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Tax News & Views Credits New Types of Technology Roundup

By Joe Kristan
January 8, 2025
Maybe a Hemmingway typewriter

Key Takeaways

  • Don't sleep on that Fourth Quarter payment.
  • Energy credits get wider reach under new regulations.
  • Trump sows confusion in tax bill strategy.
  • SALT cap foes set to meet President-elect.
  • Congress wants to stay out of tariffs.
  • Tax penalties are murder.
  • Typing Day.

IRS reminder: Final 2024 quarterly estimated tax payment due Jan. 15 - IRS.

The Internal Revenue Service today encouraged taxpayers who paid too little tax in 2024 to make a fourth quarter estimated tax payment on or before Jan. 15, 2025.

Income taxes are pay-as-you-go, meaning taxpayers must pay most of their tax throughout the year in which their income is earned or received. Usually this is done by withholding tax from paychecks or by making quarterly estimated tax payments to the IRS (or by a combination of both).

However, taxpayers who pay quarterly sometimes overlook this step, and missing a quarterly payment can result in unexpected penalties and fees when they file their returns in 2025.

...

The best way to make a payment is through IRS Online Account. There taxpayers can see their payment history, any pending payments and other useful tax information. Taxpayers can make an estimated tax payment by using IRS Direct Paydebit or credit card or digital wallet, or the Treasury Department's Electronic Federal Tax Payment System (EFTPS).

For information on other payment options, visit Make a payment on IRS.gov. If paying by check, taxpayers should be sure to make the check payable to the "United States Treasury."

 

New Rules Expand Clean Energy Credits to More Technologies.

Biden expands wind and solar tax credit to nuclear, hydropower, geothermal energy - Rachel Frazin, The Hill:

The Biden administration on Tuesday finalized a guidance that expands a tax credit that has historically applied only to wind and solar power to a range of other energy technologies. 

Under a new guidance issued Tuesday, the credit will also be able to be claimed by producers of power from sources like nuclear, geothermal, waterpower and marine wave energy.

IRS Finalizes Rules for Tech-Neutral Clean Energy Credits - Erin Schilling, Bloomberg ($):

The proposed rules, which came out in May 2024, broke clean energy facilities into two categories: those that use combustion and gasification and those that don’t. The final rules keep that distinction. Facilities in the first category are required to complete a lifecycle analysis of greenhouse gas emissions.

Wind, solar, hydropower, and a few other technologies are assumed net-zero greenhouse gas emissions and don’t have to do the analysis...

The final rules largely maintained the proposed guidelines.

Treasury Finalizes Clean Electricity Tax Credit Regs - Kat Lucero, Law360 Tax Authority ($). "Newer technologies such as energy storage, combustion or gasification, combined heat and power such as nuclear reactors, and waste energy recovery can qualify for the new incentives — called the clean electricity production and investment tax credits — alongside solar, wind and other renewable energy facilities, according to the final regulations."

Related: How the Inflation Reduction Act is Boosting Clean Energy & Energy Efficiency Incentives

 

 

A Key Part of Biden’s Climate Law Was Built to Survive Trump. Now, the Test. - Lisa Friedman and Brad Plumer, New York Times.

One of the most powerful parts of President Biden’s signature climate law was designed to attract support from such a wide array of industries that it would be hard for Congress to repeal.

Now, that theory is about to be tested.

While tax breaks for companies that build wind farms and solar panels have existed for years, these new credits can apply to a much wider set of technologies, including nuclear reactorsadvanced geothermal plantsfusion plants, hydroelectric dams, novel types of batteries and much more. 

 

One Big Beautiful Bill, or Not?

Reconciliation Discord Portends Slow Movement for Tax Extensions - Cady Stanton and Alexander Rifaat, Tax Notes ($):

Two weeks before President-elect Trump is set to be sworn into the White House, Republican lawmakers have yet to reach agreement on a preferred approach to the reconciliation process in 2025, waffling over the number of bills to move forward and where extensions of the Tax Cuts and Jobs Act fit into that plan.

...

Trump, meanwhile, has been unclear about his preferred approach. He said January 7 that he likes the idea of one “big, beautiful bill,” but also said he’d be OK with two pieces of legislation as a way to pass immigration policy more quickly.

GOP Confused Over Budget Strategy Amid Mixed Signs from Trump - Ken Tran and Jack Fitzpatrick, Bloomberg ($). "Republicans will have to decide if they’re doing one bill or two bills soon – at least in a preliminary way – to kick off the reconciliation process. Once the reconciliation instructions are approved, lawmakers could write filibuster-proof legislation. Trump’s bully pulpit is also a major factor in Republican negotiations. GOP lawmakers will rally around a plan if Trump is behind it, but his indecision can also spread among members of Congress."

 

Tax Cuts or the Border? Republicans Wrestle Over Priorities. - Andrew Duehren and Catie Edmondson, New York Times.

Republicans are planning to ram the partisan fiscal package through the Senate over the opposition of Democrats using a process called reconciliation, which allows them to steer clear of a filibuster and pass bills with a simple majority vote. But for much of this year, Republicans will be working with a one-seat majority in the House and a three-seat majority in the Senate, meaning they will need near unanimity to pass major legislation.

That has left some worried that it will be hard enough passing one bill, much less two.

“There’s serious risk in having multiple bills that have to pass to get your agenda through,” Representative Steve Scalise of Louisiana, the majority leader, said. “When you know you’ve got a lot of people that want this first package, if you only put certain things in the first package, they can vote no on the second and you lose the whole second package. That would be devastating.”

 

SALT Cap Enters the Chat

Trump Gathers SALT-Focused Republicans Before Tax Fight - Nacha Cattan, Bloomberg via MSN:

 A cohort of about 20 Republican House members from New York, New Jersey and California was invited to meet with President-elect Donald Trump at his Mar-a-Lago estate Saturday ahead of a looming fight over an extension of his 2017 tax cuts.

Much of the group is likely to attend and plans to discuss increasing the $10,000 cap on state and local tax deductions, which has disproportionately hurt voters in the three high-tax states, according to US Representative Nick LaLota, who represents eastern Long Island in New York.

SALT Boost Gets New Push by GOP Lawmaker Ahead of Trump Meeting - Zach Cohen, Bloomberg ($):

Rep. Mike Lawler (R-N.Y.), a swing vote on Republicans’ marquee tax package this year, re-filed his bill that would increase the current SALT cap to $100,000 for single filers and $200,000 for married couples filing jointly.

The 2017 tax law during the first Trump administration capped that deduction at $10,000 for federal returns. That, along with other individual provisions of the signature legislation, expire at the end of the year absent congressional action.

 

What About Tariffs?

Trump Denounces Reports of Scaled-Down Tariff Policy - Michael Smith, Tax Notes ($):

In a January 6 post on Truth Social, his social media platform, Trump said, "The story in the Washington Post, quoting so-called anonymous sources, which don't exist, incorrectly states that my tariff policy will be pared back. That is wrong. The Washington Post knows it's wrong. It's just another example of Fake News."

The Washington Post reported January 6 that the Trump aides were considering imposing tariffs on specific sectors that are crucial to national or economic security. The newspaper added that those could include the national defense industry and its related supply chain, medical supplies, and energy production materials.

House Republican leaders swatted down the prospect of voting on tariffs as part of their party-line tax plan, instead putting the ball in Trump’s court. - Kadia Goba, Semafor. "Trump imposed tariffs on steel and aluminum in 2018, but recently he’s pledged to go much bigger, threatening broader tariffs against Canada, Mexico and, most recently, Denmark if it doesn’t heed his interest in acquiring Greenland for the US. Yet lawmakers who entertained the possibility of tariffs as a revenue-raiser for tax legislation also acknowledged the huge hurdles they’d face; even as taxes and tariffs run on separate tracks, House Majority Leader Steve Scalise, R-La., said Congress would 'look at how' tariffs might affect a budget reconciliation plan."

 

Blogs and Bits

Mark these key federal tax dates on your 2025 calendar - Kay Bell, Don't Mess With Taxes. "Business taxpayers will be able to electronically file their returns on Jan. 15. As for individual returns, if the IRS follows its usual pattern, those returns will be accepted the last week of this month, meaning a likely Monday, Jan. 27, official opening of the 2025 filing season."

Taxpayer Failed to Show Building Was "Certified Historic Structure," Dooming Deduction - Parker Tax Pro Library. "The Tax Court held that a taxpayer was not entitled to take a $23.9 million conservation contribution deduction for its donation to a historic preservation organization of an easement over the exterior of a building in a registered historic district in Columbia, South Carolina."

IRS Free File opens Friday: Free tax filing service available to millions on IRS.gov - IRS. "Starting Jan. 10, the IRS Free File will begin accepting individual tax returns. Millions of taxpayers nationwide can access free software tools offered by trusted IRS Free File partners by visiting IRS.gov."

Geothermal Heating & Cooling: An Exciting Option for Tax Savings and Energy Savings - Kristin Gustafson and Josh Steinmetz, Eide Bailly. "In general, a geothermal system can save 50-70% on heating and cooling energy costs when compared to a conventional HVAC system."

 

These Tax Penalties are Murder

7th Circ. Upholds Tax Penalties For Life Insurance Scammer - Anna Scott Farrell, Law360 Tax Authority ($, taxpayer name omitted, emphasis added.):

The Seventh Circuit upheld Tuesday nearly $400,000 in tax penalties against a man who served prison time for falsifying his returns as part of a scheme to poison his wife and collect on a $20 million life insurance policy.

A three-judge panel upheld a U.S. Tax Court ruling sustaining the civil penalties against [the taxpayer] for fraudulently claiming tax refunds by inflating his income and tax withholdings from 2005 to 2007. [The Taxpayer] reported fictitious wages and withholdings for the three-year period, claiming hundreds of thousands of dollars in unwarranted refunds, the panel said.

The case originated from a criminal case in which federal authorities arrested [Taxpayer] in 2008 and charged him with 16 counts, including wire fraud in the purchase of a $20 million life insurance policy on his wife, whom he falsely reported was president and CEO of Trident Solutions LLC, according to a brief in the tax case filed by the Internal Revenue Service.

What was the taxpayer argument? From the Seventh Circuit Opinion (my emphasis):

Returning to Taxpayer, he presses two primary issues on appeal. He suggests that the Tax Court lacked jurisdiction to conduct a deficiency proceeding because the IRS never found a “deficiency” in tax payments. Taxpayer further contends that, jurisdiction aside, the Tax Court could not assess a fraud penalty against him because he did not “underpay” his taxes. As Taxpayer sees it, he merely received a larger refund than what he was owed. He is mistaken on both points.

I didn't underpay, my refund was just too big! 

Perhaps not surprisingly, the IRS granted "innocent spouse" relief to the intended poisoning victim. 

 

What day is it?

It's National Typing Day! Perhaps you are celebrating it right now.

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About the Author(s)

Joe Kristan

Joe B. Kristan, CPA

Partner
After 38 years centered on tax consulting for closely held businesses and their owners, Joe is joining Eide Bailly's National Tax Office. Joe's responsibilities include communication, process improvement and training. He is a principal contributor to the Eide Bailly Tax News and Views blog, providing daily updates on tax reform and other tax news. Joe is a Certified Public Accountant and a member of the AICPA Tax Section and Iowa Society of Public Accountants.

Any opinions expressed or implied are those of the author and not necessarily those of Eide Bailly. Opinions found in linked items are those of the authors of the linked item, not of your bloggers or of Eide Bailly. “$” means link may be behind a paywall. Items here do not constitute tax advice.