Key Takeaways
- Biden signs Disaster Tax Relief and Vet Contribution bills.
- Republicans debate on 2025 legislative strategy.
- Republicans debate on future of SALT deduction.
- Trump says he's open to cutting taxes on capital gains and dividends.
- IRS releases results on recent priorities.
- Future IRS funding uncertain.
- National Ice Cream Day!
The disaster tax relief bill, estimated by the Joint Committee on Taxation (JCX-5-24) to cost $4.93 billion, would provide tax relief to victims of California wildfires, Florida hurricanes, and the East Palestine, Ohio, train derailment.
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The VETT Act, meanwhile, would change the membership threshold that veterans’ service organizations must meet to accept deductible donations, lowering it from 90 percent wartime veterans to 75 percent, as long as the organization is a congressionally chartered entity. The JCT estimated (JCX-54-23) the cost of that bill at $1 million over 10 years.
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The VETT Act, meanwhile, would change the membership threshold that veterans’ service organizations must meet to accept deductible donations, lowering it from 90 percent wartime veterans to 75 percent, as long as the organization is a congressionally chartered entity. The JCT estimated (JCX-54-23) the cost of that bill at $1 million over 10 years.
2025 Republican Tax Policy
Republicans Watch for Trump to Break Impasse on 2025 Plans - Richard Rubin, The Wall Street Journal:
There is one Republican who can break the party’s logjam over its 2025 legislative strategy: President-elect Donald Trump, whom lawmakers are watching for a crucial call about the GOP’s priorities.
Trump hasn’t weighed in explicitly on the debate that has been raging among congressional Republicans: whether to have one big bill, or a bill focused on border enforcement followed by a separate tax bill. The two-bill approach favored by senators has momentum, including support from a key incoming administration official. But any path requires near-unanimity among Republicans in Congress, and top lawmakers say they haven’t made final decisions.
Trump hasn’t weighed in explicitly on the debate that has been raging among congressional Republicans: whether to have one big bill, or a bill focused on border enforcement followed by a separate tax bill. The two-bill approach favored by senators has momentum, including support from a key incoming administration official. But any path requires near-unanimity among Republicans in Congress, and top lawmakers say they haven’t made final decisions.
Republicans clash over 'SALT' deduction as they seek to extend Trump's tax law - Sahil Kapur, NBC News:
The GOP can afford no more than two defections to pass its planned bill, assuming Democrats are united in opposition. The pro-SALT Republicans are a minority in their party, but they hold a key advantage: Major parts of the 2017 tax law expire at the end of 2025, meaning the SALT cap would go away and tax filers could deduct unlimited amounts of state and local taxes on their federal returns absent congressional action.
Trump Open to Cutting Taxes on Capital Gains and Dividends - Alexander Rifaat - Tax Notes ($):
Asked by CNBC on the sidelines of his appearance at the New York Stock Exchange December 12 whether he will explore reducing those taxes, Trump confirmed that he will look into making further cuts.
“We’re going to be talking about that,” Trump said.
“We’re going to be talking about that,” Trump said.
IRS Updates
The IRS also announced today new results from the focus on high-income non-filers who have not filed taxes since 2017. The IRS has now collected an initial $292 million from more than 28,000 non-filers, an increase of $120 million since September 2024. These are cases where IRS has received third party information—such as through Forms W-2 and 1099s—indicating these people received income between $400,000 and $1 million or more than $1 million, but failed to file a tax return.
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IRS Criminal Investigation (IRS-CI) is charged with investigating tax and financial crimes, including drug trafficking, cybercrime and terrorist financing. In Fiscal Year 2024 (FY24), IRS-CI identified more than $9.1 billion in fraud, obtained court orders totaling $1.7 billion in restitution to U.S. taxpayers and seized criminal assets totaling approximately $1.2 billion.
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IRS Criminal Investigation (IRS-CI) is charged with investigating tax and financial crimes, including drug trafficking, cybercrime and terrorist financing. In Fiscal Year 2024 (FY24), IRS-CI identified more than $9.1 billion in fraud, obtained court orders totaling $1.7 billion in restitution to U.S. taxpayers and seized criminal assets totaling approximately $1.2 billion.
IRS recovers $4.7 billion in back taxes and braces for cuts with Trump and GOP in power - Fatima Hussein, Associated Press News:
Despite its gains, the future of the agency’s funding is in limbo.
The IRS originally received an $80 billion infusion of funds under the Inflation Reduction Act though the 2023 debt ceiling and budget-cuts deal between Republicans and the White House resulted in $1.4 billion rescinded from the agency and a separate agreement to take $20 billion from the IRS over the next two years and divert those funds to other nondefense programs.
The IRS originally received an $80 billion infusion of funds under the Inflation Reduction Act though the 2023 debt ceiling and budget-cuts deal between Republicans and the White House resulted in $1.4 billion rescinded from the agency and a separate agreement to take $20 billion from the IRS over the next two years and divert those funds to other nondefense programs.
Fact Sheet Details Noncompliance Targets IRS Hopes to Hit - Tax Analysts, Tax Notes ($):
The IRS has issued a fact sheet (FS-2024-32) announcing an examination campaign to address a tax deferral transaction in which plaintiff’s attorneys or law firms fail to report contingency-based legal fees, noting that such fees are includable in income in the year funds are transferred to a third party.
In addition to focusing on deferred transaction strategies, the IRS says it's also making use of whistleblowers to help uncover offshore tax evasion and is on the lookout for filings of Form 8275 disclosures that lack a reasonable basis.
In addition to focusing on deferred transaction strategies, the IRS says it's also making use of whistleblowers to help uncover offshore tax evasion and is on the lookout for filings of Form 8275 disclosures that lack a reasonable basis.
Blogs and Bits
How Seniors Can Donate More to Charity and Pay Less in Taxes - Laura Saunders, The Wall Street Journal:
While all Americans can get tax breaks for giving, those 70½ or older have the best choices. They include strategies that can reduce a range of taxes, offset income from Roth IRA conversions, or bypass capital-gains taxes. Givers in their 60s should take note and factor them into long-term planning.
But many seniors are unaware of these moves, especially two key tax-favored ways to give: qualified charitable distributions, or QCDs, and donor-advised funds, or DAFs.
But many seniors are unaware of these moves, especially two key tax-favored ways to give: qualified charitable distributions, or QCDs, and donor-advised funds, or DAFs.
Tax Trouble
Bay Area CEO pleads guilty to employment tax crimes - IRS (Defendant and Company name omitted):
According to court documents and statements made in court, Defendant, of Santa Clara, was the CEO of Company, a company that provided metal coating services across various industries in Campbell and elsewhere. From at least the first quarter of 2010 through the end of 2019, Company withheld Social Security, Medicare, and income taxes from the wages paid to its employees. However, Defendant, who was responsible for ensuring those funds were reported and paid to the IRS, did not do so.
In total, Defendant caused a tax loss to the IRS of approximately $1,150,000.
In total, Defendant caused a tax loss to the IRS of approximately $1,150,000.
Bitcoin Investor Gets 2 Years For Tax Fraud In Landmark Case - Anna Scott Farrell, Law 360 Tax Authority ($):
An investor who concealed millions of dollars he earned in bitcoin and became the first person criminally charged for failing to report gains from the sale of cryptocurrency by filing false returns was sentenced to two years in federal prison Thursday.
Frank Richard Ahlgren III, an early investor in bitcoin who admitted he didn't report gains on $3.7 million used to buy a house in Park City, Utah, was also ordered by a Texas federal court to pay more than $1 million in restitution to the Internal Revenue Service for the lost tax dollars, according to the U.S. Department of Justice.
Frank Richard Ahlgren III, an early investor in bitcoin who admitted he didn't report gains on $3.7 million used to buy a house in Park City, Utah, was also ordered by a Texas federal court to pay more than $1 million in restitution to the Internal Revenue Service for the lost tax dollars, according to the U.S. Department of Justice.
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