Tax News & Views Priority Hamburger Guidance Roundup

AICPA makes recommendations to IRS on next Priority Guidance Plan - Martha Waggoner, The Tax Adviser:

"As the IRS plans to prioritize providing additional guidance as stated in strategic initiative 1.7 in the IRS Inflation Reduction Act (IRA) Strategic Operating Plan, we encourage the IRS to issue guidance on the areas that we have suggested," says a letter to the IRS, dated May 17 and signed by Blake Vickers, CPA, CGMA, chair of the AICPA Tax Executive Committee (TEC).

An important item noted in the AICPA letter is the need for more guidance on the tax treatment of payments and - especially - refunds - of "pass-through entity taxes" (PTETs) enacted to work around the $10,000 cap on itemized deductions for state and local taxes. Many taxpayers are blissfully unaware that deductions by partnerships or S corporations at the entity level might lead to taxable personal refunds.

Expiring tax cuts and deficits

Republicans’ $4 Trillion Question: Should They Pay for Extending Trump Tax Cuts? - Richard Rubin, Wall Street Journal:

Extending all expiring individual and estate tax cuts, along with business-tax changes Republicans favor, would reduce projected revenue by $4 trillion over a decade, according to the congressional Joint Committee on Taxation. That would come atop $20 trillion in new deficits projected under current laws.

Next year’s tax debate will happen against a very different fiscal backdrop than existed in 2017 when the tax law was enacted. Then, the budget deficit was 3.4% of gross domestic product. Now, it is routinely above 5%, because of spending increases, the aging population, interest costs and the tax cuts. And interest rates are much higher.

Will Congress consider "adulting?"

“There’s a big enough bloc, I think, even on our side who will look for pay-fors,” said Rep. David Schweikert (R., Ariz.), who said changes to restrain healthcare costs and improve government technology could be on the table. “It may be our opportunity to actually do some adult policy instead of theatrics.”

GOP Turnover, Enduring Dem Anger Intersect on TCJA Rewrite - Doug Sword, Tax Notes ($):

Next year’s rewrite of the tax code is complicated by Republicans remembering too little of the bruising partisan fight over the 2017 overhaul and Democrats remembering too much.

Only five of the 25 Republicans on the House Ways and Means Committee sat on the panel when it advanced the Tax Cuts and Jobs Act seven years ago, with 2017’s least senior Republican — Rep. Jason Smith, R-Mo. — now chairing the committee.

...

Compare that to the 11 Democrats still on the committee who recall the TCJA being jammed through in 51 days from introduction to passage in November and December 2017 and who cast "no" votes. They also recall taking back control of the House two years later, running on a debatable platform that the TCJA benefited the wealthy and large corporations to too great a degree.

The Tax Angle: TCJA Stalemate, Corp. Rates, Tax Preparers - Stephen Cooper, Law360 Tax Authority ($):

The Tax Relief for American Families and Workers Act is dead in the water in the Senate. Negotiations there have completely broken down over the bipartisan House-passed bill to renew key parts of the GOP's 2017 tax overhaul, Senate Finance Committee ranking member Mike Crapo, R-Idaho, told Law360.

"The negotiations have been stalled for some weeks now, and there still are no negotiations at this point," Crapo said of the House-passed bipartisan tax bill that would extend the full tax break for research and development costs and expand the child tax credit for multiple years.

Penn Wharton Estimates Economic Effects of Biden’s 2025 Budget - Tax Notes ($). "President Biden’s fiscal 2025 budget plan would cut primary deficits by $1.7 trillion through 2034 and, accounting for economic feedback effects, the GDP would fall 1.3 percent and the federal debt would drop 5.4 percent by 2054, but U.S. fiscal policy would remain unsustainable, the Penn Wharton Budget Model estimated in a May 22 report."

Link: Penn Wharton Budget Model article.

IRS secrets, zappers, disaster deadlines.

IRS Partnership Audit Paper Still a Mystery After FOIA Suit Ends - Kristen Parillo, Tax Notes ($). "A tax attorney has dropped his lawsuit against the IRS for access to a paper purportedly detailing the agency’s more aggressive approach to auditing large partnerships, but neither side will confirm whether the paper was handed over."

As the teacher would say in junior high, let's share that note with the rest of the class.

New York Bill Would Criminalize 'Zapper' Sales Tax Fraud - Emily Hollingsworth, Tax Notes ($). "S. 2266 would create a new criminal offense: defrauding of the government in the first degree. The offense is defined as knowingly manufacturing, installing, or using automated sales suppression devices “for the purpose of enabling or assisting any person to evade any tax” owed to the state or a political subdivision, according to the bill. It would be a Class D felony."

IRS reminder to storm victims in 7 states: June 17 filing and payment deadline - IRS:

The Internal Revenue Service today reminded individuals and businesses in parts of seven states that their 2023 federal income tax returns and tax payments are due on Monday, June 17, 2024....

The June 17 deadline applies to taxpayers affected by seven different disaster declarations. These include:

-One county in California: San Diego.
-One county and two tribal nations in Connecticut: New London County, and the Tribal Nations of Mohegan and Mashantucket Pequot.
-Nine counties in Michigan: Eaton, Ingham, Ionia, Kent, Livingston, Macomb, Monroe, Oakland and Wayne.
-Seven counties in Maine: Androscoggin, Franklin, Kennebec, Oxford, Penobscot, Piscataquis and Somerset.
-Nine counties in Tennessee: Cheatham, Davidson, Dickson, Gibson, Montgomery, Robertson, Stewart, Sumner and Weakley.
-Two counties in Washington: Spokane and Whitman.
-Six counties in West Virginia: Boone, Calhoun, Clay, Harrison, Kanawha and Roane.

Blogs and Bits

Iowans hit by April 26 tornadoes get disaster tax relief - Kay Bell, Don't Mess With Taxes. "This latest Internal Revenue Service disaster relief applies to individuals and households that live or have a business in Clarke, Harrison, Mills, Polk, Pottawattamie, Ringgold, Shelby, and Union counties."

Before your teen starts a summer job, have ‘the talk’ about taxes - Morey Stettner, Market Watch. "Teen employment hit a 14-year high in 2023. Many of these new wage earners are only vaguely aware of taxes — until they open their first paycheck and lament all the deductions."

Tax Breaks: As Summer Begins, The Tax World Shows No Signs Of Cooling Off - Kelly Phillips Erb, Forbes. "Some retirees continue to make a key mistake with required minimum distributions (RMD). When a taxpayer doesn't need the RMD to pay living expenses, some may move the money to a Roth IRA, treating it as a conversion of the RMD to a Roth IRA. Others try to rollover the money to a different IRA or qualified retirement plan. Neither action is allowed. An RMD misstep can carry a significant penalty, so it pays to ask for help."

Termination of Marital Trusts Did Not Result in Gift Tax Liability - Parker Tax Pro Library. "The Tax Court held that a taxpayer did not incur gift tax liability when marital trusts in which she held an income interest for life, and with respect to which a qualified terminable interest property (QTIP) election was made on her late husband's estate tax return, were terminated by a state court and the underlying property held by the trusts consisting of shares of stock was distributed to the taxpayer because she made no gratuitous transfer as required by Code Sec. 2501."

Tax Crime Watch

Arizona man admits to $4.4 million conspiracy to defraud IRS - IRS (defendant names omitted):

Defendants were relatives who worked together and with others to steal victims’ identities, which they used to file false tax returns and fraudulently receive tax refunds from the IRS. They electronically submitted tax documents to the IRS falsely claiming that the individual taxpayers listed on those documents had earned certain income or won thousands – and in some cases millions – of dollars in gambling and lottery winnings. The false filings also claimed tax withholdings on the purported income or gambling winnings that entitled the tax filer to refund payments from the IRS.

The Defendants and others typically submitted these fraudulent tax filings using the names and personal identifying information of individual taxpayers without their knowledge or permission. The fraudulent filings caused the IRS to pay lucrative tax refunds, totaling $4.49 million, which the Defendants and others directed to various bank accounts that they controlled.

Identity theft tax fraud still happens. It can be a nightmare for ID theft victims. You might find it inconvenient to, for example, use your tax preparer's upload portal to exchange tax information, rather than just sending it as an unsecured email attachment, but having your ID stolen because you are careless with your tax documents takes inconvenience to another level.

What day is it?

It's National Hamburger Day! It's hard to believe we have to work on a day of such cultural importance.

Tax News & Views Priority Hamburger Guidance Roundup

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Joe B. Kristan, CPA