Key Takeaways
- Got a side hustle? Check your withholding.
- TIGTA says states can do better guarding tax information.
- Those other expiring tax provisions - including biodiesel breaks.
- Tip exclusions and tax fairness.
- "Most crypto investors owe little in crypto-related taxes."
- O-zone skepticism.
- Atlanta municipal CFO Tax TikTok tactic gunned down.
- Happy National Cherry Turnover Day!
IRS encourages people to do an end-of-summer tax checkup to avoid tax surprises next year - IRS:
Those who should be especially careful are:
-Gig economy workers.
-Those with a “side hustle.”
-Anyone earning income not subject to withholding.
These individuals should check the amount they pay, or the amount of tax they have withheld throughout the year, to bring the tax they pay closer to what is owed. The IRS has a special Tax Withholding Estimator that can help taxpayers align their tax withholding or tax payments with what they owe.
Too many taxpayers don't start thinking about taxes until December, or even later. That may be fine if you have a simple tax life. But if you have a business - and gig work counts as a business - or if you have had an unusual income event, like a big stock gain or an unusual bonus - a mid-year check-up is in order. It's easier to fix underwithholding and estimated payments with four months to go in the year than with four weeks.
TIGTA Calls For Better Guarding Of Shared Tax Info - Jack McLoone, Law360 Tax Authority ($):
TIGTA, the agency's federal watchdog, found that efforts to implement safeguards for the sharing of federal tax information with state, territorial and local agencies were largely successful, with some caveats, according to a report. For example, 41% of the 251 safeguard reports due from state agencies in 2022 were received late, with another 5% not received at all, TIGTA said.
Taxpayers should note this item from the TIGTA report (my emphasis; FTI=federal tax information):
TIGTA considers emailing tax information a "data incident." You should too. Use your preparer's confidential upload portal to transmit your tax information. Don't send your W-2s and 1099s as email attachments, and never put your social security number in an email.
Tax Extenders Menu Heavy With Energy, Business Tax Breaks - Cady Stanton and Doug Sword, Tax Notes ($):
The extenders include a dozen tax provisions expiring at year’s end, a smattering of leftover extenders that didn’t make it into the August 2022 Inflation Reduction Act but may still have political support, and the 10 tax provisions from the Tax Relief for American Families and Workers Act of 2024 (H.R. 7024), which passed the House on a 357-70 vote in January.
These "other" extenders include the second-generation biofuel producer credit, and other biofuel incentives. They also include the deduction for research costs and other items that are in the tax bill passed by the House in January that has been unable to advance in the Senate.
Taxes on the campaign trail
Candidates' Plans To End Tip Taxes Spark Fairness Concerns - Asha Glover and David van den Berg, Law360 Tax Authority ($):
...
The proposal could also treat employees in the same workplace differently, said Joe Hughes, a senior policy analyst at the Institute on Taxation and Economic Policy, aleft-leaning tax research organization. For example, front-of-house restaurant workers such as servers could benefit greatly from the proposal while kitchen staff wouldn't.
Trump economic plans would cost more than $4 trillion over a decade: Analysis - Aris Folley, The Hill:
“We project that spending increases by $2.3 trillion over 10 years while conventional tax revenue increases by $1.1 trillion, for a difference in primary deficits of $1.2 trillion. Accounting for negative economic feedback effects, primary deficits increase to $2 trillion,” the analysis said.
No Sign of Trump Releasing Tax Returns - Alexander Rifaat, Tax Notes ($). "During his 2016 presidential campaign, Trump claimed he could not release them because he was under audit. In 2020, an IRS contractor leaked parts of Trump’s tax returns to The New York Times, which showed years of sustained losses."
Cryptology
Crypto tax evasion is ‘pervasive’ - Robin Wigglesworth, Financial Times. "However, a failure to disclose holdings is obviously different from outright tax evasion, even if both are illegal. A lot of people will hold such modest amounts, or simply be so underwater on their “investments”, that they don’t actually owe any taxes."
The article references a new paper from the National Bureau of Economic Research. From the abstract: "We find that crypto tax noncompliance is pervasive, even among investors trading on exchanges that share identifiable trading data with tax authorities. However, since most crypto investors owe little in crypto-related taxes, enforcement strategies need to be well-targeted or cheap for benefits to outweigh costs."
Sixth Circuit Revives Constitutional Challenge to Crypto Transactions Reporting Rule - Parker Tax Pro Library. " The Sixth Circuit found that the plaintiffs had standing to bring their claims under the enumerated powers provision, the First Amendment, and the Fourth Amendment and the claims were ripe for adjudication."
6th Circuit Remands Case for Consideration of Certain Constitutional Claims Against § 6050I(d)(3) Addition to Include Digital Assets in CTR Reportable Cash - Jack Townsend, Federal Tax Procedure. "I will say that while dismissal on the pleadings may have not been appropriate for all of plaintiffs’ claims, as the Court of Appeals summarizes the claims, I don’t see any material prospect of plaintiffs succeeding."
Tax Policy Corner
Opportunity Zones Face Skepticism Over Who Benefits the Most - Chris Cioffi, Bloomberg:
“Opportunity zones need a fundamental reworking if it’s going to be continued. It is effectively subsidizing development that would have happened anyway in relatively well-off or appreciating markets,” said Brett Theodos, a senior researcher who specializes in community development at the Urban Institute. It isn’t damaging communities, but it’s not delivering much social benefit for the considerable expense, he said.
Blogs and Bits
Facing the Oct. 15 tax-filing extension deadline? Here are some tips to make sure you meet it. - Kay Bell, Don't Mess With Taxes. "The incessantly ticking clock isn’t a reason to panic. It is, however, a reminder that you don’t want to push that Oct. 15 deadline. The Internal Revenue Service doesn’t give you any more time to file your Form 1040."
IRS restarting processing of some ERC claims - National Association of Tax Professionals. "After a nearly year-long pause to address its issues with processing employee retention credit (ERC) claims, the IRS has begun processing some claims filed after Sept. 14, 2023. The IRS also plans to begin the payment process for 50,000 claims in September. However, the IRS isn’t lifting its moratorium on the processing of new ERC claims. Instead, the agency is 'shifting' the moratorium period to allow for the processing of claims filed between Sept. 14, 2023, and Jan. 31, 2024."
Related: IRS Releases Second ERC Voluntary Disclosure Program.
Tax Court Applies the Best Interpretation as Required by Loper Bright Rejection of Chevron Deference - Jack Townsend, Federal Tax Procedure. "As stated, the result may have been a no-brainer even without the demise of Chevron. Facially, from the statute, the later “correcting” legislation only was effective from its stated effective date rather than the earlier effective date. Fair interpretation of the statute just couldn’t get that far even with Chevron. As thus stated, the issue could have been resolved at Chevron Step One."
IRS Continues To Pursue Complex Arrangements To Evade Taxes - Ronald Marini, The Tax Times. "The IRS ramped up efforts to pursue high-income, high-wealth individuals who failed to pay a tax bill. These high-end collection cases are concentrated among taxpayers with more than $1 million in income and more than $250,000 in recognized tax debt. Out of a total of 1,600 of these cases, the IRS has assigned 1,500 to revenue officers, with over $1 billion collected so far."
Tax Crime Watch: Public Finance
City of Atlanta’s Former Chief Financial Officer Sentenced to Prison for Federal Program Theft and Tax Obstruction - US Department of Justice:
According to court documents, from 2011 to 2018, Jimmie Anthony “Jim” Beard, 60, of Fort Lauderdale, Florida, oversaw the City of Atlanta’s Department of Finance, in which his primary responsibility was to manage the city’s financial condition. At least as early as 2015, Beard devised and executed a scheme to use his authority as CFO to obtain money and property from Atlanta for his own use, including to pay for thousands of dollars in personal travel expenses for himself, his family, and his travel companions, and to buy and possess restricted machine guns.
In my experience, multiple machine guns are seldom required for accounting and finance jobs.
According to the Justice Department, the defendant used a tactic touted on social media: pretending to have a business. He reported a "consulting" business on Schedule C, using it to deduct personal expenses. It didn't work - and not just because he didn't set up an LLC or post on TikTok.
What day is it?
It's National Cherry Turnover Day! I hope some one turns one over to me.
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