Key Takeaways
- Former Missouri Congressman tapped to replace IRS Commissioner.
- Billy Long was an Employee Retention Credit promoter after leaving Congress.
- Disaster relief bill passes, heads to President.
- House, Senate lead taxwriters differ on approach to 2025 tax bill.
- No magic for "Harry Potter" actor's UK tax.
- IRS warns of "Charitable LLC" scam.
- International Ninja Day meets Martin Van Buren's birthday.
Trump Taps Former Congressman to Serve as IRS Commissioner - Benjamin Valdez and Doug Sword, Tax Notes:
The decision, announced in a December 4 release, indicates that Trump intends to remove current IRS Commissioner Daniel Werfel from the position. Werfel’s term is set to expire in November 2027 under the five-year term codified in the IRS Restructuring and Reform Act of 1998.
...
On his profile on the social media site X, Long describes himself as a “Certified Tax & Business Advisor” and adds, “DM me to save 40% on your taxes. We have a new traunch of tax credits just out!”
Trump Picks Ex-Congressman Who Hawked Tax Credits to Lead I.R.S. - Andrew Duehren, New York Times:
In a 2023 podcast interview discussing his work helping businesses claim the credit, Mr. Long said he and his associates had yet to have the tax agency deny a single claim. The program, the Employee Retention Tax Credit, was created by Congress and Mr. Trump in 2020 as part of a sweeping stimulus bill intended to incentivize businesses to pay their employees during the economic shutdown.
Link to podcast here.
Trump Picks Former Representative Billy Long As Next IRS Commissioner - Kelly Phillips Erb, Forbes. "Long does not have any formal training in tax, law, or accounting, does not have a college degree and never served in Congress on a tax writing committee. He dropped out of the University of Missouri before returning to school—this time, to an auction training program at the Missouri Auction School."
Former Representative Billy Long Picked by Trump to Lead IRS - Erin Slowey, Zach Cohen, and Chris Cioffi, Bloomberg ($):
“The president had such a mandate that I would give preference to him getting his people in there,” Grassley told Bloomberg Tax minutes after Trump announced Long’s nomination.
Further reading from Wikipedia.
Congress Passes a Tax Bill
Disaster Tax Breaks—Finally—Head for Biden’s Approval - Richard Rubin, Wall Street Journal:
The key provision would let disaster victims deduct casualty losses exceeding $500, instead of only being allowed to deduct losses above 10% of adjusted gross income under the tax law that would otherwise apply. They could take those tax deductions atop the standard deduction instead of needing to itemize to claim them.
The bill would also let people exclude from income certain payments received due to wildfires since 2014 or due to last year’s train derailment in East Palestine, Ohio.
Congressional Maneuvers on the Next Big Tax Bill
Top Republicans collide on strategy for Trump tax agenda - Aris Folley and Tobias Burns, The Hill:
...
But Rep. Jason Smith (R-Mo.), the chairman of the House’s powerful tax-writing Ways and Means committee, told reporters Wednesday he opposed putting tax reform on the back burner.
Reconciliation ‘Needs to Be One Bill’ Says Top House Taxwriter - Cady Stanton, Tax Notes ($): "Smith cited a thin House majority, the deadline pressure of the expiring Tax Cuts and Jobs Act provisions — scheduled to sunset on December 31, 2025 — and a history of challenges to Congress passing two reconciliation bills in one year as reasons why using a single package should be his caucus’s approach."
GOP caught between immigration and tax cuts for early 2025 priorities - Jacob Bogage and Mariana Alfaro, Washington Post:
...
A large, tax-based reconciliation bill might be able to package together enough programs to make it attractive to even the most moderate lawmakers in the party. But splitting those priorities into multiple measures might not work as well, some lobbyists and lawmakers worry.
The article also says nothing may happen quickly: "Logistically, Republicans are beginning to privately concede it could be months before meaningful progress on any reconciliation bill takes shape."
Navigating 2025 Tax Cuts May Be Tough For Trump And The Hill GOP - TaxVox. "If Congress enacts the tariffs through reconciliation, any new revenues could be used to finance some of the tax cuts it approves. But Trump doesn’t appear to want to wait for congressional action. And if he imposes the tariffs unilaterally, using them as an offset may not be so easy since congressional scorekeepers normally don’t count administrative actions in their budget estimates."
Register today for our December 19 Legislative Update webinar.
International Terminal
Eide Bailly's International Tax Team and our affiliates at HLB, the Global Advisory and Accounting Network stand ready to help with your worldwide tax planning and compliance needs.
INTERVIEW: Kyle Pomerleau - Alex Parker, Things of Caesar ($):
...
(Quoting Kyle Pomerleau) And then on the trade stuff. My starting point here is that trade is good, international trade is good. It has made the United States wealthier on net, and these trade provisions are going to make trade more expensive. They're going to have a negative impact on the U.S. economy. It's not just what the United States does to other countries. It's what those countries do to the United States. And that, in a sense, doubles up the economic harm of any of these provisions. You may think $100 billion in tariffs, that's not a very big deal. Well, it becomes a big deal when other countries start retaliating against that $100 billion dollars of tariffs. The economic damage is going to be far in excess of the amount of revenue that we raise from that. There are some good things that can come out of this, but the downside risks are pretty significant if things go bad.
Pillar 2 & the Call of Cthulhu - Leonard Wagenaar, Leonard's Tax Posts. "Many have tried to discern an overarching purpose in P2. Is it about stopping profit shifting? Or about stopping tax competition? But once you get into the weeds of the rules, the mechanical operation overrides any sense of purpose."
French Stocks Gain on Tax Relief Optimism as Barnier Toppled - Julien Ponthus and Macarena Muñoz, Bloomberg ($). "French equities rise after a no-confidence vote toppled Prime Minister Michel Barnier, amid optimism that his proposed tax hikes will not pass in parliament."
UK Fiscal Stance Unsustainable Without More Tax Rises, OECD Says - Phillip Aldrick, Bloomberg. "The call for tax rises clashes with Reeves’ commitment last week that she was “not coming back with more borrowing or more taxes,” a statement that has not been repeated by Cabinet colleagues including the prime minister. At the budget she raised taxes by £40 billion ($50.7 billion) a year to fix Britain’s ailing public services, one of the biggest tax-raising events on record, triggering a backlash from businesses and farmers."
Harry Potter star Rupert Grint ordered to pay £1.8m in tax - MSN:
Grint had received a £4.5m sum from a company which managed his business affairs as "consideration for rights, records and goodwill" from his work, which he claimed was a "capital asset" and therefore the subject of capital gains tax.
Blogs and Bits
Tasty Thanksgiving tax tip leftovers: 5 Tax Turkeys to Avoid - Kay Bell, Don't Mess With Taxes. "1. Not reviewing and adjusting if necessary your paycheck withholding."
IRS Launches Private Aircraft Audit Campaign - Ben Peeler and Bill Hopkins, Eide Bailly. "Two specific areas have been identified as high-risk areas of non-compliance: the deductibility of costs related to personal travel, and the required income inclusion for personal use of business aircraft."
Nationwide injunction halts BOI reporting for now - Martha Waggoner, The Tax Adviser. "Under the CTA, P.L. 116-283, which Congress passed in 2021 as an anti-money-laundering initiative, reporting companies must disclose the identity and information about beneficial owners of the entities. For new entities incorporated after Jan. 1, 2024, reporting companies must also disclose the identity of "applicants" — defined as any individual who files an application to form a corporation, limited liability company, or other similar entity."
Cracking The Code On FBAR Penalties: IRS Collection Hurdles Explained - Virginia La Torre Jeker, US Tax Talk. "The Financial Crimes Enforcement Network, FinCEN Form 114, Report of Foreign Bank and Financial Accounts, is a crucial yet frequently misunderstood requirement for U.S. persons with foreign financial accounts. The FBAR may be familiar to many Americans living abroad, but it remains largely unknown to many U.S.-based individuals who might still have an obligation to file it. This can happen if, for example, they inherit a foreign account, a foreign relative grants them signature authority over an overseas account, or if a U.S. parent receives control over a foreign account set up for their child. Awareness of these requirements is crucial, as failing to file can lead to significant penalties."
TC Holds That FBAR Penalties Are Not Taxes and Are Not Subject to Collection Due Process Rights - Ronald Marini, The Tax Times. "The decision limits the avenues for contesting FBAR penalty collections and underscores the separate legal framework governing these penalties compared to regular tax assessments."
Related: Eide Bailly Penalty Help.
Scam Alert
Charitable contribution scams on the rise; taxpayers beware of those promoting fraudulent schemes - IRS (my emphasis):
...
In the “Charitable LLCs” scheme, promoters create documents establishing the LLC for a fee. They then assist in the transfer of the taxpayer’s assets to the LLC and create documents that purport to transfer membership units in the LLC to a charity. The promoter might supply an appraisal supporting the valuation for the claimed gift and might even provide a list of charities willing to accept the membership units or identify a single charity that will accept the donation.
Promoters might incorrectly advise clients that they can retain control and legally access the cash or other assets transferred to the LLC for their own personal use after the donation. Promoters might also execute an “exit strategy” for taxpayers to buy back their contributions at a significantly discounted price after a period of time.
Generally, taxpayers cannot deduct a charitable contribution of less than their entire interest in property, and retaining rights to control the donated interests or buy back assets will disqualify the transaction as a deductible charitable contribution.
If it sounds too good to be true, assume it is until you clear it with an independent tax pro.
What day is it?
It's International Ninja Day, and the birthday of the famed American Ninja the eighth U.S. President, Martin Van Buren.
We're Here to Help
