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Tax News & Views Crypto Reporting & Hot Chocolate Roundup

By Bailey Finney
January 31, 2025
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Key Takeaways

  • Republicans trying to repeal DeFi reporting requirements. 
  • Senate two bill plan ready to go. 
  • Tariffs to come this weekend?
  • A handful of proposed tax bills. 
  • GAO releases report on IRS efficiency. 
  • IRS hiring freeze.
  • IRS PLR says IVF costs are not deductible medical expenses. 
  • PPP fraud. 
  • National hot chocolate day!

Happening in Washington 

Republicans Want to Kill Tax-Reporting Rule for Some Crypto Trades - Richard Rubin, Wall Street Journal: 

Republicans are trying to repeal a tax-compliance rule that gives the Internal Revenue Service more information about some digital asset transactions, demonstrating the cryptocurrency industry’s growing clout. 

The push from Sen. Ted Cruz (R., Texas) and Rep. Mike Carey (R., Ohio) uses a procedure that lets Congress strike down recent rules with simple-majority votes. They are trying to remove a December Biden administration rule that requires decentralized finance, or DeFi, platforms to report transactions to the government just like stock brokerages do and centralized crypto exchanges soon will. 

 

Senate’s reconciliation blueprint is ready to go, Thune says - Jordain Carney, Politico: 

Under the Senate plan that has been described by multiple lawmakers, Republicans would first attempt to pass a smaller bill encompassing border security, defense and energy measures. Later would come a larger, more complex tax-focused bill.

Both would be passed under party-line reconciliation procedures, which first requires the adoption of an identical budget resolution by the House and Senate. The text Thune referred to would provide for passage of the first bill; another blueprint teeing up the second bill would follow.

 

Trump says tariffs on Canada and Mexico coming Saturday, and he’s deciding whether to tax their oil - Josh Boak, AP News. "President Donald Trump said his 25% tariffs on Canada and Mexico are coming on Saturday, but he’s still considering whether to include oil from those countries as part of his import taxes."

 

Proposed Legislation

Bipartisan Proposal Would Ramp Up Return Preparer Oversight - Benjamin Valdez, Tax Notes ($): 

The draft legislation, released January 30 by Senate Finance Committee Chair Mike Crapo, R-Idaho, and ranking member Ron Wyden, D-Ore., would require paid, non credentialed preparers to demonstrate continuing education requirements and undergo criminal and tax compliance background checks to obtain and maintain a preparer tax identification number.

The IRS also would be given the authority to deny, suspend, or revoke PTINs for preparers who don’t meet those requirements or who are deemed incompetent or disreputable under a new set of standards that includes dinging taxpayers for providing misleading tax information or making repeated errors in returns. The proposal would pair those measures with higher penalties for improper tax preparation.

 

Discussion Draft of Proposed Taxpayer Assistance and Service Act Jointly Released by Ranking Members of Senate Finance Committee for Comment - Ed Zollars, Current Federal Tax Developments:

The key points of the Senators’ announcement are as follows:

   - 
The draft legislation proposes "common-sense fixes" to IRS procedures and administration.

   - 
It is designed to improve communication between the IRS and taxpayers.

   - 
The legislation seeks to streamline tax compliance and dispute processes.

   - 
It aims to ensure that taxpayers have access to timely expert assistance.

   - 
The National Taxpayer Advocate, Erin Collins, supports the bill, noting it would significantly strengthen taxpayer rights.

   - 
The goal is to address challenges faced by taxpayers and stakeholders within the federal tax system.

   - 
The Senators are seeking comments on the discussion draft by March 31, 2025.

 

Bipartisan Bill Would Eliminate Russian FTCs, Deductions - Michael Smith, Tax Notes ($): 

Senate Finance Committee members Catherine Cortez Masto, D-Nev., and John Cornyn, R-Texas, have introduced a bill that would make U.S. companies operating in Russia ineligible for foreign tax credits and deductions for taxes paid in Russia.

The bipartisan bill would add Russia to a list of hostile countries — including Iran, North Korea, Sudan, and Syria — that are ineligible for U.S. FTCs under section 901(j).

 

H.R. 801 Would Expand Charitable Deduction for Non-Itemizers - Tax Analysts, Tax Notes ($). "H.R. 801, the Charitable Act, introduced by House Ways and Means Committee member Blake D. Moore, R-Utah, would expand the charitable deduction for non-itemizing individuals."

 

Cruz Bill Would Expand Health Savings Accounts - Tax Analysts, Tax Notes ($). "The Personalized Care Act of 2025, introduced by Sen. Ted Cruz, R-Texas, would expand health savings account eligibility, increase HSA contribution limits, and reduce the penalty for nonqualified distributions to 10 percent, among other modifications."

 

Blogs and Bits

IRS offers top tips to make tax time easier - IRS. "3. Avoid paper returns. Filing electronically with direct deposit is the fastest way to get a refund."

IRS Struggles to Process Taxpayer Returns on Time, Report Finds - Tyrah Burris, Tax Notes ($): 

During the 2024 filing season, the IRS took an average of 20 days to process individual paper returns, failing to meet its 13-day goal, the Government Accountability Office found in a report released January 30 reviewing the agency’s processing and customer service performance.

According to the report, the IRS received and processed more returns in 2024, but the percentage of returns processed by the end of the filing season decreased. The IRS processed 97.9 percent of the 174 million returns it received. In 2023 it processed 98.6 percent of the 171.1 million returns it received.

5 reasons to wait to file your tax return - Kay Bell, Don't Mess with Taxes: 

If you're too eager to file your return, you might have to do it again because in your rush you didn't include necessary information or made a mistake. Sure, amending a tax return is not that difficult, especially since the 1040-X now can be done electrically. But really? You want to do this all twice?

If you also file states taxes, which most U.S. taxpayers do, the potential for mistakes doubles, since most state returns rely on entries from your federal filing. When that duplicated data is wrong, you'll have to re-do that state tax return, too.

But by letting your original federal tax return sit there a bit before you file it, you'll give yourself time to take another look. A pause and follow-up with fresh eyes often makes a mistake suddenly seem amazing obvious.

IRS Finds Most Expenses Related to Taxpayers’ In Vitro Fertilization and Surrogacy Will Not Be Deductible Medical Expenses Under IRC §213 - Ed Zollars, Current Federal Tax Developments: 

The IRS notes that the expenses in question, such as those related to the egg donor and surrogate, are not for the medical care of the taxpayers, their spouse, or a dependent. The IRS emphasizes that the medical procedures in the case will affect the structure or function of a third party, not the taxpayers. Therefore, these expenses do not meet the requirements for deductibility under Section 213.

 

Tax Trouble  
 
According to the facts established at trial, between April 2020 and April 2021, Defendant devised and participated in a scheme to defraud a lender of $513,732.50 in PPP loans. Defendant inflated payroll costs and gross receipts, made false statements and certifications, and submitted fabricated tax documents and payroll reports. During that same period, Defendant unsuccessfully applied for additional emergency government assistance through the Economic Injury Disaster Loan (EIDL) program. Defendant used some of the fraudulently obtained funds to purchase a Cadillac CT6 for $67,704.13.

 

What day is it?

It's National Hot Chocolate Day!

 

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