Key Takeaways
- Corporate Transparency Act on hold.
- Final regs on retirement of tax-exempt bonds.
- 2025 Republican tax priorities.
- Future of IRS hiring.
- DeFi reporting final regs.
- National Resolution Planning Day!
Fifth Circuit Puts Corporate Transparency Act Back on Hold - Michael Smith, Tax Notes ($):
In a December 26 order, the Fifth Circuit's merits panel reinstated the injunction in Texas Top Cop Shop Inc. v. Garland, just three days after its motions panel granted an emergency motion by the government to stay the injunction and expedited the case for oral arguments. The merits panel said it vacated the order "to preserve the constitutional status quo" while it "considers the parties’ weighty substantive arguments.”
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The CTA initially had a January 1, 2025, reporting deadline, but the deadline was postponed until January 13, 2025. According to a December 27 FinCEN alert, reporting companies no longer have a January 13 deadline but are asked to voluntarily submit the information.
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The CTA initially had a January 1, 2025, reporting deadline, but the deadline was postponed until January 13, 2025. According to a December 27 FinCEN alert, reporting companies no longer have a January 13 deadline but are asked to voluntarily submit the information.
On Capitol Hill
GOP Spending Rebellion Is Ominous Sign for Trump’s All-Republican Government - Richard Rubin, The Wall Street Journal:
Chances for chaos abound. On taxes alone, New York and New Jersey lawmakers are insisting on a significant increase in the $10,000 cap on state and local tax deductions. Some Republicans say Congress must repeal Biden’s clean-energy tax breaks while others warn against disrupting clean-energy investments in their districts. Some House Republicans worry about tax cuts increasing budget deficits unless spending cuts are attached, while senators are planning ways to make extending expiring tax cuts look costless.
Will President Trump Change The Federal Tax Code In 2025? - Mike Sylvester, Forbes:
To navigate these challenges, Republicans will use a process called reconciliation, which allows certain bills to pass in the Senate with a simple majority (51 votes) instead of the usual 60. This process is faster but has strict rules about what can be included. Republicans may choose to split their efforts into two separate bills:
- The first bill, focused on immigration and energy, is likely to be introduced in the first one hundred days and should be easier to pass.
- The second bill, focusing on taxes, will be much harder and could take until late 2025 to finalize.
- The first bill, focused on immigration and energy, is likely to be introduced in the first one hundred days and should be easier to pass.
- The second bill, focusing on taxes, will be much harder and could take until late 2025 to finalize.
Trump Policy Priorities Could Push Tax Into the Back Seat - Doug Sword and Cady Stanton, Tax Notes ($):
Senate leadership and some Republicans in the House appear to be leaning toward the two-bill approach that is being pushed by the couple dozen or so conservative hard-liners in the House Freedom Caucus.
“We do know that extending the tax cuts is incredibly important, but will require some hard decisions to be made on spending reductions in order to control the deficit,” House Freedom Caucus Chair Andy Harris, R-Md., said December 18.
“We do know that extending the tax cuts is incredibly important, but will require some hard decisions to be made on spending reductions in order to control the deficit,” House Freedom Caucus Chair Andy Harris, R-Md., said December 18.
Blogs and Bits
How to Avoid Costly Tax Blunders in 2025 - Laura Saunders, The Wall Street Journal:
Higher interest rates pushed up the penalty on income-tax underpayments to a steep 8% for most of 2024, and it is still quite high at 7%. That compares with 3% a few years ago. To avoid these charges, Americans must pay at least 90% of what they owe well before the April tax-due date. The deadline is Dec. 31 for employees and others who have taxes withheld, and it is Jan. 15, 2025, for filers paying quarterly estimated taxes.
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Backdoor Roth IRAs are a clever way for savers to make indirect contributions to Roth IRAs if they earn too much to make direct contributions. IRA contributions can be either $7,000 or $8,000 for 2024, depending on age, and they can be made until April 15, 2025. But savers doing backdoor Roths should be aware of a potential pitfall: There could be surprise tax bills and complex record-keeping if the saver also has traditional IRAs holding pretax dollars that were deducted going in—as many do.
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Backdoor Roth IRAs are a clever way for savers to make indirect contributions to Roth IRAs if they earn too much to make direct contributions. IRA contributions can be either $7,000 or $8,000 for 2024, depending on age, and they can be made until April 15, 2025. But savers doing backdoor Roths should be aware of a potential pitfall: There could be surprise tax bills and complex record-keeping if the saver also has traditional IRAs holding pretax dollars that were deducted going in—as many do.
Learning from Federal Experience, Minnesota Will Soon Advance State-Level Child Tax Credit Payments - Elaine Maag and Peter Subkoviak, Tax Policy Center. "Research shows that advance payments helped families pay school related expenses as well as provide protections against day-to-day hardships for half the year. They reduced food insecurity and child poverty."
The final regs (T.D. 10020) issued December 27 unify the existing patchwork of guidance for taxpayer determinations on when tax-exempt bonds issued by state and local governments are treated as retired for federal income tax purposes.
The regs finalize the proposed rules (REG-141739-08) that were issued in December 2018, concurrently with final regs (T.D. 9845) that streamlined the public approval process, reduced administrative burdens, and addressed statutory changes for the public approval requirement that applies to tax-exempt private activity bonds issued by state and local governments.
The regs finalize the proposed rules (REG-141739-08) that were issued in December 2018, concurrently with final regs (T.D. 9845) that streamlined the public approval process, reduced administrative burdens, and addressed statutory changes for the public approval requirement that applies to tax-exempt private activity bonds issued by state and local governments.
DeFi Reporting
IRS Targets Front-End Services In DeFi Reporting Final Regulations - Joshua D. Smeltzer, Forbes:
On December 27, 2024 the Treasury Department published the final regulations applicable to DeFi specifically targeting participants in trading front-end services that help retail investors interact with DeFi protocols.
The final regulations outline the three traditional steps in the sale of a security involving a customer giving a trade order to a broker, the broker routing the order to a trading center, and then finding a counterparty and settling and recording the transaction. The IRS then outlines the DeFi model as also involving three “layers” it calls the interface layer, application layer, and settlement layer.
The final regulations outline the three traditional steps in the sale of a security involving a customer giving a trade order to a broker, the broker routing the order to a trading center, and then finding a counterparty and settling and recording the transaction. The IRS then outlines the DeFi model as also involving three “layers” it calls the interface layer, application layer, and settlement layer.
Treasury Finalizes DeFi Reporting Rules for Crypto Brokers - Mary Katherine Browne, Tax Notes ($):
The final regulations (T.D. 10021), issued December 27, detail the information reporting requirements for brokers providing services in DeFi transactions, particularly brokers that provide “front-end services.” DeFi platforms are peer-to-peer financial systems that use blockchain technology to allow people to transact directly with one another without the need for a bank or financial institution to clear the transactions. One of the benefits of DeFi is that it reduces costs and transaction times.
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Members of the cryptocurrency industry are unhappy with the regulations. Several members previously campaigned to have DeFi trading platforms removed from the definition of broker. “Today’s broker rulemaking by the IRS and Treasury — days before the end of the year — is a disappointing, but expected, final attempt to send the American crypto industry offshore. On behalf of the industry, we’re prepared to take aggressive action to fight back,” Kristin Smith of the Blockchain Association said in a release.
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Members of the cryptocurrency industry are unhappy with the regulations. Several members previously campaigned to have DeFi trading platforms removed from the definition of broker. “Today’s broker rulemaking by the IRS and Treasury — days before the end of the year — is a disappointing, but expected, final attempt to send the American crypto industry offshore. On behalf of the industry, we’re prepared to take aggressive action to fight back,” Kristin Smith of the Blockchain Association said in a release.
Tax Trouble
Defendant was the owner of several restaurants, including Company in Springfield and Branson, Mo. Defendant admitted that he participated in a wire fraud conspiracy that fraudulently attempted to obtain $13,925,534 through commercial loans as well as Paycheck Protection Program loans and Economic Injury Disaster loans and grants under the CARES Act from January 2018 to Sept. 13, 2022. Although Defendant admitted that he attempted to obtain almost $14 million, the court today ruled that the actual loss amount was $8,173,736, for which Defendant must pay restitution.
What day is it?
2025 is almost here! It's National Resolution Planning Day!
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