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Tax News & Views Protect IDs Roundup

Jay Heflin
May 10, 2024
Hacker lurking in the internet at dark

Key Takeaways

  • IRS adds ID protections.
  • HSA increases.
  • Silence on corp rate increase.
  • EV credits get opposers.
  • Court updates.
  • PFIC rules in the hopper.
  • Refunds: going, going…
  • Messy rooms are messy.

 

To protect against identity theft, IRS adds additional protections to Centralized Authorization File, Transcript Delivery System; changes designed to protect sensitive tax pro, taxpayer information – IRS:

With identity theft and refund fraud an ongoing concern, the Internal Revenue Service today highlighted additional protections for tax professionals being taken to increase security for the Centralized Authorization File (CAF) program and placed new guidelines on requesting client transcripts by phone.
To address this issue, the IRS has a process in which suspected compromised CAF numbers are placed into a suspended status pending further review. Once placed into a suspended status, the owner of the CAF number will be contacted to confirm if the CAF number has been compromised. If the compromise is confirmed, the IRS will take the appropriate actions to address the compromised CAF number. The IRS recognizes the significance of the CAF process and is continuously working on ways to expedite this review process for impacted practitioners.

 

IRS Issues Health Savings Account (HSA) limits for 2025 – Bailey Finney, Eide Bailly:

The IRS has issued (Rev. Proc. 2024-25) the inflation-adjusted limits for Health Savings Accounts for 2025. The 2025 amounts, and the comparable amounts for 2024 and 2023...

HSA contribution limits for 2025 are $4,300 for single plans and $8,550 for family plans.

Health Savings Accounts are IRA-like accounts designed to accumulate funds for coverage of out-of-pocket health costs. Qualifying contributions generate an "above-the-line" deduction on 1040s, with no phaseouts for high-income filers.

HSA inflation-adjusted maximum contribution amounts for 2025 announced – Martha Waggoner, The Tax Adviser. “The IRS announced the updated amounts Wednesday in Rev. Proc. 2024-25, issued pursuant to Sec. 223(g). The revenue procedure also includes the revised maximum amount that may be made newly available for excepted-benefit health reimbursement arrangements (HRAs) under Regs. Sec. 54.9831-1(c)(3)(viii).”

The document is here.

 

On The Hill

Yesterday’s Roundup included an article reporting that some conservatives “want” to increase the corporate income tax rate. That group does not seem to include House Republicans:

House Republicans Seeking Corporate Rate Hike Are Mum So Far – Doug Sword and Cady Stanton, Tax Notes ($):

House Republicans supporting a hike in the corporate income tax rate are hard to find despite an assertion by the chamber’s top taxwriter that some of the more conservative members hold that view. 

Following the May 8 revelation from House Ways and Means Committee Chair Jason Smith, R-Mo., that some conservative members are open to raising the corporate rate to pay for other tax cuts, no Republicans have said they seek such an increase.

“It ain’t me, bro,” said Rep. Tim Burchett, R-Tenn., one of the eight House Republicans who voted to oust former House Speaker Kevin McCarthy seven months ago.

Reality check: Lawmakers sometimes say things that don't mirror how they vote. The truth is, most DC tax folks expect the corporate income tax rate to increase to help pay for extending expiring TCJA tax cuts. The hope among many DC tax folks is that the rate doesn't rise above 25%. 

 

Second Democrat to back effort to overturn Biden’s EV tax credit rules – James Bikales and Josh Siegel, Politico:

Sen. Sherrod Brown (D-Ohio) plans to back a Congressional Review Act resolution to overturn the Biden administration’s rules implementing the electric vehicle tax credit... Senate Energy Chair Joe Manchin (D-W.Va.) has already pledged to introduce a CRA to overturn the rules, which Brown plans to support 
If it were to pass the Senate, such a measure would likely pass the GOP-led House, but President Joe Biden would almost certainly veto it.

The final rules contain several concessions to automakers to continue sourcing batteries and minerals like graphite from China. The auto industry argued that without those provisions, every EV model on the market would be ineligible for the lucrative vehicle tax credit created by the Inflation Reduction Act.

Somewhat related:

Treasury's Energy Tax Credit Regs Leave Room For 'Chaining' – Kat Lucero, Law360 Tax Authority ($).

The Inflation Reduction Act of 2022 created two monetization methods, known as direct pay and transferability, to expand the options for tax-exempt entities and small companies with limited tax liability to efficiently access refundable clean energy credits that can be worth millions of dollars.

In final rules released this year on direct pay and transferability under Internal Revenue Code sections 6417 and 6418, Treasury prohibited the chaining of the two methods, in which a tax-exempt entity buys credits from a clean energy project owner and then elects a direct cash payment from the government for those credits.

Nevertheless, Treasury kept some hope alive in the final rules that it may allow chaining in certain circumstances, such as when a government entity needs to set up a separate business entity to capitalize on the credits because it is limited in its business activities.

 

Court Side

Tax Court Puts Abuse-of-Discretion Argument to Sleep – Caitlin Mullaney, Tax Notes ($):

There was no abuse of discretion by an IRS settlement officer who sustained a notice of federal tax lien (NFTL) filing against an anesthesiologist who owes the agency over $2.8 million, the Tax Court has held. 

In a May 9 memorandum opinion in Holley v. Commissioner, Judge Albert G. Lauber granted the IRS’s motion for partial summary judgment, finding that [the defendant] presented no genuine dispute of material fact showing an abuse of discretion by the IRS settlement officer in sustaining the NFTL filing against [the defendant].

 

Mich. Doctor Ordered To Stay In Jail Until Assets Repatriated – David Hansen, Law360 Tax Authority ($):

A Michigan doctor fighting accusations that he failed to report his foreign bank accounts will stay in jail, as a federal court declined to release him Thursday when he didn't comply with an order to deposit over $1 million to cover the judgment against him.

However, the court will allow [the defendant]. to file a brief on the issue of his release from custody and will allow the federal government to respond, according to an order from U.S. District Judge Gershwin A. Drain. [The defendant] is in jail after the court ruled he was in contempt for failing to comply with a January order to deposit $1.1 million into a bank to cover the penalty for failing to file reports of foreign bank and financial accounts.

 

Lack of Evidence Sinks Lobster Broker’s Tax Court Case – Kristen Parillo, Tax Notes ($):

A lobster broker’s trial strategy of critiquing an IRS auditor’s competency without offering any evidence to support his case resulted in the Tax Court upholding a deficiency notice treating business expenses as constructive dividends.

The taxpayer’s argument regarding purported flaws in the IRS’s audit “is no substitute for evidence,” Chief Special Trial Judge Lewis R. Carluzzo wrote in a May 9 summary opinion in Maderia v. Commissioner.

 

Ohio Doctor Who Said Vaccines Cause Magnetism Faces IRS Tax Suit - Tristan Navera, Bloomberg ($):

…[A] Cleveland-area physician who became a national lightning rod for claiming that Covid-19 vaccines magnetize people, is being sued for a tax bill by the IRS.

The IRS filed a complaint and summons in the US District Court for the Northern District of Ohio seeking to recover $202,000 in taxes, plus penalties, from the tax years 2001, 2012 and 2013. With the penalties, the balance owed to the government has grown to about $647,000, the complaint says.

 

International Zone

IRS Turning to Final PFIC Rules This Year, Official Says – Natalie Olivo, Law360 Tax Authority ($):

The Internal Revenue Service expects to "begin in earnest" this year on final regulations for partnerships that hold stock in passive foreign investment companies, including guidance that would treat partnerships as an aggregate of their partners, an agency official said Thursday.

The outlook for final regulations regarding partnerships with stakes in passive foreign investment companies, or PFICs, was outlined by Chad Rowland, a senior technical reviewer at the IRS Office of the Associate Chief Counsel, International. Rule writers are working through comments received on proposed rules and expect to "really get the wheels turning on those final regs this year," he said, speaking during a conference hosted by the Practising Law Institute in New York and broadcast online.

 

From the “Tick Tock” file

$1 billion in tax refunds from 2020 is about to expire – CNN:

The Internal Revenue Service said the deadline to claim the more than $1 billion in tax refunds from 2020 is about to expire. 

May 17 is the deadline for people who failed to file their 2020 tax return to become eligible for a refund.

The IRS said there’s no penalty for failure to file if a refund is due.

BTW, if you need help grabbing your green:

Let us help you relieve your tax headache – Eide Bailly:

Federal, state, local, and international tax burdens and responsibilities consume time and cash flow. Whether you’re an individual, a business, a nonprofit, or handling a trust or estate, proper planning and guidance from a well-versed professional can make managing taxes less painful.

Eide Bailly has the depth of tax resources to help you gain peace of mind. Plus, our professionals are supported by the National Tax Office, allowing clients to dig into specialized tax situations.

 

What Day Is It?

Oh, the irony! It’s National Clean Up Your Room Day and last night I brought my kid home from college - and yes his room is already a mess. 

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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.