Tax News & Views Working The Room Roundup

Jay Heflin
April 16, 2024

Key Takeaways

  • Senators seek movement on tax bill.
  • The dwindling tax refund.
  • Lights out at tax firm.
  • Leaders show their numbers.
  • Warning for donor-advised funds.
  • A deduction too far for Madoff victims.
  • Recording soon-to-be defendants.
  • IRS numbers and controversy.
  • Bean Counters chill!

Sinema, Hawley, Young quietly working to get tax bill to 60 votes - Laura Weiss and Andrew Desiderio, Punchbowl News ($):

A group of senators is informally working behind the scenes to secure enough votes to pass the Wyden-Smith tax bill. 

The group includes Sens. Kyrsten Sinema (I-Ariz.), Josh Hawley (R-Mo.) and Todd Young (R-Ind.), all of whom support the tax package and are trying to overcome an intense pressure campaign from Senate GOP leaders who want to see the bill defeated.

GOP leaders don’t want to kill the bill as much as they want to postpone it until next year.

Quick review: The tax legislation overwhelmingly passed the House on January 31st by a 357 – 70 vote. It includes the following provisions:

  • R&D expensing (domestic)
  • Expand the 163(j)-interest deduction from EBIT to EBITDA
  • Up Bonus Depreciation to 100%
  • Increase the amount a taxpayer may expense under section 179
  • Enlarged Child Tax Credit
  • Restrict the Employee Retention Tax Credit (ERTC) by:
    • Penalizing ERTC promoters for “aiding and abetting understatement of a tax liability,” according to description of proposal.
    • Requiring that no credit or refund of the ERTC shall be allowed or made after January 31, 2024, unless the claim for the refund or credit is filed on or before that date.
  • Increase the threshold for information reporting of certain payments, from $600 to $1,000, in a calendar year.

Upon passage in the House the bill traveled to the Senate. It landed in the upper chamber on February 1st – and has remained stuck ever since. Only time will tell if this bill gets play in the Senate.


Tax Day and Beyond

A tax mystery: Why are fewer people getting refunds? – Brian Faler, Politico Pro ($):

If it seems like you’re not getting a tax refund like you used to, you’re not alone. 

The share of taxpayers who get money back at tax time is slowly and, a little mysteriously, shrinking. At the same time, the number of people having to cut a check to the government has been rising.

The article states that refunds are down 3.3 percent this year. Refunds were down the last two years as well.

While no one is exactly sure why, some point to changes in the way people work. Others suspect it has to do with the way the government calculates how much in tax should be withheld from people’s paychecks. And the reversal of fortune could have consequences for how and whether people comply with tax laws.

CNET: “Taxpayers can normally expect to receive a refund within 21 days if they file electronically and choose direct deposit, the IRS said. But by April 5, the IRS had issued more than 66.7 million refunds. By comparison, the IRS had sent out over 69 million refunds by April 7, 2023.” 


H&R Block’s Tax Day Outage Frustrates Last-Minute Filers – Ashlea Ebeling, Wall Street Journal ($):

H&R Block said it experienced technology outages on Monday, temporarily preventing thousands of last-minute tax filers from sending in their returns. 

Some people who bought and downloaded the H&R Block software on their computers were unable to electronically file their returns. Those who use the company’s software through a web browser or who work directly with its tax professionals weren’t affected, H&R Block said.

The outage began around 9pm on Sunday and continued until roughly 4pm (Eastern Time, I’m assuming) on Monday, the article reports.

Not good:

Users posted on social media that they were getting error messages, and repeat pending credit card charges for multiple filing attempts. 

Many taxpayers who procrastinate owe taxes. Late filing penalties and interest charges on balances due kick in one day after tax day.

The day after Tax Day is today.


Joe Biden and Kamala Harris release their latest tax filings – Fritz Farrow, ABC News:

The White House on Monday released the 2023 tax returns for President Joe Biden, Vice President Kamala Harris and their spouses. 

Those filings show the president and first lady Jill Biden had a combined federal adjusted gross income of $619,976 and paid combined federal income tax of $146,629. That's roughly on par with the previous year's income and income taxes…
Vice President Kamala Harris and second gentleman Doug Emhoff reported a combined federal adjusted gross income of $450,299 in their 2023 tax filings and they paid $88,570 in federal income tax, in line with the previous year.

Bloomberg: “[M]eaning the first family paid an effective federal income tax of 23.7%.” 


Taxing Exempts

Donor Fund Regs Could Imperil Nonprofit-Sponsored Projects – David van den Berg, Law360 Tax Authority ($):

So-called fiscal sponsorship funds set up at established nonprofits to help new projects start charitable work could be unexpectedly threatened by proposed IRS and Treasury rules on donor-advised funds that could subject such arrangements to burdensome taxes, experts say. 

The proposed rules on donor-advised funds, which are essentially investment accounts set up to support charities that allow donors to advise on how the funds are allocated, were released in November. Under the rules, the definition of what types of arrangements qualify as donor-advised funds would expand to encompass fiscal sponsorships, which would subject sponsorship funds to excise taxes on standard expenses that may make it hard for them to operate.


Court Side

Madoff Victims Can't Claim Theft Deduction, Tax Court Rules – Jared Serre, Law360 Tax Authority ($):

A New York couple who fell victim to Bernie Madoff's Ponzi scheme were properly denied a theft loss deduction because they did not own the assets that were stolen, the U.S. Tax Court ruled Monday.

The Internal Revenue Service was right to disallow a theft loss deduction claimed by Christopher and Silvana Pascucci in 2008 after Christopher Pascucci's life insurance premiums were indirectly invested in Madoff's investment securities company, according to the opinion.


Exxon Seeks $1.8B Tax Refund As Qatar Deal Trial Opens – Spencer Brewer, Law360 Tax Authority ($):

Exxon Mobil Corp. argued Monday in Texas federal court that its deal with Qatar to extract natural gas from the country's coast was a partnership, rather than a lease agreement, saying at the start of a trial that it's entitled to get $1.8 billion in tax benefits back from the IRS.

The deal between the countries was unique, said James Rouhandeh of Davis Polk & Wardwell LLP, representing Exxon: Qatar supplied the oil rights, and Exxon brought technical know-how and substantial investments to the table. Both parties took part in a management committee, he said, and that committee ultimately ran the venture, Al Khaleej Gas.


New York Tax Preparer Charged Over Thousands of False Returns – Bloomberg ($):

[A defendant] has been charged in connection with a scheme to file thousands of false federal individual income tax returns that deprived the IRS of more than $100 million in tax revenue, the Justice Department said Monday. 

The returns contained false information to fraudulently reduce the individuals’ tax burden and to make false statements to the IRS, according to the DOJ. [The defendant], who was the CEO, owner, and manager of ATAX New York, LLC, helped the company generate at least approximately $15 million in gross revenues from about 2016 to 2019, the government said.


Tax Attys, Broker Peddled 'Financial Fantasy,' NC Jury Told – Hayley Fowler, Law360 Tax Authority ($):

A North Carolina federal jury on Monday heard a series of secret recordings at the start of a tax fraud trial in which an insurance agent and a St. Louis attorney unwittingly pitched an undercover IRS agent on a way to decrease taxable income — or what the government characterized as a "financial fantasy."

In nearly two dozen clips played for the jury in Statesville, [the defendants] could be heard selling Robert Elias, an undercover agent for the criminal division of the IRS, on a "gain elimination plan" to lower clients' taxable income, with Simmons calling Kohn "the best" and "very aggressive."


Corporate Grind

IRS Provides Limited Penalty Relief to Corporate AMT Taxpayers – Tax Notes ($). “The IRS has issued guidance (Notice 2024-33) providing a limited waiver of the addition to tax under section 6655 for the underpayment of estimated income tax by a corporation for underpayments attributable to a portion of its corporate alternative minimum tax liability under section 55.”

The document is here.


From the “Working Better For You” file:

Filing Season 2024 Report Card: IRS Builds On 2023 Progress, Delivers World Class Customer Service Thanks to Inflation Reduction Act – Treasury Department:

Thanks to resources from President Biden’s Inflation Reduction Act, the IRS has built on the progress made during Filing Season 2023, delivering world class service in Filing Season 2024. The IRS achieved an 88% Level of Service on the phones, exceeding Secretary of the Treasury Janet L. Yellen’s goal of 85%. 

The agency also cut phone wait times to three minutes, answered more than 1 million more calls through live assistance, and saved taxpayers more than 1.4 million hours of hold time. 

Taxpayers have benefitted from the new and improved “Where’s My Refund” tool 31 million times, and the IRS has served more than 170,000 additional taxpayers in-person at Taxpayer Assistance Centers than last Filing Season.

Coverage of this subject was in yesterday’s Roundup, which is here.

And of course, controversy ensues over IRS’s numbers:

Conflicting IRS Level of Service Figures Raise Questions – Alexander Rifaat, Tax Notes ($):

A slight statistical inconsistency from the 2023 filing season could cast doubt over the accuracy of the 2024 filing season report card that the IRS touted as an improvement over last year…
Most notably, the IRS said it achieved an 88 percent level of phone service during the filing season, hailing it as an improvement from 84 percent last year. However, the 84 percent figure cited by the IRS for the 2023 filing season appears to contradict previous statements by Treasury that the agency achieved 87 percent in 2023.


What Day Is It?

Happy National Bean Counter Day! Celebrated by tax preparers in honor of Tax Day being in their review mirror (except for extensions).

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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.