Tax News & Views Pancake Day Roundup

Tax Legislation

Making the Tax Cuts and Jobs Act Permanent: Economic, Revenue, and Distributional Effects - Erica York, Garrett Watson, Tax Foundation:

Permanently extending the expiring individual, estate, and business tax provisions would boost long-run economic output by 1.1 percent, the capital stock by 0.7 percent, wages by 0.5 percent, and hours worked by 847,000 full-time equivalent jobs. Extending the expiring individual tax provisions adds 0.4 percent to long-run GDP, while the business provisions add 0.7 percent. Extending the estate tax provisions leaves GDP unchanged but boosts domestic saving, resulting in an increase in American incomes as measured by GNP.

Republicans Gamble on a Regressive Economic Agenda - Andrew Duehren, New York Times:

Who is helped and who is harmed by Republicans’ plans are shaping up to be central questions for G.O.P. lawmakers as they try to squeeze legislation through their narrow majorities in Congress. The House on Tuesday adopted a budget blueprint that calls for $4.5 trillion in tax cuts and $2 trillion in spending reductions, alongside $300 billion in new funding for defense and border programs and an increase in the debt limit.

GOP Taxwriters Would Win Big with Tax Cut Extensions, Report Says - Tax Analysts, Tax Notes ($):

Extending expiring provisions of the Tax Cuts and Jobs Act would provide wealthy GOP members of the House Ways and Means Committee and Senate Finance Committee with a total of $1.8 million in annual income tax cuts and potentially a one-time estate tax cut of $22.8 million, at expense of middle-income earners, Americans for Tax Fairness said in a February 27 report.

CTA

FinCEN Announces No Penalties to Be Imposed Under CTA Pending Revised Interim Final Rule - Ed Zollars, Current Federal Tax Developments. "On February 27, 2025, FinCEN announced that it will not issue fines, penalties, or take enforcement actions against companies that fail to file or update Beneficial Ownership Information (BOI) reports by the current deadlines."

No later than March 21, 2025, FinCEN intends to issue an interim final rule that extends BOI reporting deadlines, recognizing the need to provide new guidance and clarity as quickly as possible, while ensuring that BOI that is highly useful to important national security, intelligence, and law enforcement activities is reported.

IRS Staffing

What to Know About Filing Taxes as the I.R.S. Sheds Workers - Tara Siegel Bernard, New York Times:

Roughly 91 percent of taxpayers file their returns electronically, according to the agency. If you are among the 10 percent who don’t, now is a great time to start, whether that means working with a professional or using tax software or the agency’s free Direct File system, if you’re eligible. That’s the most important step you can take to avoid delays; also be sure to use direct deposit for your refund, and verify your routing and bank account numbers.

Alsup Halts 'Illegal' Firings Of Probationary Federal Workers - Bonnie Eslinger, Law 360 Tax Authority ($):

U.S. District Judge William Alsup on Thursday temporarily blocked the mass firings of probationary federal employees ordered by President Donald Trump's administration, determining that the Office of Personnel Management illegally directed government agencies to terminate the probationary employees without authority to do so from Congress.

Blogs and Bits

Dirty Dozen tax scams for 2025: IRS warns taxpayers to watch out for dangerous threats - IRS:

The Internal Revenue Service today announced its annual Dirty Dozen list of tax scams for 2025 with a warning for taxpayers, businesses and tax professionals to watch out for common schemes that threaten their tax and financial information.

Ranging from email schemes to misleading tax credits, many of the Dirty Dozen items peak during filing season as people prepare their tax returns. In reality, these scams can occur throughout the year as fraudsters look for ways to steal money, personal information and data.

Protect Yourself From Tax Identity Theft. Here’s How I Did. - Laura Saunders, Wall Street Journal:

To forestall fraudulent refunds, the IRS encourages taxpayers to apply for a six-digit IP PIN, which stands for Identity Protection Personal Identification Number. For taxpayers who have them, the IRS’s computers reject returns without the proper number to prevent fraud. Note: This number is different from the five-digit PIN many taxpayers use to e-file.

IP PINs can also protect against so-called false positives. These occur when the IRS’s computers hold up a return because of red flags for tax ID theft that turn out to be incorrect. In 2023, the agency had about 1.3 million false positives. They are easier to fix than true tax ID theft but still take time for the taxpayer to resolve.

IRS: Many farmers and fishers face March 3 tax deadline; disaster areas have more time - IRS:

Disaster-area taxpayers, including farmers and fishers, have more time to file and pay. This extension is automatic; taxpayers don’t need to file any paperwork or call the IRS to get it.

Currently, taxpayers in the entire states of Alabama, Florida, Georgia, North Carolina and South Carolina, and parts of Alaska, New Mexico, Tennessee, Virginia and West Virginia have until May 1, 2025, to file and pay.

IRS To Begin Posting Tax Documents In Online Accounts - Anna Scott Farrell - Law 360 Tax Authority ($):

The first information return documents to hit the online accounts will span 2023 and 2024 and, in addition to the W-2s, include the Form 1095-A Health Insurance Marketplace Statement, the agency said in a statement. Users should look for them in the Records and Status tab, the Internal Revenue Service said.

Tax Trouble

Florida financial advisor pleads guilty to promoting illegal tax shelter and stealing client funds - IRS (Defendant name omitted):

A Florida man pleaded guilty today to orchestrating a nearly decade-long scheme to promote an illegal tax shelter and commit wire fraud. He also pleaded guilty to assisting in the preparation of false tax returns for tax shelter clients.

In reality, as Defendant knew, the “royalty payments” were merely a circular flow of money designed to give the appearance of genuine business expenses. Typically, a client would send money to bank accounts controlled by Defendant and other co-conspirators, who then sent the money — less a fee — right back to a different bank account that the client controlled. In this way, tax shelter participants retained control of the money they transferred, while falsely deducting the transfers as business expenses on their tax returns.

In total, Defendant and his co-conspirators helped clients prepare tax returns that claimed over $106 million in false tax deductions, which caused a tax loss to the IRS of approximately $37 million.

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