Tax News & Views Basis Tax Boost Watch Roundup

Individual Taxes Would Surge 10 Percent if TCJA Expires, CBO Says - Doug Sword, Tax Notes ($):

National debt will exceed $50 trillion by 2034, budget watchdog estimates - Jacob Bogage, Washington Post. "The new figures add to the urgency facing policymakers in 2025 — and on the campaign trail — to tackle the nation’s financial health. Next year, vast portions of the tax code are set to expire, potentially forcing a steep tax hike on individuals and families. Congress suspended the debt limit in 2023, but that, too, will expire next year, setting up a showdown between the two parties over federal spending."

U.S. Debt on Pace to Top $56 Trillion Over Next 10 Years - Alan Rappeport, New York Times. "The C.B.O. also said an agreement by lawmakers, which Republicans insisted upon, to claw back $20 billion from the Internal Revenue Service would reduce revenues from corporate and individual income taxes by about $32 billion through 2034. That assumption stems from an expectation that the I.R.S. money would be used to crack down on tax cheats, resulting in more federal revenue."

Energy credit wage, apprenticeship rules issued.

IRS Clarifies Prevailing Wage and Apprenticeship Requirements - Mary Katherine Browne and Alexander Rifaat, Tax Notes ($):

Regs. cover green energy incentive wage and apprenticeship requirements - Martha Waggoner, The Tax Adviser. "The PWA requirements apply to all contractors and subcontractors of the taxpayer that employ laborers and mechanics. However, taxpayers claiming the increased credit or deduction are responsible for ensuring that the PWA requirements are satisfied."

Links: T.D. 9998; IRS press release 

Related: Eide Bailly Energy Incentive Program

Research credit refund rules eased

IRS Paves the Way for Easier Research Credit Refund Claims - Caitlin Mullaney, Tax Notes ($):

Related: Research & Development Tax Incentives

IRS attacks partnership basis shifting; challenges expected.

IRS Crackdown Takes New Aim at Partnerships’ Maneuvers - Richard Rubin, Wall Street Journal ($). "The proposals attack a technique known as basis shifting among related parties, where partnerships that share common ownership move tax basis from assets that can’t be depreciated—like stock and land—to assets such as equipment that can generate depreciation deductions. Sometimes, officials said, businesses repeatedly depreciate the same asset."

Planned IRS Rules on Partnership Maneuver Exposed to Challenges - Erin Schilling and Erin Slowey, Bloomberg ($). "But the tax code allows for a change in basis, tax professionals said, so regulations the IRS said it intends to release will likely be challenged in court. This latest move from the IRS comes as it sees an increase in Administrative Procedure Act litigation and awaits a pending Supreme Court case that could unravel some of its most controversial regulations."

Tax bill not dead yet? Kansas tax cut deal clears legislature. Oregon signs up for Direct File.

Just resting? An update from Politico's Burgess Everett says one important senator insists the House-passed tax bill, stalled since February in the Senate, isn't dead yet. "It’s been more than four months since the House passed a bipartisan tax bill marrying business tax breaks with an expanded child tax credit. And despite Congress' full-on slide into election season, Sen. Chuck Schumer says the bill is still alive."

Kansas Due for Tax Cuts as Lawmakers Pass Governor-Backed Bill - Michael Bologna, Bloomberg. "The most significant feature of the bill shifts Kansas from a three-bracket graduated income tax system with rates of 3.1%, 5.25% and 5.7%, to a two-bracket system with rates of 5.2% and 5.58%. The measure passed the Senate Tuesday morning by a vote of 34-4 and quickly won passage in the House by a vote of 121-2."

Oregon to Join Direct File for 2025; Pilot States to Stay - Benjamin Valdez, Tax Notes ($):

Blogs and bits

Tax ID theft victims waiting 2 years for refunds - Kay Bell, Don't Mess With Taxes. "Not only must they go through the process of alerting the IRS of the stolen identity and fraudulent refund claim, their wait for their rightful refunds takes much, much longer. In some instances, two years."

Will Filing Taxes Jointly Save Money? - E. Napoletano, Buy Side. "However, some couples may be better off filing separately, especially if they have unique financial circumstances including hefty unreimbursed medical expenses or one spouse with tax problems in their past."

Consent Order Signed by Debtor and IRS Does Not Preclude Additional Tax Assessments - Parker Tax Pro Library.  "The Eleventh Circuit affirmed the Tax Court and held that a Consent Order signed by a debtor in bankruptcy and the IRS was not a final determination of the debtor's tax liability for the years at issue."

Should You Handle Your Own IRS Tax Audit Or Hire A CPA Or Lawyer? - Robert Wood, Forbes. "Should an accountant or tax lawyer handle it for you? Either one is better than doing it yourself in my view. On average, I believe that taxpayers come out better if they don’t represent themselves. That’s so even taking the cost of professional fees into account. There are cases in which representing yourself can make sense, but they are rare."

Related: Eide Bailly IRS Exam Assistance

Five Things to Know about Trump’s Tariff and Income Tax Proposals - Erica York, Tax Policy Blog.

Untipped: Why Trump’s Tax Cut Promise Would Hurt Many Service Workers - Howard Gleckman, TaxVox. "One example: Half of wait staff in the US make $32,000 or less annually, according to the Bureau of Labor Statistics. A single worker making $32,000 would owe roughly $1,900 in federal income tax. But that’s only if they could not claim benefits such as the Child Tax Credit or the Earned Income Tax Credit. Most parents making $32,000 or less who receive those credits already pay no federal income tax."

Debt burdens, tariffs, and Up Wing thinking - James Pethokoukis, Faster, Please! "There are a lot of smart tax plans out there, but one favorite of mine, as well as many economists, is the elegant Bradford X tax, a flat tax-variant meant to simplify taxation and encourage savings and investment. It consists of a progressive household wage tax with no capital income tax, and a business cash flow tax allowing immediate deduction of investment costs. The business tax rate matches the highest wage tax rate, based on revenue targets and desired progressivity."

In the courts

Tax Court Admonishes CPA For 'Unbecoming' Tax Positions - Anna Scott Farrell, Law360 Tax Authority. The taxpayer "who headed the audit department for Rising Pharmaceuticals Inc. when the taxes accrued for 2018, claimed without support that his wages weren't taxable unless he invested them and converted them to gains, Judge Elizabeth A. Copeland said, upholding the tax deficiencies."

Oklahoma City man pleads guilty to attempting to impede federal tax laws - IRS (Defendant name omitted): "Court documents allege that beginning in 2017, Defendant, knowing of the IRS enforcement actions, forged the signature of an IRS revenue officer onto IRS forms, including an IRS Installment Agreement and an IRS Release of Levy, in an attempt to have levied funds paid to himself rather than be sent to the IRS."

Back to the old drawing board.

What day is it?

Happy Juneteenth! And Happy National Watch Day.