Eide Bailly merges in Seim Johnson – Michael Cohn, Accounting Today:
Eide Bailly, a Top 20 Firm based in Fargo, North Dakota, is expanding to Nebraska by adding Seim Johnson, a firm in Omaha, effective July 25.
The merger will add 20 partners and 70 staff members to Eide Bailly, which currently has more than 350 partners and nearly 3,000 staff in the U.S. Financial terms of the deal were not disclosed. Seim Johnson is a $22 million firm, while Eide Bailly earned $521 million in annual revenue. Eide Bailly ranked 20th on Accounting Today’s 2022 list of the Top 100 Firms.
IRS Proposes Regulations on Estate Tax Deductions – Erin Slowey, Bloomberg ($). “The Internal Revenue Service unveiled a proposed regulation amending certain parts of tax code Section 2053 Friday. The proposal (RIN 1545-BI11) offers guidance on the amount deductible for estate funeral expenses, administration expenses, and other claims against the estate.”
Proposed Regs Would Give Estates Three Years to Value Deductions – Caitlin Mullaney and Jonathan Curry, Tax Notes ($):
New proposed regulations respond to lingering estate questions by requiring the use of present value after three years in determining deductions and claims against the estate.
The proposed regs (REG-130975-08), issued June 24, would amend the section 2053 regs, providing instructions on the proper use of present value in determining the amount deductible from an estate for funeral expenses, administration expenses, and claims against the estate.
The regs also provide rules on the deduction of amounts paid under a decedent’s personal guarantee and of interest expense accrued on loan obligations an estate incurred.
The proposed regs are here.
IRS Releases FAQ, 121 Taxable Rates for Superfund Excise Tax - Erin Slowey, Bloomberg ($). “The IRS released its FAQ on the reinstated Superfund excise tax Friday, attempting to give chemical companies clarity on the levy that goes into effect July 1. The Superfund excise tax imposes a levy on chemical companies and importers for chemicals known to pollute."
The FAQ is here.
IRS Working on Voluntary Disclosure Backlog – Nathan Richman, Tax Notes ($):
Taxpayer representatives should maintain contact with the IRS Criminal Investigation division while it reviews voluntary disclosures of noncompliance that taxpayers filed to avoid criminal prosecution, according to CI’s retiring deputy chief.
Between outbreaks of COVID-19 and analysts being locked out of their work locations, the pandemic shutdowns at the IRS affected CI’s job of reviewing voluntary disclosures, IRS CI Deputy Chief James D. Robnett said June 24 at a conference sponsored by the New York University School of Professional Studies.
Robots Starting to Help Set Up Payment Plans, IRS Official Says – Naomi Jagoda, Bloomberg ($). “The IRS is having early success with its new voice bots that taxpayers can use to set up payment plans, an agency official said Friday at a tax conference hosted by New York University.”
The agency literally started this program ten days ago. It seems a little early to be singing its praises.
IRS Collections Function’s Phone Bots Off to Hot Start – Jonathan Curry, Tax Notes ($). “The rollout of the IRS’s artificial voice bots in its collections function has been an unmitigated success so far, and other functions within the agency are taking notice, according to an official.”
‘Every day it just gets better and better,’ Darren Guillot, deputy commissioner of collections in the IRS Small Business/Self-Employed Division, told Tax Notes June 24 at a New York University School of Professional Studies event.
'Unmitigated success'? "Every day it just gets better and better"? Again, it's been a little over a week.
Tax Court’s Sealed Case Iceberg Will Soon Be Fully Thawed – Nathan Richman, Tax Notes ($). “The Tax Court’s new case management system no longer automatically seals old cases, and the previously sealed dockets are getting freed up, according to the new chief judge.”
Information Reporting on Digital Assets Steps Into the Spotlight – Marie Sapirie, Tax Notes ($). “The looming prospect of compliance with the reporting requirements in section 6050I has been a problem for the digital asset industry since the passage of the Infrastructure Investment and Jobs Act (P.L. 117-58) last November. The requirements pose procedural obstacles and privacy concerns for taxpayers, but the government has an interest in ensuring compliance with the tax laws.”
When Is the Time to Consider New Withholding on the W-4? Always - Jody Padar, Bloomberg ($). “June may seem like a time to breathe easy on tax issues, but for many workers, this is the moment to take stock and examine an overlooked portion of your taxes: your withholding. With some thought and a quick calculation, taxpayers can avert a significant headache down the road. Now is the time to examine your W-4, a form that has taken on new meaning and challenges in our rapidly changing economy.”
Attempt to Roll Back $600 Reporting Threshold Falls Short – Doug Sword, Tax Notes ($):
Democrats beat back a GOP amendment to repeal a new $600 threshold for information reporting that will require Venmo, PayPal, Uber, Etsy, and others to provide millions of Forms 1099-K at the beginning of the 2023 tax season.
Rep. Chris Stewart, R-Utah, proposed the amendment June 24 during the House Appropriations Committee’s consideration of the $30 billion fiscal 2023 financial services and general government spending bill, which includes IRS funding. The amendment was rejected 24-31. The broader bill advanced to the full House on a 31-22 vote.
Update on Build Back Better:
Dems weigh new plan to defuse Obamacare subsidy bomb – Adam Cancryn, Politico:
A proposal being weighed by congressional Democrats and party advisers in recent weeks aims to temporarily extend the enhanced Obamacare subsidies that were part of the financial aid package President Joe Biden signed into law last March, according to three people familiar with the discussions.
Those subsidies are set to expire later this year. The plan under consideration would keep them in place for at least another few years, postponing the insurance premium hikes projected to hit roughly 13 million Americans. It would stop well short of making them a permanent part of the Affordable Care Act, sharply curtailing the overall cost.
This is just one of several problems when it comes to advancing the Build Back Better bill. Other problems (off the top of my head): SALT cap. Child Tax Credit. Foreign minimum tax. Tax credits for electric cars. Allowing tax incentives for fossil fuels. Gun tax. The list goes on and on.
Meanwhile, talks on Build Back Better (aka: the reconciliation package) could hinder money getting to defense:
How high will defense spending go in 2023? - John Bresnahan, Punchbowl News ($):
The House Appropriations Committee has already approved a Democratic-drafted bill that was strongly opposed by Republicans. Even if that bill makes it through the House – which is questionable – it’s not going anywhere in the Senate. Senate Republicans will want a lot more defense money than what’s been floated so far.
GOP leaders also aren’t going to do any serious negotiating on appropriations bills as long as Senate Democrats are still talking about doing a reconciliation package. This is a similar scenario to what happened last year with the Build Back Better Act. The FY2022 omnibus package didn’t come together until after Sen. Joe Manchin(D-W.Va.) put a stake in BBB in mid-December.
The defense bill will likely need Republican support to pass the Senate.
Auto Enrollment Emerges As Key Difference In Retirement Bills – Stephen Cooper, Law360 Tax Authority ($). “Comprehensive retirement legislation is making its way through both chambers of Congress, but before it can become law negotiators must work to resolve some significant differences in the bills, such as how to automatically enroll workers into employer-sponsored savings plans.”
Yes, differences between the House and Senate bills must be ironed-out. But first, the Senate has to pass its bill. More on this bill later.
Inventories, Inflation, and Supply Chain Disruption, Part 2 – Martin Sullivan, Tax Notes ($). “Inflation is raising corporate taxes. Businesses using first-in, first-out accounting are hit. But some companies using last-in, first-out can be hit hard also. And because depreciation allowances aren’t indexed for rising prices, inflation reduces the value of deductions for depreciation. These effects of inflation on profit are observable in data from the Commerce Department’s Bureau of Economic Analysis (BEA).”
Inflation Bites Into State Sales Tax Hauls, Warns of Boom’s End – Donna Borak, Bloomberg ($). “More than half of states around the country saw sales tax collections fall in April for the first time since last summer, an early warning sign that trouble may be brewing for budget officers in fiscal 2023 as consumers adjust their spending habits because of decades-high inflation.”
California Tentative Deal Offers Up to $1,050 Gas Price Relief – Laura Mahoney, Bloomberg ($):
California families would get as much as $1,050 to offset rising gas prices and inflation under a tentative agreement between Gov. Gavin Newsom and Democrats in the Legislature.
Although a deal on the roughly $9 billion cash relief package isn’t final, lawmakers agree on a handful of other tax policy changes as part of a state budget package of about $235 billion. Those items include a sales tax exemption for diesel fuel and exclusion of forgiven 2021 Paycheck Protection Program loans from state income tax.
Remote Work Tax Litigation Will Continue, Panelists Say – Maria Koklanaris, Law360 Tax Authority ($). “Though the U.S Supreme Court turned down New Hampshire's remote tax case against neighboring Massachusetts, ongoing litigation elsewhere and the interests of many states in stopping cross-border taxation of their residents suggest the issue is not over, panelists said.”
Related:
Telecommuting Workers in Refuge States Complicate State Taxes - Iris Chung, Eide Bailly. “Due to the COVID-19 pandemic, employees have increasingly become remote workers and are changing how and where their work is done. Telecommuting usually implies working from a personal residence, but that residence may be in a state outside of the state where the employer is located.”
Tax Breaks in the Works for Philadelphia Businesses, Homeowners - Angélica Serrano-Román, Bloomberg ($):
Philadelphia businesses and property owners would see tax relief in the fiscal year that begins next week under a budget deal Mayor Jim Kenney (D) is expected to sign.
The City Council late Thursday approved a $5.8 billion city budget with cuts in business income and an increase in property assessments. The bill would increase the homestead exemption to $80,000 from $45,000, to help homeowners counter an average 31% increase in property tax assessments. Property owners could save an estimated $1,119 on their property tax bills next year, according to lawmakers.
Pass-Through Businesses Score Tax Break on Ohio Entity Sales – Alex Ebert, Bloomberg ($). “Ohio pass-through entity owners gained a lucrative tax break Friday with Gov. Mike DeWine’s signature of a bill giving preferential treatment to income from business sales.”
Tax Rules on Cryptocurrency ‘Airdrops’ Head to Arizona Governor – Brenna Goth, Bloomberg ($):
Recipients of free cryptocurrency airdropped to digital wallets wouldn’t have to pay income tax on the value under legislation Arizona state lawmakers passed late Friday.
The bill (H.B. 2204), which now heads to Gov. Doug Ducey (R) for consideration, is among the earliest efforts to put into Arizona law the tax treatment of virtual currencies and digital collectibles known as non-fungible tokens, or NFTs. State revenue agencies across the country are weighing their approaches to the growing markets, though most have yet to issue guidance, according to Bloomberg Tax data.
Global Tax Deal Faces Roadblocks From Hungary, Congress – Paul Hannon and Richard Rubin, Wall Street Journal ($). “U.S. and European officials are trying to inject fresh momentum into a global drive for a minimum corporate tax rate, but they are finding it difficult to navigate around a series of roadblocks, namely Democrats’ narrow margins in Congress and consequential objections from Hungary.”
This tax is attached to the Build Back Better bill that can pass with support only from Democrats. However, the legislation has stalled in the Senate for roughly six months due to a myriad of objections for why it should not become law. Those objections are chiefly coming from one Democratic lawmaker.
Also, the clock is ticking on this bill. Control of Congress could switch parties. If that happens, enacting this tax will be highly unlikely.
A lesson on how to kill a bill in Congress: It benefits the wealthy.
Senate retirement bill benefits wealthy Americans – Tobias Burns, Opinion piece in The Hill:
The Senate’s Enhancing American Retirement Now (EARN) Act raises the age at which taxpayers must start making withdrawals from 72 to 75, allowing them three extra years of tax-free growth.
Most Americans start living off their retirement accounts well before the age of 75, so the bumped-up age requirement really only affects the wealthy, who often use their retirement accounts as tax-sheltered investment vehicles rather than as savings to cover the cost of living in old age.
The bill throws another bone to rich taxpayers — and the Wall Street fund managers who look after their money — by allowing them to deposit an additional $10,000 a year into their retirement accounts beginning between the ages of 60 and 63. Setting aside an extra $10,000 a year is something most Americans can’t afford to do.
The House has already passed its retirement bill. But if the above argument takes hold in the Senate, passage from the upper chamber could become questionable.
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