Tax News & Views Retirement Frog Roundup

Retirement Plans

IRS OKs Rules On Withholding for Pension Payments – Dylan Moroses, Law360 ($):

The Internal Revenue Service released final rules Friday covering certain retirement plans' obligation to withhold income tax when they make payments or distributions to taxpayers outside the U.S. starting in 2026.

The IRS said it received no comments on the proposed rules it published in 2019, so the final rules adopt those without change except for minor wording tweaks and the addition of the applicability date. The rules cover how plans should address withholding for taxpayers that receive distributions depending on if they live in the U.S. or at a U.S. military base, diplomatic post or elsewhere overseas.

IRS Retirement Rule Finalized for Taxpayers Outside US – Erin Slowey, Bloomberg ($):

The IRS Friday finalized regulations on withholding for retirement plan payments made to US taxpayers living outside of the country.

The regulations (RIN: 1545-BN52) affect tax withholding for retirement plan distributions under section 3405(a) and (b) of the Internal Revenue Code. No comments were received after the regulations were first proposed.

Sustainable Aviation Fuel

IRS Issues More Guidance on Sustainable Aviation Fuel Tax Credit – Erin Slowey, Bloomberg ($):

The IRS released additional guidance Friday on the sustainable aviation fuel tax credit, fixing a calculation issue in one of the models.

For companies to qualify for the credit, which ranges from $1.25 to $1.75 for each gallon of sustainable aviation fuel or SAF, the fuel must have a minimum reduction of 50% in lifecycle greenhouse gas emissions.

Notice 2024-74 clarifies that taxpayers who use a 40BSAF-GREET 2024 safe harbor to calculate its emission reduction percentage must use the October 2024 version of the model going forward.

IRS Urges Taxpayers to Use New GREET Model for Fuel Credit – Mary Katherine Browne, Tax Notes ($):

Treasury and the IRS are urging taxpayers to use the updated version of the new greenhouse gases, regulated emissions, and energy use in technologies (GREET) model when doing calculations for the sustainable aviation fuel credit.

Notice 2024-74, 2024-45 IRB 1, released October 18, instructs taxpayers to use the October 2024 updated 40BSAF-GREET model when claiming credits for the sale or use of a qualified mixture on or after October 18.

IRS Releases Sustainable Airplane Fuel Credit Guidance – Jack McLoone, Law360 ($):

Taxpayers using a certain safe harbor to calculate their emissions reduction percentage with regard to sustainable airplane fuel credit claims on the sale or use of qualified mixtures after a certain date must use an updated model, the IRS said Friday.

In Notice 2024-74, the Internal Revenue Service said those using the 40BSAF-GREET 2024 model on the sale or use of a qualified mixture on or after Friday must use its October version. This updated model addresses a calculation issue included in the April version, the agency said.

Election

Trump Open to Granting Tax Exemptions to Military and Police – Alexander Rifaat, Tax Notes ($). “Former President Trump said he would consider allowing active military personnel, veterans, police officers, and firefighters to claim exempt status on their tax returns.”

Trump Considers No Taxes for Military, Police and Firefighters – Stephanie Lai, Bloomberg ($). “Donald Trump said he’d consider exempting police officers, firefighters, active duty military and veterans from paying taxes, the Republican nominee’s latest campaign trail idea to deliver tax breaks to key groups of supporters.”

IRS on AI

As IRS Spending on AI Skyrockets, Congress Boosts Oversight – Chris Cioffi and Erin Slowey, Bloomberg ($):

IRS spending on artificial intelligence rose by over 700% in the last half-decade as it hones the use of machine learning to identify tax cheats and improve taxpayer communication, according to Bloomberg Government contracting data.

Agency spending of at least $60 million in fiscal 2024 on AI and machine learning is expected to keep rising in coming years—an upshot of the agency tapping into billions provided in the 2022 tax-and-climate bill.

And though the IRS has provided some details on how it’s using the new transformative tech, lawmakers in Congress are keeping their attention focused on agency oversight.

Deficit

US Posts $1.8 Trillion Annual Deficit, Highest Outside of Covid – Viktoria Dendrinou and Daniel Flatley, Bloomberg ($):

The US government’s budget deficit hit its highest since the Covid pandemic years in 2024, propelled by increased debt interest costs and higher Social Security and defense spending — which more than offset a boost in tax revenues.

The shortfall for the fiscal year, which ended Sept. 30, came to $1.83 trillion, up from $1.7 trillion the previous year and the largest on record aside from the 2020 and 2021 fiscal years, US Treasury data released Friday showed.

Conservation Easements

Tax Court Gave Short Shrift to Land Donors, 11th Circ. Told – Anna Scott Farrell, Law360 ($):

The owners of a waterfront property in Georgia who protected 500 acres for conservation told the Eleventh Circuit that the U.S. Tax Court drastically undercut the value of their gift and its corresponding tax deduction by accepting flawed evidence provided by the government's sole witness.

In briefs Thursday, Ralph Evans and Nathaniel Carter, who own the property through Dover Hall Plantation LLC, accused the Tax Court of disregarding their copious evidence that what they relinquished in forgoing the land's development potential in donating the conservation easement was worth at least around $10 million.

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Trina Pinneau