Tax News & Views Tries to Hitch a Ride with the FAA Roundup

Could FAA Bill Be a Last-Chance Home for the Tax Package? - Cady Stanton and Doug Sword, Tax Notes ($):

The Senate teed up what appears to be the last legislative vehicle for months that could accommodate the bipartisan tax package, but senators who support the tax bill aren’t confident the chamber will take that path.

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The Senate moved April 20 to renew the Federal Aviation Administration’s authorization to impose excise taxes, which expired September 30, 2023, and has been temporarily extended three times. With fewer than 60 in-session days scheduled in the Senate before the November election, the May 10 expiration of the FAA’s taxing authority could offer among the last vehicles for a tax package to hitch a ride before a lame-duck session.

This, of course, the the tax bill passed overwhelmingly in the House of Representatives in February. That bill would have restored current deductions for domestic research costs, allowed 100% bonus depreciation, and eased deduction limits for business interest while ending the fraud-ridden employee retention credit program.

One Senator said "hope springs eternal," but that might not be the way to bet.

Still-Stalled Business Break Tax Bill Helped Drive Lobbying Jump - Chris Cioffi and Samantha Handler, Bloomberg ($):

The House-passed tax bill helped drive millions in spending on federal lobbying in the first quarter of 2024 as businesses sought to advance the now-stalled legislation aimed at restoring expired tax breaks and boosting the child tax credit.

Filings from heavy hitters like the US Chamber of Commerce and the Business Roundtable showed a boost in spending, including on advocacy for the tax bill. At least 340 companies and groups listed the legislation in their lobbying filings, representing interests ranging from housing and child welfare advocates to universities, county governments, and industry groups.

It hasn't worked.

Unfinished bills, tax law preparation push lobbying spending up - Caitlin Reilly, Roll Call:

The 2017 tax provisions due to expire at the end of 2025 are at the very top of everyone’s radar, lobbyists said. The political environment has changed since 2017, including turnover on the House and Senate tax-writing committees and a growing populist bent in both parties, Page said.

“Taken together, it really requires that stakeholders take a proactive approach to educate members on policies and why they’re in place and whether they need to be renewed or tweaked,” she said. “If they wait until next year it is going to be too late because, at that point, things are going to be moving very quickly.”

IRS Leak Victim's Lawsuit Trimmed

Judge Allows Griffin’s IRS Suit But Dismisses Privacy Claims - Madlin Mekelburg, Bloomberg ($):

A judge allowed Ken Griffin’s lawsuit accusing the Internal Revenue Service of leaking his confidential tax information to proceed, but dismissed his claim that the agency broke privacy laws by failing to safeguard his data.

US District Judge Robert N. Scola Jr. in Miami ruled on Monday that Griffin’s primary claim — that the IRS wrongfully disclosed his confidential information — can move forward. But the judge said the billionaire had failed to provide enough evidence that he suffered financial harm to proceed with his second claim over privacy violations.

Billionaire's Privacy Claims Dismissed in Data Leak Suit - Caitlin Mullaney, Tax Notes ($):

In an April 22 order in Griffin v. IRS, Judge Robert N. Scola Jr. of the U.S. District Court for the Southern District of Florida denied the government’s motion to dismiss for lack of subject matter jurisdiction a section 6103 claim by Kenneth C. Griffin of Citadel LLC that the IRS illegally inspected and disclosed his confidential information.

Griffin, the second largest Republican political donor in the 2022 midterm elections, filed a complaint in December 2022, alleging that the IRS failed to establish adequate safeguards to protect confidential tax information and that its employees exploited that failure in accessing his data and disclosing it to ProPublica. In April and July 2022, ProPublica published articles that included his tax information.

Ministry of Magic steps in.

Indicted 'Magician' Tax Preparer's Clients Under Scrutiny - Pete Brush, Law360 Tax Authority ($):

Clients of a New York City-based tax preparer who earned the nickname "the magician," allegedly making $15 million while fraudulently depriving the IRS of $100 million, may also face charges, a prosecutor told the federal judge in charge of the case on Tuesday.

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Asked by the judge on Tuesday if the Manhattan U.S. Attorney's Office is considering additional charges, prosecutor David Felton said a superseding indictment could contain forfeiture allegations against the defendant.

"We are continuing to interview additional former clients of Mr. Alvarez," Felton added. "In certain cases, if the conduct is sufficiently egregious, we may consider bringing charges."

We are all responsible for our own returns. A crooked preparer doesn't necessarily shield crooked clients.

In other news

Colorado Governor Signs Bills Backed by Sales and Use Tax Task Force - Emily Hollingsworth, Tax Notes ($). "Colorado bills to create reporting standards for local lodging tax and to hold retailers harmless for errors made by the state’s sales and use tax tracking tool have been signed into law."

Tax Breaks: Was It The Best Tax Filing Season In Years? - Kelly Phillips Erb, Forbes. "A little related Tax Day advice? If the day flew by and you missed it, or didn’t get around to filing a return, don’t give up. You can still file. Missing the deadline isn’t the end of the world, but since the failure-to-file penalty is based on time, the sooner you can file, the better."

If taxpayers missed the deadline to file a federal tax return, the IRS can help - IRS. "Even if a taxpayer can't afford to immediately pay the full amount of taxes owed, they should still file a tax return and pay as much as possible. This reduces interest and penalties on the outstanding amount and may help avoid a possible late-filing penalty."

The IRS says it’s going after wealthy tax cheats. Here’s what new audit stats show. - Andrew Keshner, MarketWatch:

In the most recent year of finalized audit data, the 2019 tax year, the IRS said it subjected 11% of returns with total positive income of at least $10 million to audits. One year earlier, 9.9% of these supersized returns were audited, and the year before that the audit rate was less than 7%.

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The nearly 600,000 audits closed in fiscal year 2023, for returns of all sizes, recommended $31.9 billion in extra taxes, up from more than $30 billion a year earlier.

Blogs and bits

Tax records to keep, and for how long - Kay Bell, Don't Mess With Taxes. "While it's tempting to just toss it all, don't. It often takes the Internal Revenue Service a while to process filings. The agency could come back weeks, months, or even years from now with a question about an entry on your return."

Final Regulations Modify the Definition of Short -Term, Limited-Duration Insurance - Parker Tax Pro Library. "Short-term, limited-duration insurance (STLDI) is a type of health insurance that is primarily designed to fill temporary gaps in coverage that may occur when an individual is transitioning from one plan or coverage to another, such as transitioning between employment-based coverages."

IRS Releases Digital Asset Draft Form 1099-DA - Ronald Marini, The Tax Times. "The IRS intends to have the cryptocurrency reporting done on a new form, Form 1099-DA."

National Volunteer Week: Being a Hero in Your Community - Erin Collins, NTA Blog:

This week, we celebrate National Volunteer Week to recognize and thank those who give their time to serve their communities, assist taxpayers in need, and provide support for individuals who may not be familiar with the tax system.

At LITCs, volunteers help answer phones, take applications, translate tax education materials, interpret at local education events, present tax talks, advocate for taxpayers with the IRS, and participate in pre-trial settlement days and calendar calls for the U.S. Tax Court on behalf of numerous individuals. During my term as the National Taxpayer Advocate, it has been heartwarming to see so many of the students who took part in a clinic for academic credit at a law or business school continue to volunteer at LITCs after they complete the clinical course. Giving back and helping others is rewarding and gratifying.

Throughout the country, volunteer attorneys, certified public accountants, and enrolled agents have stepped up to help LITCs expand their reach by taking on cases pro bono that the clinic does not have the staff to handle. Volunteers are essential in protecting taxpayer rights by enabling their ability to challenge the IRS’s position and be heard, ensuring individuals only pay the amount of tax due, and helping safeguard the right to a fair and just tax system. These volunteers make a difference!

You can find a list of Low-Income Tax Clinic sites here.

Who Pays Corporate Taxes? Look in the Mirror - Phil Gramm and Mike Solon, Wall Street Journal. "If you consume, you pay the corporate tax. If you consume and work for a corporation, you pay the corporate tax twice. If you consume, work and invest your retirement funds in corporate equities, the corporate tax rate hits you three times"

Lessons from the courts

Deepwater man sentenced for $500,000 CARES Act fraud - IRS. "A Deepwater, Mo., man was sentenced in federal court today for fraudulently obtaining more than $500,000 in Paycheck Protection Program (PPP) loans under the Coronavirus Aid, Relief, and Economic Security (CARES) Act."

The result is a nine-year prison term. You might say he's in... deep water.

Tax Protester’s Argument Doesn’t Have a Prayer in Tax Court - Kristen Parillo, Tax Notes. "A Nevada woman’s claim that she is immune from taxation because God had appointed her as a minister plenipotentiary was dismissed as 'tax protestor gibberish' by the Tax Court."

If there were documentation for the appointment, it would be of interest to a much broader group than tax people, but none is mentioned in the Tax Court opinion. It does, however, describe an interesting motion filed by the taxpayer (name omitted here):

There is more, much more, all culminating in a motion dated February 28th of last week for injunctive relief and final judgment in her favor, in which she claims $100,000 in damages for tax years 2020 through 2023 and exemption from all Federal, state, and county taxation tax penalties and the like for Petitioner..., Petitioner's current or future businesses, and each lineage member of the estate appointed, established, and authenticated by minister plenipotentiary of the estate for seven generations or for 202 years, whichever is first and congruent, unquote.

It didn't work. Maybe if it were 8 generations and 199 years...

What day is it?

It is both "National Pigs in a Blanket Day" and "Administrative Professionals Day." I'm sure the administrative team would like nothing better than little hot dogs wrapped in bread.

Tax News & Views Tries to Hitch a Ride with the FAA Roundup

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Joe B. Kristan, CPA