disaster areas will have even more time both to file and pay thanks to IRS-granted extensions. The IRS has also given an extension to individuals and businesses affected by the October 7 terrorist attacks in Israel

But if you are not in any of those situations, and you can’t file a full return by Monday, at the very least submit Form 4868 to get an automatic six-month extension to file.

From the horse's mouth:

Need more time to file a federal tax return? It’s easy with IRS Free File – IRS:

With the April 15 tax filing deadline fast approaching, the Internal Revenue Service reminds taxpayers who need more time to file their return that receiving an extension is quick and easy through IRS Free File on IRS.gov. An extension gives taxpayers an automatic six more months – until Oct. 15 this year – to file their tax return. 

The IRS also reminds taxpayers that payments are still due by the original deadline, even if they request an extension of time to file a tax return. Taxpayers should file even if they can't pay the full amount.

 

I Messed Up My Taxes. How Long Does the IRS Have to Find Me? – Laura Saunders, Wall Street Journal ($):

Now you’re worried about the long arm of the Internal Revenue Service. How much time does the agency have to find you before the statute of limitations expires? 

The short answer is: three years, six years, 10 years or forever. Depending on the circumstances, you may have less time to sweat than you think—or much more. For example, the statute of limitations doesn’t start to run until a taxpayer actually files a return, so non-filers are never off the hook. 

 

Taxing Exempts

Democratic Lawmakers Seek IRS Regs on Tax-Exempt Hospitals – Caitlin Mullaney, Tax Notes ($):

A group of House Democrats are calling on the IRS and Treasury to strengthen and enforce charity care and financial assistance regulations for nonprofit hospitals. 

“The IRS has an important role to play in reducing medical debt, which remains an unfortunate reality for millions of families in the United States. We urge the IRS to ensure accountability for nonprofit hospitals and to protect families from the destructive effects of medical debt,” the lawmakers said in an April 4 letter to IRS Commissioner Daniel Werfel and Treasury Secretary Janet Yellen.

The letter is here.

 

Encouraging Charitable Giving: Matching Grants Versus Rebates Roberg McClelland, Tax Policy Center. “The federal government subsidizes charitable contributions for those taxpayers who have positive tax liability and itemize their deductions. However, especially since the passage of the 2017 Tax Cuts and Jobs Act, few taxpayers itemize, and those that do tend to have higher incomes – limiting the progressivity of the deduction. Replacing the charitable contribution deduction with a tax credit is one solution, but that would still only affect donors that file federal returns and owe taxes.”

 

Court Side

Fla. Restaurateur Gets Prison Time For Dodging Payroll Taxes – David Minsky, Law360 Tax Authority ($):

The ex-CEO of a defunct Jacksonville, Florida-based restaurant chain was sentenced to 2½ years in federal prison after pleading guilty earlier this year to willfully failing to pay more than $5 million in payroll taxes.

Following a hearing Tuesday in Florida federal court in Jacksonville, U.S. District Judge Wendy Berger sentenced [the defendant] to 30 months in federal prison after he pled guilty in January to one count of willfully failing to pay over to the Internal Revenue Service payroll taxes on employees' wages. The deal he struck with prosecutors dismissed 16 similar counts alleged against him.

The defendant will have three years of supervised release after his term and must pay more than $3.8 million in restitution to the IRS, the article reports.

 

IRS Denies Error in Nixing $2.9B Deduction for Hilton Donation – Erin McManus, Tax Notes ($):

The estate of William Barron Hilton is entangled in disputes with both his heirs and the IRS despite careful, detailed planning.

The agency on April 4 filed its answer to the estate’s February 2 petition challenging a $1.16 billion assessed estate tax deficiency. As of the filing of the petition, six of eight probate cases brought by the decedent’s eight children had been dismissed in Estate of Hilton v. Commissioner.

 

Judge Sends Tax Data Suit Against H&R Block To Arbitration – Anna Scott Farrell, Law360 Tax Authority ($):

A man who used H&R Block to prepare his taxes online and then sued the company, along with Google and Meta Platforms Inc., for sharing his private data must pursue his claims against the tax preparation software giant in arbitration, a California federal judge ruled Thursday.

The online services agreement [the defendant] accepted when logging into his H&R Block account included a valid provision requiring him to arbitrate any complaints, including his proposed class action federal suit accusing the three companies of conspiring to track his online tax filing activity, said U.S. District Judge P. Casey Pitts in the order.

 

International Zone

Swiss Bank Probe May Prompt IRS To Revive Disclosure Effort – Dylan Moroses, Law360 Tax Authority ($):

Senate Finance Committee Chairman Ron Wyden's latest investigation into the Swiss banking industry may apply further pressure to federal law enforcement officials to revive a program designed to encourage taxpayers' voluntary compliance in disclosing income held overseas to the IRS. 

Wyden's latest inquiry comes after he recommended reopening the Internal Revenue Service's Offshore Voluntary Disclosure Program last year in a last-ditch effort to get taxpayers to comply with laws on overseas income held in Swiss banks before the IRS beefs up enforcement on those earnings thanks to increased funding from the 2022 tax, climate and healthcare law.

The article goes on to report that Wyden could request the IRS reopen the Offshore Voluntary Disclosure Program. He could also ask the Justice Department to “recalibrate” its Swiss Bank Program.

 

From the “It Must Have Gotten Lost In The Mail” file

Bankruptcy documents detail how GOP NC governor nominee Mark Robinson failed to file federal income taxes for 5 years – Will Steakin, ABC News:

North Carolina Lt. Gov. Mark Robinson has been open about some of his past financial challenges, including nonpayment of debts and failure to pay rents. 

He's also, throughout his political rise, railed against the social safety net and disparaged those who have relied on government assistance, while on his way to clinching the Republican gubernatorial nomination in the state. 

And while Robinson has previously talked about his financial issues, bankruptcy records obtained by ABC News paint a more dire and detailed picture of his financial and business history than has previously been disclosed -- including new details regarding how the potential future governor had failed to file his federal income taxes for five consecutive years starting in 1998.

 

What Day Is It?

Speak Not! Its National Day of Silence!

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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.

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.