Key Takeaways
- IRS allies with states, tax industry against scams.
- New ERC regrets program combines with 30,000 new rejection letters.
- Taxpayer info leaks rarely prosecuted.
- Nebraska Governor says he will veto "watered down" special session tax cuts.
- Ways & Means meets the butter cow.
- Harris pushes $6K child credit.
- Child credit "arms race."
- IRS crimefighters in Bozeman.
- National Potato Day.
Programming Note: I will be hosting a free Eide Bailly webinar tommorrow, August 20, on Tax Planning Tips: Key Business & Individual Considerations. Register here.
IRS Forms Coalition to Combat Tax Scams With States, Industry - Benjamin Valdez, Tax Notes ($):
The Coalition Against Scam and Scheme Threats will work to expand outreach efforts on emerging tax scams, identify fraudulent returns at the point of filing, and improve fraud safeguards across federal and state tax systems, the IRS said in an August 16 release.
From the press release:
Numerous other scams and schemes continue to be seen circulating on social media and are highlighted through efforts including the annual IRS Dirty Dozen list and alerts from the Security Summit partners. The new approach will increase collaborative efforts to raise awareness and education about schemes, not just during tax season but throughout the year.
Apparently some tax ideas on TikTok may not be entirely legitimate.
IRS Releases Second ERC Voluntary Disclosure Program - Tonya Rule, Eide Bailly:
Under this Voluntary Disclosure Program, eligible participants return 85% of the ERC received and keep the remaining 15%, avoiding civil penalties and interest.
The IRS will mail up to 30,000 new letters to reverse and recapture potentially $1 billion in improper ERC claims. Taxpayers who learned they are ineligible for the 2021 ERC can use this new ERC Voluntary Disclosure program before receiving a denial notice/letter from the IRS.
Still not a good idea.
Taxpayer Data Leak Investigations Rarely Lead to Prosecutions - Benjamin Valdez, Tax Notes ($):
...
The report, which also details recent and ongoing data security audits by TIGTA, was requested in February 2023 by House Ways and Means Committee Chair Jason Smith, R-Mo., following the leak of a trove of taxpayer data to ProPublica by former IRS contractor Charles Littlejohn.
Link: TIGTA report.
Special session going out with a veto
Neb. Gov. Says He'll Veto Watered-Down Property Tax Cut Bill - Michael Nunes, Law360 Tax Authority ($):
...
Pillen had previously supported a bill, L.B. 1, that expanded the state's 5.5% sales and use tax and created a new 7.5% tax on digital advertisers with more than $1 billion in revenue in order to pay for property tax relief, but the bill failed to make it past the Revenue Committee.
More coverage: Gov. Pillen threatens veto over property tax caps - News Channel Nebraska.
Taxes on the Campaign Trail
U.S. House Ways and Means Committee highlights Trump tax law at Iowa State Fair - Robin Opsahl, Iowa Capital Dispatch. "The GOP committee members praised the 2017 tax law — a measure Trump has said he would extend and expand on as president — and the benefits seen by Iowa families and small businesses. U.S. Rep. Jason Smith, R-Mo., the committee chair, also drew a contrast between the 2017 law and measures like the Inflation Reduction Act enacted by the Biden-Harris administration."
Kamala Harris unveils populist policy agenda, with $6,000 credit for newborns - Jeff Stein, Yasmeen Abutaleb, and Dan Diamond, Washington Post:
The last item followed a suggestion earlier this month from Sen. JD Vance (Ohio), the GOP vice-presidential nominee, that the credit be raised from $2,000 per child to $5,000. Harris is also calling for restoring the Biden administration’s child tax credit that expired at the end of 2021, which raised the benefit for most families from $2,000 per child to $3,000.
Child Tax Credit ‘Arms Race’ Raises Budget Questions - Alexander Rifaat, Tax Notes ($):
Of all of Harris’s proposals, the restoration of the full refundability of the child tax credits, which were temporarily increased to up to $3,600 as part of the American Rescue Plan Act, would be the most expensive, costing an estimated $1.1 trillion.
Vice President Harris’s Tax Policy Ideas: Details and Analysis - William McBride, Erica York, Garrett Watson, and Alex Muresianu, Tax Policy Blog:
The package would establish a $25,000 down payment assistance program for first-time homebuyers. Previously, the Biden-Harris administration had proposed a combination of credits and direct support to support similar groups, but the new proposal is focused entirely on downpayment assistance. The Harris campaign proposal would provide an average of $25,000 for all eligible first-time homebuyers, with additional support for first-generation homebuyers. Depending on how the subsidy is structured and limited, the fiscal cost would be about $100 billion over four years, based on the plan’s aim of reaching 4 million first-time homebuyers.
Many, but not all, of Harris’s housing policy proposals flow through the tax code.
Reminder Corner
Are You Using the Right Tax Breaks to Boost Investment Returns? - Laura Saunders, Wall Street Journal. "Unlike in the past, there is an array of tax-sheltered account options that fall into five major buckets: traditional IRAs and 401(k)s; Roth IRAs and Roth 401(k)s; Health Savings Accounts (HSAs); 529 college-savings plans; and “taxable accounts,” which actually have superb tax breaks. These categories contain variations, such as traditional and Roth Solo 401(k)s for the self-employed and 403(b) plans for nonprofit employees."
IRS reminds truckers of upcoming tax deadline - IRS. The Internal Revenue Service reminds those who operate large trucks and buses that the deadline for filing Form 2290, Heavy Highway Vehicle Use Tax Return, is Tuesday, Sept. 3, 2024, for vehicles used in July 2024. The usual Aug. 31 deadline is delayed until the next business day because it falls on a Saturday this year.
Blogs and Bits
Connecticut & North Carolina to join IRS Direct File in 2025 - Kay Bell, Don't Mess With Taxes. "Twelve states — Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington, and Wyoming. — were part of the Direct File pilot program this year. The IRS rolled it out slowly during the 2024 tax filing season to test the free online program that it developed and operates, cutting out private sector tax prep software companies."
Tax Breaks: The Financial, Internet, And Elder Fraud Prevention Edition - Kelly Phillips Erb, Forbes. "The IRS continues to chase what it deems abuse of the ERC, announcing last week that over 460 criminal investigations have been initiated in connection with the claim. Their efforts appear to be paying off: last year, a preparer was indicted for allegedly filing over $124,000,000 in false ERC Claims. The staggering fraud has resulted in the IRS slowing down—and in some instances, stopping altogether—the processing of claims while they sort out those that are legitimate."
CSI-IRS: Bozeman
Bozeman construction company owner sentenced to prison, fined $75,000 for failing to pay taxes to IRS - IRS (Defendant name omitted, emphasis added):
The defendant, owner of Alpine Customs, Inc., pleaded guilty in April to failure to truthfully account for and pay over withholding and FICA taxes, a felony, and failure to file employer’s quarterly return and pay tax, a misdemeanor.
U.S. District Judge Dana L. Christensen sentenced Defendant to one year and one day in prison, to be followed by three years of supervised release. The court also fined him $75,000 and ordered $270,807 restitution, which is the remaining amount owed after Defendant repaid some of his outstanding balance prior to sentencing.
...
Defendant did not timely deposit several employee or employer payroll taxes from 2018 to 2021. Defendant knew of the requirements and his bookkeepers and IRS officers repeatedly advised Defendant of these legal obligations. In total, Defendant failed to timely pay $803,374 in employer and employee payroll taxes.
Sometimes business owners rationalize not paying over withheld taxes on the grounds that they are "borrowing" from the government and will pay them back. The government doesn't agree with the "borrowing" part. Still, the owners will definitely will pay it back, and more.
What Day is It?
Why, it's National Potato Day! The humble, tasty root that changed the world.