Tax News & Views: Lost 401(k) Falafels

The Employee Benefits Security Administration hit a snag earlier this year when the IRS refused to share plan data with the DOL, citing confidentiality rules. Now the agency is seeking voluntary submissions from plan sponsors to track down “lost” assets, unclaimed by participants or their beneficiaries when workers leave their jobs.

Regulators’ new focus on plan cybersecurity along with separate DOL enforcement initiatives is making that a hard sell for private-sector retirement plans. There is fear they could be exposing themselves to federal audits or private-sector litigation by handing over data willingly, or that they might risk that data falling into the wrong hands by sharing it at all.

The SECURE 2.0 Act Congress passed in December 2022 gave EBSA until the end of this year to collect data for a searchable online tool to find lost retirement income “in consultation with the Secretary of the Treasury,” but neither Congress nor the DOL expected the obstacles they’ve encountered.

The court should reverse a lower court's decision affirming that Fitzgerald Truck Parts & Sales LLC is eligible for the safe harbor exemption under Internal Revenue Code Section 4025(f)(1) , the government said Monday, because the company didn't repair an existing article as required by the first part of the statute. A judge and jury erred in finding that Fitzgerald is eligible for the safe harbor exemption for all its glider tractors, which are refurbished using glider kits containing new and refurbished parts, according to the government's brief.

Car buyers have received more than $1 billion in electric vehicle tax credits through a new program that allows for faster payouts, Treasury Department officials said.

The 2022 tax-and-climate law, known as the Inflation Reduction Act, allowed car dealers to receive advanced payments of the clean vehicle tax credits to transfer those credits directly to the buyer during the sale, rather than the buyer later claiming the credit on their tax return. The program took effect at the beginning of this year.

First, the Tax Forms and Publications Project Committee will meet July 16 at 3 p.m. Eastern time, a notice said. The following day, the Notices and Correspondence Project Committee will meet at 11 a.m. Eastern time, another notice said. Finally, the Taxpayer Advocacy Panel Joint Committee will meet July 25 at 3 p.m. Eastern time, a third notice said.

A federal judge gave final approval to a $5.1 million settlement agreement between GEICO Indemnity Co. and Georgia policyholders, concluding a suit accusing the insurance company of not fully covering the replacement costs of taxes assessed on vehicle purchases.

Life insurance proceeds increase the estate tax value of a closely held corporation and aren’t offset by its obligation to redeem a deceased shareholder’s interest, the Supreme Court ruled in Connelly v. United States.

In a unanimous opinion June 6 in Connelly v. United States, the Court ruled that “a corporation’s contractual obligation to redeem shares at fair market value does not reduce the value of those shares” in calculating estate tax.

The Taxpayer Advocate Service is warning taxpayers against trusting artificial intelligence-generated tax tips from major tax preparation companies.

Chatbots that utilize AI to provide answers to tax-related questions should be used with caution, especially when those answers concern complex areas of the tax code or unique tax situations, TAS said in a June 11 Tax Tips post. Both TurboTax and H&R Block have introduced generative AI assistants into their tax preparation services.