Key Takeaways
- "This tax season could be very different–and difficult."
- Tariff first, negotiate later?
- Pushing pet provisions in tax bill negotiations.
- Congressional GOP trashing budget scorekeepers.
- Trump pushes tip tax exemption in Nevada speech.
- How IRS hiring freeze may affect tax season.
- Private foundation missteps.
- How to get arrested for a tax crime.
- National Chocolate Cake Day.
The Welcome To The Not-So-Usual 2025 Tax Season Edition - Kelly Phillips Erb, Forbes. "Even though tax season opens on Monday, January 27, 2025, there are very few headlines talking about it–and the IRS news website, normally a flurry of activity in the run-up to the open, hasn’t been updated in over a week. It's clear that things are changing, and this tax season could be very different–and difficult."
What’s New This Tax Season That Can Save You Money - Ashlea Ebeling, Wall Street Journal. "Many electric-vehicle buyers took a $7,500 tax credit at the dealership at the time of sale, effectively an instant discount. But they still need to report the purchase on their tax returns to prove that they were eligible for the credit. If it turns out their income is over the income limits for the credit, it will get clawed back, Murphy [Enrolled Agent Dannie Lynn Murphy] said."
CTA Update
The Supreme Court Rules on CTA – But Questions Remain - Adam Sweet, Eide Bailly. "While the requirement to disclose beneficial ownership information continues to be on hold, FinCEN still allows for voluntary compliance with the rules."
Tariff Threats
Trump Aides Want to Hit Mexico, Canada With Tariffs Before Talks - Gavin Bade, Vipal Monga, and Paul Vieira, Wall Street Journal:
Trump has shown a willingness to move swiftly on tariffs in recent days without allowing for drawn-out talks...
Protectionist advisers such as Commerce Secretary nominee Howard Lutnick and deputy chief of staff for policy Stephen Miller are advocating the tariff-first-talk-second approach, according to people familiar with the discussions. Tariffs on China, which Trump has threatened with additional 10% levies, are likely to come after the initial action on Canada and Mexico, said the people familiar with the issue, emphasizing that the situation remains fluid. Other options are also in play, including announcing tariffs on Feb. 1 but giving a grace period before they are implemented.
Trump’s new trade war may prove far more disruptive than his first - David Lynch, Washington Post:
But with his top trade-related officials still awaiting Senate confirmation, Trump will probably wait to act until the April 1 deadline for completion of the multipart trade review.
Tax Bill Talk
Tax-Cut Wish List Grows for Trump’s ‘Big, Beautiful Bill’ - Siobhan Hughes and Richard Rubin, Wall Street Journal:
...
Rep. Andy Barr (R., Ky.) wants to reinstate a provision to cut to three years the amount of time to depreciate racehorses, letting owners recover costs quickly. “It’s very important for my constituents,” Barr responded when asked if the measure was a must-have.
Republicans Are Trashing the CBO Before They Have a Tax Bill - Cady Stanton, Tax Notes ($):
...
Republican lawmakers and other tax watchers told Tax Notes that while it’s unlikely the party will push the boundaries of procedure to completely disregard CBO and JCT estimates on the cost of their tax provisions, long-simmering frustration with the groups suggests scoring from noncongressional sources may play a larger role in reconciliation debates this year than in the past.
That growing trend results in no small part from a desire among Republicans to avoid the challenge the cost of their intended tax extensions presents, paired with their frequent reliance on examples of revisions of CBO and JCT estimates of major tax bills, according to Marc Goldwein of the Committee for a Responsible Federal Budget.
Stock Buyback Tax Repeal Effort Renewed by House Republicans - Zach Cohen, Bloomberg ($).
Rep. David Kustoff (R-Tenn.) introduced legislation Thursday that would repeal the 1% excise tax on the fair market value of any stock repurchase in a tax year by publicly traded companies.
Trump touts ‘no-tax-on-tips’ plan in Nevada victory lap - Julia Mueller, The Hill:
“So if you’re a restaurant worker, a server, a valet, a bellhop, a bartender, or one of my caddies — I go through caddies like candy, if I play badly, I always blame my caddy — or any other worker who relies on tipped income, your tips will be 100% yours,” he continued.
IRS Job Seekers Look to Fallback Plans
Law Students Scramble As Federal Gov't Yanks Job Offers - Alison Knezevich, Law360Tax Authority ($). "Students got word that their offers for legal positions were revoked at agencies including the U.S. Department of Justice, the Internal Revenue Service, the U.S. Drug Enforcement Administration and U.S. attorney's offices, according to students and law school officials who spoke to Law360 Pulse."
Executive order’s hiring freeze causes IRS to cancel some job offers - Martha Waggoner, The Tax Adviser:
"With the announcement of returning to work in the office, many of the IRS employees who are retirement age and currently teleworking may just decide to retire and lock in their retirement benefits," she wrote in an email. "If that happens, then some of the important filing season/taxpayer service/accounts positions the IRS has filled — phone, correspondence, error resolution, tax examiner — won't be able to be back-filled, and that will signal real impact on the filing season."
Across the Border
Businesses Ask Canada to Drop Tax Plans After Trump Threats - James Munson, Bloomberg ($). "They urged Canada to abandon its place as a leading adopter of the OECD’s 15% global minimum tax and pause its domestic implementation in light of the new US posture, Matthew Holmes, executive vice-president and chief of public policy at the Canadian Chamber of Commerce, said in an interview."
Brazil Government Will Cut Some Import Taxes to Lower Food Costs - Simone Iglesias, Bloomberg. "The administration will reduce levies on imported food that’s cheaper abroad, and the Finance Ministry will study ways to cut intermediary costs, Chief of Staff Rui Costa told reporters in Brasilia. No unorthodox measure will be adopted, he said, adding that the government ruled out the use of subsidies."
Private Foundation Missteps
Foundation’s Loans Result in Private Benefit, Self-Dealing - Tax Notes Research:
Moreover, indirect acts of self-dealing under section 4941(d)(1)(E) occurred when the foundation loaned substantially all its assets to the business entities in which a disqualified person owned less than a 35 percent interest. Thus, the loans constituted the use of the foundation’s assets for the benefit of a disqualified person.
Related: Eide Bailly Exempt Organization Tax Services
Blogs and Bits
Tax prognostications at the start of Trump's second term - Kay Bell, Don't Mess With Taxes. "A former Los Angeles politician was sentenced to 13 years in federal prison for racketeering conspiracy and tax evasion."
LA Wildfire Victims, Should You Claim A Casualty Loss On Your Taxes? - Robert Wood, Forbes. "Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2025 return normally filed in 2026), or on the return for the prior year (2024). Taxpayers have extra time — up to six months after the due date of the taxpayer’s federal income tax return for the disaster year to make the election."
IRS Updates Guidance on Employment Tax Worker Classification Disputes - Parker Tax Pro Library. "Section 530 of the Revenue Act of 1978 (Pub. L. 95-600) provides that a taxpayer will not be liable for federal employment taxes, with respect to an individual or class of workers if certain statutory requirements are met."
Organization Seeking to Provide Assistance to Members in Need Denied Status as a §501(c)(3) Organization - Ed Zollars, Current Federal Tax Developments. "The IRS determined the organization’s primary activity was disbursing funds to members for personal events like deaths, marriages, and birthdays. This activity, while helpful to members, did not directly advance religious, charitable, scientific, educational, or other purposes listed as exempt under 501(c)(3). The IRS viewed these payments not as part of a broader charitable program, but as direct financial benefits to members, thus making this a substantial non-exempt activity."
Tax Policy Corner
Reviewing the House Budget Committee Tax Options - Adam Michel, Liberty Taxed. "Last week, a copy of House Budget Committee Republicans’ draft menu of reconciliation options leaked to the press. The document is impressive in its breadth and willingness to seriously consider the tough budgetary trade-offs Republicans have ahead of them. The 51-page document includes potential tax and spending changes across 11 committees."
Follow The Money: Tax Inheritances, Not Estates - William G. Gale, John Sabelhaus, and Oliver Hall. "The estate tax is riddled with loopholes, making it difficult to administer and easy to avoid. A comprehensive tax on inheritances would not leave room for the many loopholes that plague the estate tax. By taxing heirs rather than donors, an inheritance tax could conform more closely to the economic circumstances of the recipient. It might also encourage the break-up of major estates, which would reduce wealth inequality and increase economic mobility. And an inheritance tax could raise more revenue than the estate tax does."
I maintain that one or two generations of heirs is generally enough to break up a large estate.
A Tax Crime That Doesn't Pay
Former CEO of Startup Software Company Sentenced to 30 Months in Federal Prison for Tax Scheme - U.S. Department of Justice (defendant name omitted, emphasis added):
Defendant was the co-founder and CEO of a startup technology company. Defendant was responsible for all financial matters related to the company, including for filing the company’s quarterly payroll tax returns and collecting and paying over Social Security, Medicare and income taxes withheld from the employees’ wages to the IRS, as well as the matching Social Security and Medicare taxes the company owed. Defendant was also responsible for collecting and paying over state and local taxes to those respective governments.
From the company’s founding in 2014 through the third quarter of 2021, Defendant withheld federal, state and local taxes from the wages of the company’s employees but did not pay them over to the IRS and state and local tax authorities as required by law. He also did not pay over the portion of the payroll taxes that the company owed. Defendant did so even though a payroll service company that he hired to process the employees’ payroll notified him hundreds of times that the taxes were due, and four employees of the company complained that the Social Security Administration reported no withholdings had been paid over by the company on their behalf.
I don't know what crimes are most likely to get caught, but not remitting employment taxes has to be near the top, as tax crimes go. When employees file returns to claim withholding that hasn't been paid, even old IRS technology eventually notices. As this case shows, it makes employees grumpy.
What day is it?
It's National Chocolate Cake Day! An important part of a healthy breakfast.
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