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Introduction Of Bipartisan Bill To Disallow Foreign Tax Credits And Other Tax Benefits for Companies Operating in Russia

Introduction of Bipartisan Bill to Disallow Foreign Tax Credits and Other Tax Benefits for Companies Operating in Russia

Washington, D.C.—Senate Finance Committee Chair Ron Wyden, D-Ore., and Senate Finance Committee Member Rob Portman, R-Ohio, today introduced legislation to disallow Foreign Tax Credits for companies that pay taxes to the Russian government, and other tax benefits.

“American taxpayers should not subsidize the Russian war machine. Vladimir Putin continues to bomb civilians, and credible reports and strong evidence of war crimes, including execution of civilians and forced deportations, emerge daily,” Wyden and Portman said.

The senators continued, “If companies choose to keep doing business in Russia and paying taxes to Putin’s government in the face of these atrocities, they should forfeit their foreign tax credits and deductions for taxes paid to Russia in the United States. Russian oligarchs and companies supporting Putin also shouldn’t be getting tax benefits in the United States. These are simple propositions.

“The tax code already disallows lower tax rates and foreign tax credits for companies paying taxes to countries with rogue regimes. Our commonsense proposal simply adds Russia and Belarus to that list. The discussion draft of our bill, released last month, was reviewed by stakeholders and outside experts. The bill was well-received and reflects changes from those discussions. We hope that our colleagues will join us in supporting this legislation and the urgent need to pass it.”

A summary of the legislation can be found here.

Update On Criminal Breach of Taxpayer Data

US Senate Committee On Finance

(Article from Newsroom of the U.S. Senate Committee On Finance)

Almost a year later, the Biden Administration has not sought out stolen taxpayer information

Washington, D.C.–Nearly 10 months later, the Biden Administration still does not know what taxpayer data was stolen and leaked to ProPublica last summer.  In a letter to Treasury Secretary Janet Yellen, top Republicans on the Senate and House tax panels are requesting an update on the investigation.

The letter, sent by Ranking Member of the Senate Finance Committee Senator Mike Crapo (R-Idaho) and House Ways and Means Ranking Member Representative Kevin Brady (R-Texas) notes how investigators still have not sought a copy of the stolen information, writing:

Anyone accessing or releasing confidential personal tax information from the IRS without necessary approvals faces severe penalties and must be prosecuted.  In June 8, 2021, testimony before the Senate Finance Committee, IRS Commissioner Rettig pledged to ‘absolutely’ ensure that anyone found to have revealed such information would face prosecution, ‘absolutely.’  

“It is unclear why the Department of Treasury, the IRS, and the Department of Justice do not ask ProPublica for a copy of whatever data ProPublica is using to produce political articles in order to determine whether ProPublica’s claim of possessing legally protected data is true.” 

Read the full letter here.

KEY TAKEAWAYS: 

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IRS Encourages Modernization Of Electronic Filings: 30M Taxpayer Paper Filed Tax Returns Destroyed

IRS Encourages Modernization Of Electronic Filings: Destroys More Than 30M Taxpayer Paper Filed Tax Returns

Treasury Inspector General For Tax Administration Report

The IRS has taken a number of actions and developed initiatives in an effort to increase e-filing. Furthermore, legislative requirements have resulted and will continue to result in increases in e-filing. The
backlogs of paper tax and information returns to be processed along
with the inability to ship paper tax returns and/or retrieve paper tax
returns from Federal Records Centers due to the pandemic
demonstrate the need for the IRS to develop a Service-wide strategy to further increase e-filing. However, the IRS does not have a Service-wide strategy that identifies, prioritizes, and provides a
timeline for the addition of tax forms for e-filing nor an accurate and
comprehensive list of tax forms not available to e-file.

Read The Full Report Of May 4, 2022

Download Joint Committee On Taxation Blue Book: General Explanation Of Tax Legislation Enacted In The 116th Congress

BLUE BOOK - JOINT COMMITTEE ON TAXATION

The Bluebook includes a description of present tax law, an explanation of the provision, and the effective date

The staff of the Joint Committee on Taxation has prepared its Bluebook for the 116th Congress. Known formally as the General Explanation of Tax Legislation Enacted in the 116th Congress, the Bluebook provides explanations of more than 200 tax provisions across eight different Acts, starting with the Taxpayer First Act (Public Law 116-25) and ending with the Consolidated Appropriations Act, 2021 (Public Law 116-260).

For each provision, the Bluebook includes a description of present law, an explanation of the provision, and the effective date. For a bill with a Committee report (or, in the absence of one, a contemporaneous technical explanation prepared and published by the Joint Committee staff), the document is based on the language of the report (or explanation).

An appendix provides a table with the estimated budget effects of the tax legislation in the Bluebook.

The Bluebook is available via download only.

U.S. Department Of Justice: Florida Man Sentenced To Prison For Promoting Nationwide Tax Fraud Scheme

U.S. DEPARTMENT OF JUSTICE on Tax Fraud Schemes

Caused $14.6 Million in Fraudulent Tax Refund Claims to be Filed with IRS

A Florida man was sentenced to 51 months in prison for his role in a nationwide tax fraud scheme that involved more than 200 participants in at least 19 states.

According to court documents and statements made in court, Aaron Aqueron, of Clermont, recruited clients to the fraud scheme by convincing them that their mortgages and other debts entitled them to tax refunds. Aqueron collected tax and financial information from the clients to send to co-conspirators, who prepared tax returns and other tax documents to submit to the IRS. These tax returns falsely claimed that banks and other financial institutions had withheld large amounts of income tax from the participants, thereby entitling the clients to a refund. In reality, the financial institutions had not paid any income to, or withheld any taxes from, these individuals. In total, the tax returns filed by Aqueron’s clients sought more than $14.6 million in tax refunds and caused the IRS to actually pay out more than $7.6 million.

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U.S. Senate Committee On Finance: Senator Wyden Continues Investigation Into Big Pharma Tax Practices

https://www.finance.senate.gov/chairmans-news/senator-wyden-continues-investigation-into-big-pharma-tax-practices

Following letters to AbbVie and Bristol Myers Squibb, Wyden requests information from Merck, which reports just 14 percent of pretax income in the United States despite U.S. market being home to 46 percent of global sales

Washington, D.C. – Senate Finance Committee Chair Ron Wyden, D-Ore., today continued his investigation into Big Pharma’s tax practices, and how loopholes in the tax code have allowed large multinational corporations headquartered in the U.S. to further abuse tax havens and avoid paying U.S. taxes on prescription drug sales. While U.S. sales account for 46 percent of Merck’s global sales, Merck reported just 14 percent of pretax income in the United States.

In a letter to Merck, Wyden wrote, “As you are aware, in addition to being Merck’s legal domicile and the primary location for Merck’s research and development activities, the United States is the market for nearly half of Merck’s total global sales. Although the United States accounted for $22.4 billion of Merck’s sales in 2021, Merck reported just $1.85 billion in pre-tax income in the United States. In contrast, in the same year Merck reported international pre-tax income of more than $12 billion on approximately $27 billion in sales. This substantial discrepancy between Merck’s domestic and international pre-tax income appears to be the result of Merck’s use of subsidiaries in several well-known low-or-zero tax jurisdictions, which yielded a ‘favorable impact on [Merck’s] effective tax rate compared with the U.S. statutory rate of 21%.’” 

Full text of the letter follows:

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IRS Dispels New And Common Myths About Tax Refunds

IRS On Tax Refunds

IRS dispels new and common myths about tax refunds; key information available to help people

WASHINGTON ― With the April 18 tax-filing deadline closing in for most taxpayers, the Internal Revenue Service wants to dispel some new and common myths about getting refund details or speeding up tax refunds. A number of these myths circulate on social media every tax season.

The IRS continues to process 2021 tax returns and deliver refunds, with nine out of 10 refunds issued in less than 21 days. As of the week ending April 1, the IRS has sent out more than 63 million refunds worth over $204 billion. The average refund is $3,226.

The IRS reminds taxpayers the easiest way to check on a refund is “Where’s My Refund?,” an online tool available on IRS.gov and through the IRS2Go mobile app. “Where’s My Refund?” provides taxpayers the same information and issue date information that IRS assistors and tax professionals have.

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Here Is How To Tell The Difference Between A Hobby And A Business For Tax Purposes

Here Is How To Tell The Difference Between A Hobby And A Business For Tax Purposes

Here’s how to tell the difference between a hobby and a business for tax purposes

A hobby is any activity that a person pursues because they enjoy it and with no intention of making a profit. People operate a business with the intention of making a profit. Many people engage in hobby activities that turn into a source of income. However, determining if that hobby has grown into a business can be confusing.

To help simplify things, the IRS has established factors taxpayers must consider when determining whether their activity is a business or hobby.

These factors are whether:

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IRS Spotlights Criminal Investigation Law Enforcement

IRS Spotlights Criminal Investigation Law Enforcement

CI pursues financial crimes like money laundering, terrorist financing, cybercrimes, and sanctions evasion—including investigating and seizing assets of Russian elites

I. Introduction

IRS Criminal Investigation (CI) serves the American public by investigating potential criminal violations of the Internal Revenue Code and related financial crimes in a manner that fosters confidence in the tax system and compliance with the law. It is the only federal law enforcement agency authorized to investigate federal criminal tax violations and pursues related financial crimes, such as money laundering, currency violations, and terrorist financing. These efforts are increasingly important given emerging threats in the global financial landscape.

General tax fraud investigations are at the core of CI’s law enforcement efforts—for example, agents expend substantial energy unpacking domestic and offshore tax avoidance strategies that are facilitated through trust and partnership arrangements. CI also investigates money laundering by criminals and criminal organizations, corruption, and broader non-tax related fraud cases. CI has the authority to seize assets that are involved in money laundering or other unlawful activities, and it is the largest law enforcement division of Treasury with this capacity.

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Service Sales Tax By State: Important Things To Know

Service Sales Tax By State: Important Things To Know

According to Focus Economics’ recent economic forecast, the services sector is the main engine of our economy in the United States. Since service-oriented companies are such a large part of our economy, we thought it would be beneficial to look at how services are taxed in different states across the country.

Are Services Subject To Sales Tax? 

When we think of sales tax, most people assume that only the sales of tangible goods are subject to it. Most state laws are written to assume that sales of tangible personal property are subject to sales tax unless there is a specific exemption (there can be many!) and laws for sales of services are written to assume that services are exempt unless specifically enumerated. So historically, while it certainly varies by state, few services were subject to sales tax.

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Who Is In Charge? Dealing With Conflicting Guidance

Who Is In Charge? Dealing With Conflicting Guidance

In March 2022, the Joint Committee on Taxation released a Bluebook on tax legislation enacted in the 116th Congress (JCS-1-22, 3/8/22). On page 315 of this report, there is what I find to be a troubling statement and footnote on how the Employee Retention Credit (ERC) works. The ERC was enacted in March 2020 by the CARES Act and applied to qualified wages from March 13, 2020 through September 30, 2021 (longer for recovery startup businesses). So this credit has been around for a while and widely claimed.

The issue is one I raised in a blog post on 6/4/20. The ERC is fairly complex due to numerous definitions and special rules and changes made when it was extended and one change enacted in December 2020 was retroactive. The ERC works differently depending if the employer is large or small based on number of full-time employees.

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Biden Signs New Executive Order On Digital Assets

Biden Signs Executive Order On Digital Assets

According to the White House, an Executive Order released by President Biden on March 9, 2022 Outlines First Whole-of-Government Strategy to Protect Consumers, Financial Stability, National Security, and Address Climate Risks.

Digital assets, including cryptocurrencies, have seen explosive growth in recent years, surpassing a $3 trillion market cap last November and up from $14 billion just five years prior. Surveys suggest that around 16 percent of adult Americans – approximately 40 million people – have invested in, traded, or used cryptocurrencies. Over 100 countries are exploring or piloting Central Bank Digital Currencies (CBDCs), a digital form of a country’s sovereign currency.

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