Tax News & Views Corporate Tax Rate and Bacon Roundup

Programming Note: Joe Kristan will be hosting a free Eide Bailly webinar today, August 20, on Tax Planning Tips: Key Business & Individual Considerations. Register here.

Business tax account now gives many business taxpayers new options for making payments easier; available in both English, Spanish; more features coming soon - IRS:

Launched last fall, BTA is a key part of the agency’s service improvement initiative funded under the Inflation Reduction Act (IRA). When fully developed, BTA will allow many types of business taxpayers to check their tax history, make payments, view notices, authorize powers of attorney and conduct other business with the IRS.

With the latest expansion, an eligible business taxpayer can now use BTA to pay Federal Tax Deposits (FTDs) and see and make a payment on their full balance due – all in one place. The account is also now accessible in Spanish with more translations planned.

Now That the Coca-Cola Tax Appeal Can Begin, What's At Stake? - Ryan Finley, Forbes:

The monetary stakes in Coca-Cola are staggering. Lauber’s final decision, which concerns only the 2007 through 2009 tax years, resulted in a total tax liability of about $2.7 billion and a further $3.3 billion in accrued interest. According to Coca-Cola’s most recent Form 10-Q filing with the SEC, the company’s total tax and interest exposure would rise to about $17 billion through the first half of 2024 if the method endorsed by the Tax Court were applied to all subsequent tax years. The broader effects of the case’s outcome on the integrity of the section 482 regulations, and tax administration in general, are orders of magnitude greater.

Tax Guidance, from Summer Camps to Currency

Child and Dependent Care tax credit can help offset summer day camp expenses - IRS. "Many working parents arrange for care of their younger children under age 13 during the summer. A popular solution is a day camp program, which can sometimes also lead to a tax benefit. Taxpayers who pay for the care of a child, or other qualifying person, so they could work or look for work may be able to take the credit for child and dependent care expenses."

IRS issues important interim guidance on employer matching contributions made to returement plans related to employee student loan payments - IRS:

Notice 2024-63 PDF, posted today on IRS.gov, implements section 110 of the SECURE 2.0 Act of 2022, which for the first time permits employers to provide matching contributions for employees based on their payments on student loans.

The 2022 legislation permits employers with a 401(k) plan, 403(b) plan, governmental 457(b) plan or SIMPLE IRA plan to provide matching contributions based on student loan payments, rather than based only on elective contributions to retirement plans, in plan years beginning after Dec. 31, 2023.

Currency Loss Regs Reduce Mark-to-Market Election Flexibility - Andrew Velarde, Tax Notes ($):

The IRS is changing procedures on foreign currency gain and loss elections to make them more consistent with other filing requirements while reducing flexibility for mark-to-market elections. The IRS and Treasury on August 19 released proposed regs (REG-111629-23) and partially withdrew proposed regs from December 2017 (REG-119514-15).

According to the preamble to the newly proposed regs, practitioners raised concerns over inconsistency with other CFC filing requirements, including related to the global intangible low-taxed income provision. There were also fears of inconsistencies in the treatment of a controlling U.S. shareholder with a matching tax year to the CFC and a shareholder that owns a CFC with a short or different tax year. As such, the proposed regs provide that a U.S. shareholder makes an election by filing a statement with the tax return for its tax year “in which or with which” the tax year of the CFC ends.

Tax Policy Corner

Credit Unions Reject Banks' Criticism of Tax-Exempt Status - Fred Stokeld, Tax Notes ($):

“Notably, today's multi-billion-dollar credit unions have outstripped their public mission and tax-exempt purpose and are now even leveraging their tax-exemption to purchase tax-paying community banks,” the ICBA’s Rebeca Romero Rainey wrote. “The pace of these acquisitions in recent years is driving the consolidation of financial services across all markets, to the harm of consumers and small businesses.”

Modern credit unions exploit a tax exemption established to “serve people of modest means” within defined membership fields, the ICBA alleged. Today’s largest credit union, Navy Federal, has assets of $168 billion, “dwarfing the size of a typical community bank with assets of less than $1 billion,” the letter said.

Credit Union representatives argue:

“The banks’ old adage of credit unions misusing their tax-exempt status is tired and worn out,” Carrie Hunt of America’s Credit Unions said in an August 16 statement to Tax Notes.

“Credit unions pick up the pieces when banks move out and create a financial desert for communities, leaving many at financial risk,” Hunt said. The credit union industry “has taken this responsibility bestowed by Congress seriously since 1937, and we don’t plan on stopping any time soon.”

Taxes on the Campaign Trail

House GOP Taxwriters Warn of Impacts From Letting TCJA Expire - Cady Stanton, Tax Notes($):

With no Democrats from the committee in attendance in Des Moines, Iowa, to defend their caucus’s position, GOP members claimed that Vice President Kamala Harris — the Democratic presidential nominee — intends to allow all those TCJA provisions to expire should she take office. The TCJA, drafted and voted for exclusively by Republicans, made some provisions, such as the 21 percent corporate tax rate, permanent while scheduling others to expire at the end of 2025.

Ways and Means Committee Chair Jason Smith, R-Mo., said the panel’s Republican tax teams focused on the upcoming tax cliff are holding listening sessions and field hearings to stop the “Biden-Harris tax hike.”

Harris Calls for Expanded Child Tax Credit, 3 Million New Housing Units - Andrew Restuccia, The Wall Street Journal:

In Friday’s roughly 25-minute speech, the vice president and Democratic nominee proposed restoring the expanded child tax credit of up to $3,600 a child, which was put in place in 2021 amid the Covid-19 pandemic and expired at the end of that year. She also threw her support behind a new further expansion of the tax credit that would provide up to $6,000 in total relief for middle- and low-income families during the first year of a child’s life.

Kamala Harris Backs 28% Corporate Tax Rate - Andrew Restuccia, The Wall Street Journal. "Vice President Kamala Harris has endorsed increasing the corporate tax rate to 28% from 21%, her campaign said Monday, echoing President Biden’s position on the matter. While it isn't surprising that Harris backs a core part of Biden’s economic agenda, it is nonetheless notable because it offers insight into her economic agenda. The tax hike would help pay for the other economic policy proposals she has put forward over the past week, including a large expansion of the child tax credit."

Harris's Homeownership Plan Hinges on Construction Credits - Alexander Rifaat, Tax Notes ($):

Proposed changes to a tax credit aimed at increasing America's housing supply could be key to the Democratic presidential nominee Kamala Harris's plan to boost first-time homeownership.

As part of the economic agenda she unveiled August 16, which includes increases to the child tax credit, Vice President Harris is seeking to provide incentives to first-time homebuyers in the form of credits worth up to $10,000, as well as down payment assistance worth up to $25,000.

Accounting professor tax evasion

Mercer County accounting professor found guilty of tax evasion and filing false tax returns - IRS (Defendant name omitted):

According to documents filed in this case and the evidence at trial:

During tax years 2014 through 2017, Defendant was a professor of accounting at a university in Pennsylvania as well as the co-owner of Healthcare Pharmacy in Trenton, New Jersey. Healthcare Pharmacy was organized as an S corporation, the income of which flowed through to Defendant and his wife and was to be reported on their personal income tax returns. Defendant prepared fraudulent books and records for Healthcare Pharmacy inflating the pharmacy’s costs of goods sold to reduce and underreport the pharmacy’s actual profits flowing through to Defendant and his wife. In the fraudulent books and records, among other things, Defendant identified certain wire transfers as payments to purchase goods sold by the pharmacy when these wire transfers were in fact made to personal bank accounts under Defendant's control and to bank accounts in Nigeria associated with an automotive company under Defendant's control. Each of Defendant's tax returns for tax years 2014 through 2017 falsely underreported his income and falsely reported that he had no financial interest in or signature authority over any foreign bank accounts. Defendant failed to report approximately $3.28 million in income from the pharmacy, resulting in the evasion of approximately $1.25 million in tax due and owing.

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Tax News & Views Corporate Tax Rate and Bacon Roundup

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