Tax News & Views ERC Claims and Scarves Roundup

IRS opens new process for payroll companies, third-party payers to help client resolve incorrect claims for the Employee Retention Credit - IRS:

Third-party payers report and pay clients’ federal employment taxes under the third-party payer’s Employer Identification Number. They handle clients’ payroll and tax reporting duties. Some of these TPPs filed ERC claims for multiple employers. If a third-party payer’s client has since determined it is ineligible for the ERC and wants to resolve their claim, it is the third-party payer that needs to correct it.

This supplemental claim process lets a third-party payer that filed a prior claim with multiple clients “withdraw” only some clients while maintaining the claims of the qualifying clients.

Treasury Pushing to Wrap Up Catch-Up Contributions Regs - Caitlin Mullaney, Tax Notes ($):

Treasury is aiming for a timely release of the proposed regs that will address the Roth tax treatment of catch-up contributions to qualified retirement plans enacted in the SECURE 2.0 Act as part of the Consolidated Appropriations Act, 2023, Robert Daily of the Treasury Office of Benefits Tax Counsel said September 26 at the American Bar Association Virtual Fall Tax Meeting.

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Treasury is also working on proposed regs addressing outstanding questions regarding the automatic enrollment provision enacted in SECURE 2.0, according to William Evans, also of the Treasury Office of Benefits Tax Counsel.

On Capitol Hill

It's Officially Tax Extenders Season - Candy Stanton, Doug Sword - Tax Notes ($):

Having averted a government shutdown with a stopgap funding bill, Congress has ushered in that biennial rite that captivates the world of tax: the lame-duck tax extenders season.

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Lawmakers have a mix of opinions on the chances for a year-end tax bill, but an omnibus government funding package — now a possibility with a pre-2025 funding deadline — could serve as a vehicle for taxwriters to work with during the lame-duck period. The House and Senate both left for recess September 25 and are scheduled to return November 12.

Bennett Bill Would Increase Employer Child Care Credit - Tax Analysts, Tax Notes ($). " The Child Care for American Families Act, introduced by Senate Finance Committee member Michael F. Bennett, D-Colo., would increase the employer-provided child care tax credit from 25 percent to as much as 60 percent."

Campaign Trail

Harris Pledges $100 Billion in Tax Credits to Boost U.S. Manufacturing - Ken Thomas, Tarini Parti, and Andrew Restuccia - The Wall Street Journal:

The tax credits, which the campaign hasn’t described in detail, would cost $100 billion over 10 years and be paid for using revenue from raising taxes on U.S. companies’ foreign earnings if Congress implements the global corporate minimum tax agreement, according to Harris’s advisers. The incentives, aimed at countering China, would focus on revitalizing factory towns and retooling existing factories and boosting wages and union partnerships, campaign officials said.

Why Should I Care About the Corporate Tax Rate? - Daniel Bunn, The Tax Foundation:

So, what would a 28 percent corporate rate, as Harris proposes, actually do? We estimate it would lower long-run GDP by .61 percent, wages by .52 percent, and employment by 125,000 jobs, while raising $760 billion over 10 years.

Trump’s 15 percent proposal, on the other hand, would raise GDP by .44 percent, wages by .37 percent, and employment by 93,000 jobs, while reducing revenue by $460 billion over 10 years.

TCJA Outcomes Will Affect Corporations in 2025, Report Says - Tax Analysts, Tax Notes ($):

Regardless of the outcome of the presidential election, expiring Tax Cuts and Jobs Act provisions will be a major concern for corporations in 2025, particularly deductions and tax rates, while the corporate alternative minimum tax and stock buyback tax are unlikely to affect plans, S&P Global Ratings said in a September 24 report.

Harris' and Trump's Tax Plans Each Add To Deficit, Study Says - Kevin Pinner - Law 360 Tax Authority ($):

The U.S. federal deficit would grow by at least $2 trillion over the next decade from the tax policy plans of both major parties' candidates, former President Donald Trump and Vice President Kamala Harris, researchers said Thursday.

Neither candidate's tax plan would finance itself, and each would effectively raise taxes while adding more carveouts to the tax code, according to a working paper by researchers at the libertarian-leaning Tax Foundation, published by the Center for Economic Studies at the University of Munich.

The report.

Tax Trouble

Former commercial airline pilot sentenced to over three years in prison for tax evasion - IRS (defendant name omitted):

A former commercial airline pilot has been sentenced to 41 months in prison followed by two years of supervised release for filing false tax returns, failing to file tax returns, and making false claims, announced U.S. Attorney Andrew M. Luger.

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According to the evidence presented at trial, Defendant refused to pay his tax debt and took steps to actively evade the IRS’s collection efforts by hiding his income and assets in bank accounts in the name of shell religious non-profits and by liquidating his retirement accounts and converting the funds into cryptocurrency. Defendant also failed to file federal income tax returns for 2017, 2018, and 2019. It is estimated that Defendant owes the United States more than $300,000.

An IRS Crackdown on Abusive Trusts Snags a Dentist - and More - Laura Saunders, The Wall Street Journal:

While most Americans aren’t in the market for tax shelters, the allegations in this case are a reminder of what can happen when taxpayers ignore professional advice and common sense on taxes. They also show how easy it can be for people who want to slash their taxes to delude themselves.

“People see a complex structure and think, ‘This is what rich people do to reduce their taxes,’” says Bryan Skarlatos, a criminal tax attorney with Kostelanetz. “But a complex structure with no business purpose is often a sign of fraud to the IRS.”

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Tax News & Views ERC Claims and Scarves Roundup

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