Key Takeaways
- Tax Day flushes accounts
- “Tax Teams” not “Working Groups”
- Funny story re: Stalled tax bill
- Money pool
- ERC grief
- Donor-advised funds regs
- Committing fraud is not good
- Pillar “Three”
- Bedtime reading
- Cleaning cabinet intrigue
Money-Market Assets Drop Most Since 2008 as Tax Day Takes Toll - Alexandra Harris, Bloomberg ($):
About $112 billion flowed out of US money-market funds in the week through April 17, according to Investment Company Institute data. Total assets dropped to $5.97 trillion from $6.08 trillion the week prior.
Ways and Means’ ‘Tax Teams’ - Naomi Jagoda, Bloomberg ($) (scroll down):
The teams are designed to help lawmakers prepare for 2025, when much of Republicans’ 2017 tax law is set to expire. Smith emphasized in a brief interview after a huddle with some Ways and Means members Thursday morning that the committee is referring to these groups as tax teams, rather than “working groups,” as previous committees have formed.
“Tax teams are different from working groups, because working groups is when you’re trying to fix a problem,” Smith said. “Tax teams is when you’re trying to plan for success.”
BTW: Don’t call them “working groups.” You will be corrected by tax folk on Capitol Hill.
The reason these “Tax Teams” are being created is because few members currently on the House Ways and Means Committee were on the panel when the Tax Cuts and Jobs Act was enacted in 2017. They need to better understand its provisions, which will be the subject of much debate in 2025, and possibly longer.
Regarding the tax bill that is stalled in the Senate, which includes R&D expensing for domestic costs, ups bonus depreciation to 100%, and expands the business interest deduction and the Child Tax Credit, to name a few of its provisions:
Wyden Talks Tax Bill - Naomi Jagoda, Bloomberg ($) (scroll down):
“I believe that if we had a vote on the floor of the United States Senate for what’s come to be called the Smith-Wyden tax bill, we would get well over 60,” he said Thursday during a session at the Semafor World Economy Summit. Wyden took the lead in negotiating the bill along with Ways and Means Chair Smith.
Funny story: I was in a meeting yesterday with a Senator who sits on the Senate Finance Committee.
He said that if anyone tells you there is a plan to move this bill forward they are lying to you. He also said that the longer this bill awaits action the less chance there is that action will happen on it. The bill has been stalled in the Senate for over two-and-a-half months. Tick. Tock.
IRS Updates
Contractors Reap Windfall From IRS Transformation – Lauren Loricchio, Tax Notes ($):
A slide deck posted on SAM.gov from an Inflation Reduction Act industry day event in February outlines the agency’s proposals for dozens of contracting opportunities in the coming years.
Despite moratorium, IRS gets 20,000 ERC claims weekly, Werfel says – Martha Waggoner, The Tax Adviser:
Werfel's comments came as Committee Chairman Sen. Ron Wyden, D-Ore., questioned him about the ERC and whether a tax bill — passed by the House in January and now stalled in the Senate — would help the IRS fight fraud in the program.
There is tax legislation that would move the ERC submission deadline from April 15, 2025 to January 31, 2024. However, that bill is stalled in the Senate.
Here is what Werfel said at the committee hearing about the incoming ERC claims:
Capitol Hill Recap: Once More, With Feeling! – Jay Heflin, Eide Bailly:
Exhibit A:
Bogus 'tax service specialists' duped business owners in latest Covid relief debacle, IRS says – Laura Strickler and Ken Dilanian, NBC News:
Then he started to get bombarded by telemarketers who were claiming to be “tax service specialists,” telling him he qualified for a special IRS pandemic relief credit. Among hundreds of calls and emails, he signed up with a company and agreed to pay a 10% fee. He ended up with a check for $330,000 — money he plowed back into his business.
Cut to the chase: Volner was not eligible for the ERC. He now must repay the money he used to pay his employees with funds he does not have..
Donor Fund Rules Unlikely To Be Retroactive, Officials Say – David van den Berg, Law360 Tax Authority ($):
The retroactive effect of the proposed rules — which would apply for tax years ending after they are finalized and published but permit reliance on them before publication — wasn't intentional, said Amber MacKenzie, an attorney-adviser in Treasury's Office of Tax Policy. She spoke during a Georgetown Law Office of Executive and Continuing Legal Education conference panel held in Washington, D.C., and online.
Lawmakers Press IRS on Identity Theft Case Backlogs and Delays – Chris Cioffi, Bloomberg ($):
“Taking years to identify and resolve ID theft victims’ claims and problems is unacceptable, and both the delinquent resolution time and sheer volume of this backlog needs to be improved rapidly,” said Senate Finance Committee ranking member Mike Crapo (R-Idaho) during the committee’s April 16 hearing with IRS Commissioner Danny Werfel.
Court Side
Clinic Head Gets 9 Years For Medicare Kickback, Tax Scheme – Anna Scott Farrell, Law360 Tax Authority ($).
[The defendant], who ran several clinics in Brooklyn and Queens, was sentenced Wednesday for charges relating to what federal prosecutors say was his leadership role in a massive scheme that defrauded Medicaid and Medicare of more than $222 million. [The defendant] pled guilty last year to conspiracy to receive and pay healthcare kickbacks and conspiracy to defraud the Internal Revenue Service, according to court documents.
Court: No Theft Loss Deduction for ‘Stolen’ Controlling Interest – Kristen Parillo, Tax Notes ($):
A controlling interest isn’t a thing of value that can be the subject of a deductible theft loss under section 165, Judge Patrick J. Urda held in an April 18 memorandum opinion in Giambrone v. Commissioner.
Atty In Tax Fraud Must Pay Full $2.5M Per Plea Deal, Feds Say – Anna Scott Farrell, Law360 Tax Authority ($):
[The defendant], who pled guilty in March 2023 to one count of conspiracy to defraud the federal government, has proposed a restitution order that violates his plea agreement and "surreptitiously inserts improper limitations" on the Internal Revenue Service, prosecutors said in a sentencing memo.
International Zone
EU Split Stops Move Toward Corporate Tax Harmonization – Bengt Ljung, Law360 Tax Authority ($):
After intense, eight-hour talks on how to boost the EU's economic competitiveness and capital markets, leaders from the 27-country bloc cut wording from the final conclusions that in earlier draftscalled for "harmonizing relevant aspects ... of corporate tax law to foster equity investment."
I attended a meeting yesterday full of D.C. tax pros. They referred to the EU tax situation as “Pillar Three,” meaning there could be no consensus on taxes between the EU countries and the U.S. will have to deal with them individually.
From the “Trouble Sleeping? Read This” file:
IRS releases 2023 Data Book describing agency’s transformation through statistics – IRS:
For FY 2023, the IRS collected approximately $4.7 trillion, or about 96 percent of the funding that supports the federal government’s operations — to fund everything from education to national defense.
During FY 2023, the IRS processed more than 271.4 million tax returns and other forms, including more than 163.1 million individual income tax returns.
The Data Book is here.
What Day Is It?
Today can be fun and alarming. It’s National Clean Out Your Medicine Cabinet Day! Tread carefully!