Tax News & Views Comes in From The Cold With a 1099 Roundup

When To Expect Your Forms W-2 & 1099 In 2026—And What To Do If They’re Missing - Kelly Phillips Erb, Forbes:

It’s also increasingly common for forms to be delivered electronically. While tax forms generally can’t be provided electronically without your consent unless a paper copy is also issued, you may have agreed to electronic delivery without realizing it. With e-statements, payroll portals, and online accounts, it’s easy to forget you checked a box somewhere along the way. Before assuming a form never arrived, check your email, your spam folder, and any online accounts you have with employers, banks, brokers, or payment processors.

If you’re waiting for information from a trust, estate, or pass-through entity—such as a partnership, S corporation, or LLC—you’ll want to be patient. Even though many of these entities now file a bit earlier with the IRS than they used to, they still tend to report later than individual filers would like. Because those entities must complete their own returns before issuing Schedules K-1, filing early often isn’t realistic. If you have concerns, your best bet is to reach out to the administrator or preparer handling the entity.

This is important:

I always recommend waiting to file your tax return until you have your tax forms in hand. You may think you know what’s on them, but guessing can create problems.

Depreciating your house?

Trump Floats Idea to Allow Depreciation for Homeowners - Katie Lobosco, Tax Notes ($):

President Trump said his administration may consider changing tax rules so homeowners can claim a depreciation deduction for their primary residences.

Trump’s comments, made January 21 during a wide-ranging speech at the World Economic Forum in Davos, Switzerland, come as Republicans are eager to show voters they are addressing their concerns about affordability.

“You know the crazy thing is, a person can’t get depreciation on a house. But when a corporation buys it, they get depreciation,” Trump said. “That’s something we’re going to have to think about.”

Trump floats idea to extend business tax break to homeowners - Kate Dore, CNBC:

Under current law, depreciation is permitted for business or income-producing rental property, but generally not for primary residences, with exceptions for business use.

The depreciation deduction is based on the property’s “basis,” or up-front purchase price plus improvements, and when it was “placed in service.” The annual tax break also depends on the accounting method used, which outlines how many years the owner has to recover the cost basis.

If the property is later sold at a profit, the IRS recoups some of the deduction claimed, known as “depreciation recapture.”

They should think this one through a little more.

Depreciation is a business deduction. You don't depreciate your house for the same reason you don't depreciate your refrigerator - it's not a business expense.

As the CNBC piece notes, business depreciation lowers the basis of the home and results in additional income when the house is sold - gain that is ineligible for the home sale exclusion. This already applies to taxpayers depreciating a home office.

If home depreciation becomes a business expense, then it would be logical to tax the owner on the "imputed income" from the home as well. This implied income is already part of academic computations of income, including the Haig-Simons model. Wouldn't that be fun.

Who Needs Tax Revenue, Anyway

A Giant Tax Bill Again Sparks Huge Drop-Off in Corporate Taxes - Doug Sword, Tax Notes ($):

Government revenues from corporate income tax collections plummeted 32 percent over the last half of 2025 as businesses retroactively wrote off research and development and other expenses.

Republicans say the plan in passing the One Big Beautiful Bill Act (P.L. 119-21) was always to put cash into business coffers while rewarding investments through tax code changes. The bill allows businesses to use 100 percent bonus depreciation to write off many expenses incurred since President Trump’s January 20, 2025, inauguration, along with research and development costs, and to take expanded net interest expensing since January 1, 2025.

To be fair, capitalizing research costs was always a bad idea. So was treating the capitalization as "revenue" to pay for the 2017 tax bill.

Congressional Budget Office Scores IRS Rescission at $38 Billion - Cady Stanton, Tax Notes ($):

A nearly $12 billion clawback in operations support funding for the IRS in the government funding minibus will reduce enforcement actions at the cost of an estimated $38 billion over 10 years, according to the Congressional Budget Office.

The CBO estimated in a January 21 report that the $11.7 billion rescission of operations support funding for the IRS originally granted in the Inflation Reduction Act would cost $2.7 billion in 2026, $25.6 billion between 2026 and 2030, and $38.6 billion over the 2026-2035 period.

“CBO anticipates that rescinding those funds would result in fewer enforcement actions over the next decade and thus in a reduction in revenue collections,” the group wrote.

IRS Leader Shake-Up Bleeds Criminal, Civil Enforcement Oversight - Erin Slowey, Bloomberg ($):

The line between tax auditors policing mere civil infractions versus serious tax crimes is blurring in the latest reorganization at the top of the IRS.

Jarod Koopman, a longtime and respected criminal investigator, took over the top job for compliance at the IRS in October. Under the shake-up announced Tuesday, he’ll also oversee the IRS’s criminal investigation unit.

The reshuffling at the top of the IRS tightens CEO Frank Bisignano’s grip on the agency with more leaders reporting directly to him. Bisignano, who also will co-lead the compliance office with Koopman, is also the commissioner of the Social Security Administration, and now oversees more than 120,000 federal workers.

Another Big Beautiful Bill, or Not

The GOP’s Megabill Debate: Go Big Again or Go Home (to Campaign) - Lillianna Byington and Maeve Sheehey, Bloomberg ($):

Some Republicans see it as a no-brainer. They argue that, given slim margins, it’s likely the only avenue to allow them to pass major legislation ahead of what’s expected to be a tough midterm battle. House members even developed an AI bot to make the process easier.

Others, including Senate Majority Leader John Thune (R-S.D.), are less certain. Thune has not ruled out using reconciliation, but he’s made clear they need to have good reason to do it. Last year, the divisive tool exposed internal party divisions.

...

Republicans have eyed packing other wide-ranging policies into a second reconciliation bill, including accelerating permitting approvals, requiring congressional approval of major regulations, incentivizing homeownership, and selling off underused government buildings. Rep. Stephanie Bice (R-Okla.) said “affordability starts with energy and deregulation,” pointing to how the RSC framework includes her push to prevent the government from blocking energy projects.

If the home depreciation idea makes it into legislation, this is where it could happen.

Tariff Turmoil, Again

Trump Drops EU Tariff Threats After Striking Early Greenland Deal - Sarah Paez, Tax Notes ($):

President Trump announced he will drop tariffs threatened on European countries after reaching a “framework of a future deal” on the status of Greenland, which he had sought to take over.

In a January 21 Truth Social post, Trump said he had a “very productive meeting” with NATO Secretary General Mark Rutte on the heels of the World Economic Forum in Davos, Switzerland, and that the two “have formed the framework of a future deal with respect to Greenland and, in fact the entire Arctic Region.”

‘She Just Rubbed Me the Wrong Way’: Trump Suggests Swiss Tariffs Were Personal - Jonathan Wolfe, New York Times ($):

Speaking on Wednesday at the World Economic Forum in Davos, Switzerland, Mr. Trump seemed to confirm what European officials had long suspected: The rate increase was personal.

...

Mr. Trump continued: “She said, ‘No, no, no, please, you cannot do it,’ kept saying the same thing over and over: ‘We are small country.’ I said, ‘But you’re a big country in terms of’ — and she just rubbed me the wrong way. I’ll be honest with you.”

Mr. Trump, sounding frustrated as he retold the story, said he thanked Ms. Keller-Sutter and ended the call. “And I made it 39 percent,” he said.

These are "emergency" tariffs. Some emergency.

We Still Have Pillar II

Tax News & Views International Weekly: Simplifying Pillar Two - Alex Parker, Eide Bailly:

While the Organization for Economic Cooperation and Development’s Jan. 5 announcement revealed a new side-by-side agreement to largely exempt U.S. companies from taxation under the Pillar Two 15% global minimum tax, that’s not the only thing it included.

In fact, the OECD’s release had several safe harbors meant to simplify and ease enforcement of the system, which since it was first revealed in 2021 has been heavily criticized by taxpayers who claim it will create giant, and ever-increasing, compliance burdens. These new shortcuts, in theory, will make Pillar Two easier to administer in the vast majority of cases where there’s not expected to be new payments—in other words, where there isn’t a large amount of previously untaxed income.

...

The devil, as always, is in the details. Already, some practitioners have questioned whether the “simplified” safe harbor is all that simplifying. For countries enforcing a domestic minimum tax, financial statements using local accounting standards may be required, even though they can differ from the standards used for global accounting–just as with the standard Pillar Two calculations. (The OECD says countries will be “encouraged” to allow certain global standards as well.)

Survivor: The Tax Litigation

First Survivor Winner Loses Appeal Over Longstanding Tax Bill - James Matheson, Bloomberg ($):

The first winner of the game show Survivor can’t appeal a district court’s partial summary judgment regarding his longstanding tax dispute because the court lacks jurisdiction, a federal appeals court said.

The US Court of Appeals for the First Circuit can’t review Richard Hatch’s appeal because its jurisdiction extends only to final decisions and certain interlocutory or collateral orders.

This is a tax bill that arose from the 2000 season of the show. Nobody would win if they had to "survive" as long as this tax litigation has.

The Missing Middle in State Income Taxes

Wealth Taxes and Millionaires' Taxes - Jared Walczak, The SALT Road:

A proposed California wealth tax initiative is still months away from making the ballot, but it has already driven multiple high-profile billionaires out of the Golden State. Meanwhile in Washington, where the state constitution has historically been understood as restricting income taxes, the governor has announced his support for a 9.9% income tax on high earners. Lawmakers in Rhode Island, Virginia, and elsewhere are poised to give similar proposals serious consideration. And in Michigan, a proposed ballot measure could put a 9.25% income tax in front of the voters.

A fault line is emerging between the majority of states that have cut individual income taxes in pursuit of greater tax competitiveness and a minority of states that are doubling down on high taxes on high earners. We are headed toward a new reality in which there is no such thing as a “typical” rate—just low rates and high rates.

Blogs and Bits

6 reasons to wait to file your tax return - Kay Bell, Don't Mess With Taxes. "But 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?"

Twelve Estate and Succession Planning Mistakes to Avoid - Kristine Tidgren, Ag Docket:

11. Believing that All Experts are Equal. If you have a farm, it is important to work with experts, such as attorneys and tax professionals, who understand the intricacies of farm succession planning. It is worth driving a bit further or paying a little extra to work with a professional who understands your situation and can help you achieve your goals.

The End of Paper Refund Checks—and What It Means for Filing Season Prep - Kelly Golish, Tax School Blog. "Returns without banking info will still be accepted, but refunds will be delayed as the IRS issues a letter requesting bank details. If none is provided within 30 days, a paper check will eventually be issued about six weeks after filing to avoid interest payments."

IRS Issues Interim Guidance on OBBBA Amendments to Bonus Depreciation Deduction - Parker Tax Pro Library. " Taxpayers may rely on the interim guidance before the proposed regulations are published."

Worse Wisconsin Result than the Bears Game

Franklin Woman Pleads Guilty to Aiding in the Preparation of False Tax Returns - US Attorney, Eastern District of Wisconsin (Defendant name omitted, emphasis added):

According to the plea agreement filed in court, Defendant worked as a tax preparer who prepared and filed federal tax returns for clients for a fee. For the 2020, 2021, and 2022 tax years, Defendant electronically filed approximately 424 federal tax returns with the IRS. Of those, approximately 386 contained indicators and evidence of fraud. Most of the 1040 tax returns filed by Defendant on behalf of her clients reported materially false income related to business income and losses, household employee wages, and/or ordinary dividends. They also reported a variety of materially false refundable credits and other payments including sick and family leave credits, child and dependent care credits, fuel tax credits, IRC Section 1341 credits, and/or false income tax withholdings. As a result of Defendant’s material misrepresentations, her clients received larger refunds to which they were not entitled, which increased Defendant’s commission well beyond what she was entitled to receive. Throughout the course of her scheme, Defendant intended a loss to the IRS of approximately $3,499,253, and caused an actual tax loss, based on fraudulent refunds paid, of $1,397,947. As a result of her fraudulent conduct, Defendant also obtained approximately $253,712.89 in fees and commissions to which she was not entitled.

Two things:

1. The biggest refund doesn't identify the best preparer.
2. Clients don't get to keep fraudulent refunds, and the IRS has forever to go after them.

What day is it?

It's Come in From The Cold Day! Appropriate with subzero temperatures sweeping across the country. Stay warm.

Tax News & Views Comes in From The Cold With a 1099 Roundup

Make a habit of sustained success.

Joe B. Kristan, CPA