Key Takeaways
- IRS pulls buyout offer for "critical filing season positions."
- Try again after tax season.
- What buyouts, hiring freeze mean for taxpayer service.
- Musk and taxpayer data.
- More taxpayers notified of leaked data.
- Senate, House at odds over tax bill strategy.
- Two-bill approach could mean fall fight over tax cut extensions.
- IRS secret shopper visits a St. Louis Preparer.
- National Frozen Yogurt Day meets Optimists Day.
Critical tax season IRS workers receive later date for resignation program - Martha Waggoner, The Tax Adviser:
The critical positions are in taxpayer services, information technology, and the Taxpayer Advocate Service office, says the email, sent to all IRS employees about 1 p.m.
IRS Claims Filing Season Staff Are Exempt From Buyout - Benjamin Valdez, Tax Notes ($):
Employees in critical positions in taxpayer services, information technology, and the Taxpayer Advocate Service will be required to work until May 15 notwithstanding an offer from the Office of Personnel Management (OPM) for employees to resign with full pay through September, according to an email sent to all staff by the IRS Human Capital Office on February 5 and viewed by Tax Notes.
The IRS attributed the decision to exempt some filing season employees from the buyout to Treasury Secretary Scott Bessent.
Key IRS Workers Can't Do 'Resign' Deal Until After Tax Season - Anna Scott Farrell, Law360 Tax Authority ($):
Attorneys have questioned the legality of the resignation program and whether workers will actually get paid. Observers also have questioned what will happen to the federal government workforce when people leave their jobs, especially when coupled with the hiring freeze.
Taxpayers Need IRS to Continue Its Unique Mission, Advisers Say - Chandra Wallace, Tax Notes ($):
The loss of knowledge and experience will present a challenge both at the national office and the higher levels of exam, Resnick said. “If you lose a lot of leadership — a lot of folks with not only experience in exam appeals resolution, but with industries and companies throughout the country — that’s really going to slow down resolution of big issues that taxpayers have,” he said.
In the Treasury
Democrats Press Bessent on Musk's Access to Personal Tax Info - Zach Cohen, Bloomberg ($):
Democrats worry inquiries by Musk’s team from the so-called Department of Government Efficiency team could disrupt the ongoing filing season. They sought the names of any individuals who sought confidential data, as well as info about the data and taxpayers potentially affected.
Speaking of Data
More Rich Taxpayers Learn Their Data Was Stolen in Huge IRS Leak - Erin Schilling, Bloomberg ($):
The tax return information for almost 100,000 individuals and businesses was included in the data Littlejohn stole, according to an email from Department of Justice attorney Jonathan Jacobson, which was released Jan. 8 as part of Littlejohn’s appeal of his sentence. Littlejohn was sentenced to five years in federal prison last January. The scope of the breach was difficult for the government to determine, and the IRS said it didn’t get access to what was stolen until after Littlejohn’s sentencing, which may have contributed to notices coming years after the crime.
Senate, House Tax Bill Conflict Heats Up
Republicans Eye Shorter Tax-Cut Extension to Keep Down Cost - Richard Rubin, Wall Street Journal:
The discussions come as Senate Republicans now plan to move ahead with their own proposal next week. A five-year plan would put House Republicans at odds with Treasury Secretary Scott Bessent and the head of the Senate Finance Committee, Mike Crapo (R., Idaho), who want the tax cuts to be permanent.
Republican Senators Break With House Over Trump Tax Cuts Strategy - Steven Dennis and Billy House, Bloomberg via MSN:
But the strategy would accelerate Republicans’ efforts to give Trump more resources to expand his crackdown on undocumented migrants, possibly delivering additional funds within weeks.
Senate to Move on Budget Plan, But House Embraces the Challenge - Cady Stanton and Doug Sword, Tax Notes ($):
As Senate Republicans began to lay out their plan to mark up a $300 billion, four-year budget resolution the week of February 10 — notably without tax extensions — House Budget Committee Chair Jodey C. Arrington, R-Texas, said he would welcome the heat from the Senate to incentivize the House to move quickly with its own one-bill plan.
Top House tax writer hits back at Senate plans to jam chamber on budget - Benjamin Guggenheim and Meredith Lee Hill, Politico:
At issue in the dispute is which chamber will have the final word on how to push the legislation through Congress. While Graham (R-S.C.) wants to take a two-bill approach — one for energy and border issues, and the other for taxes — Smith says packaging it all in one bill is the only way to get it through the House.
Trump, Johnson to huddle with House Republicans as frustration grows - Jake Sherman, John Bresnahan, Laura Weiss and Melanie Zanona, Punchbowl News: "The two-bill approach basically punts tax reform to the second half of 2025. Given the volatile nature of the House, it seems plausible that Republicans have just one chance to get something big through the chamber. In other words, the two-bill approach dramatically raises the chances that Congress will still be working on extending the 2017 cuts late into the fall."
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.
Tax News & Views International Weekly: Out at the United Nations - Alex Parker, Eide Bailly. "The United States announced at the United Nations on Monday that it would not participate in ongoing discussions over a new U.N. tax convention, with Jonathan Shrier, acting U.S. representative to the U.N. Economic and Social Council, calling it an “unwelcome overreach” into national tax sovereignty. It’s not the first time the U.S. has expressed discomfort with the negotiations, which aim to create a new global tax framework focused on developing country needs, to potentially compete with that promoted by the Organization for Economic Cooperation and Development. But walking out entirely is a new level of opposition, which calls into question whether the framework would ever be followed."
U.S. Estate Tax Treaties – Help For Foreigners But Not U.S. Citizens - Virginia La Torre Jeker, US Tax Talk. "When an American dies abroad or owning assets in foreign countries, the various estate and taxation matters become complex because foreign and U.S. laws will come into play. The interplay between U.S. laws and the local laws of the country where the decedent lived or owned assets cannot be ignored."
Related: Eide Bailly Foreign Trust & Estate Tax Compliance & Planning Services
Narendra Modi’s government rolls out tax cuts to stimulate slowing growth - John Reed, Andres Schipani, and Chris Kay, Financial Times. "Nirmala Sitharaman, finance minister, on Saturday announced an increase in the personal income tax threshold below which taxpayers owe no tax to Rs1.2mn ($13,842), up from Rs700,000, as well as an uplift in brackets for the rates levied on taxable income. She said that the government would introduce a new income tax bill next week."
The EU’s Questionable VAT Policy - Christina Enache, Tax Foundation. "In 2022, the largest compliance gaps were observed in Romania (30.6 percent), Malta (25.9 percent), Lithuania (14.6 percent), and Slovakia (14.6 percent). The smallest compliance gaps were registered in Hungary (2.3 percent) and Cyprus, Portugal, and Ireland (all below 2 percent)."
Blogs and Bits
Need free tax help? VITA or TCE volunteers could be the answer - Kay Bell, Don't Mess With Taxes. "Volunteers at VITA and TCE locations across the United States help eligible taxpayers prepare and e-file their returns for little or no cost."
IRS Issues Ruling on Tax Consequences of State Paid Family and Medical Leave Acts - Parker Tax Pro Library. "The IRS issued a ruling on the income and employment tax treatment of contributions and benefits paid in various situations under a state, or District of Columbia, paid family and medical leave program, as well as the related reporting requirements. "
How Your Home Can Shelter You From Taxes - Ashlea Ebeling, Wall Street Journal. "A cheat sheet for the generous breaks Congress has bestowed on homeowners"
Treasury Asks Smith Court to Remove the Preliminary Injunction on Enforcement, Pledges to Delay Enforcement by 30 Days and Consider Changing the Final Rule on Filing - Ed Zollars, Current Federal Tax Developments. "If granted, FinCEN plans to extend the compliance deadline for 30 days while it assesses potential modifications to the reporting requirements."
Dark Majac
St. Louis tax preparer admits preparing false tax returns - IRS (Defendant name removed, emphasis added):
Defendant pleaded guilty to two counts of aiding and assisting in the preparation of false and fraudulent tax returns. Defendant admitted using a tax preparation business, Majac Money, which was opened by her daughter because the IRS revoked the preparer tax identification number (PTIN) assigned to Defendant and her business, Sha-Sha Taxes, in 2015. Defendant falsely identified her daughter as the paid preparer on the tax returns that Defendant prepared at Majac Money. On these returns, Defendant commonly included a false Schedule C that reported tens of thousands of dollars in business expenses, when the taxpayer either had substantially smaller expenses or did not own a business at all. Defendant also claimed false and fraudulent deductions for things like state and local taxes, medical and dental expenses and mortgage interest, her plea agreement says.
Defendant also admitted preparing a fraudulent tax return for an undercover agent with IRS Criminal Investigation who was posing as a potential client of Majac Money. Without ever asking if the agent had a business, Defendant prepared a return that included a false Schedule C showing $26,242 in business expenses, the plea agreement says.
Defendant charged clients hundreds of dollars in fees for preparing returns, making about $378,026 in fees for the 2017-2021 tax years. Her plea says she prepared at least 41 false tax returns for 13 different taxpayers, costing the IRS at least $312,192.
The IRS secret shopper strikes again.
The Moral? If a preparer generates big tax refunds like "majac," it might be all smoke and mirrors. Even if the taxpayer doesn't know about it, preparer fraud gives the IRS until forever to audit a return.
What Day is It?
Once again, it's National Frozen Yogurt Day! It's also Optimist Day, for those of us who feel we can pile on the fro-yo toppings without waistline consequences.
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