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Statements At Finance Committee Hearing Examining Tax Schemes Used by Ultra-Wealthy Americans

Statements At Finance Committee Hearing Examining Tax Schemes Used by Ultra-Wealthy Americans

Senate Finance Committee Chairman Ron Wyman (Senator Oregon – Leading U.S. Senate Democrat Statement)

This Congress the Senate Finance Committee has investigated a number of tax schemes that the very wealthy – with the help of armies of high-priced tax lawyers and accountants – use to pay virtually no federal tax for years on end.

Today, we’ll examine one strategy – among others – called “Buy Borrow Die.” Just three little words on the chart behind me, that have a huge impact. Here’s how it works:

A corporate raider buys a business, and then borrows against its growing, untaxed value to fund their extravagant lifestyle. Everything from superyachts, to luxurious vacations, expensive art deals, you name it. It goes up and up in value all while not paying a dime in tax. And when they die, their assets are passed to their kids – often entirely tax-free – and the cycle continues.

Now let’s contrast Buy Borrow Die against the tax system mandated for everyone else.

A nurse or a firefighter living in Philomath, Oregon are required to pay taxes out of each paycheck. Working people don’t get to play by the same rules as billionaires. They don’t get to call up an accountant every time they don’t feel like paying taxes.

Right now, the average billionaire wriggles their way into a measly 8 percent tax rate while a nurse or firefighter making $45,000 is paying a 22 percent tax on their wages.

How is that fair? Americans overwhelmingly believe it’s not. So it’s time to look to solutions that restore fairness to the tax code while still rewarding success. After all, that’s what our country is founded on: the idea that everyone has a chance to get ahead.

Luckily, there’s a solution that achieves both fairness and economic growth. It’s called mark to market. And here’s the kicker: there’s already a version of it in the tax code. That means we have the blueprint right in front of us to use as a model for mark-to-market provisions for billionaires. Put simply: mark-to-market would require billionaires to pay tax every year, just like everyone else.

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Written by | Posted in Senator Mike Crapo • Senator Ron Wyman

300 Million Of Taxpayer Money Goes To New FBI Building

300 Million Of Taxpayer Money Goes To New FBI Building: Want To Know Who Voted To Fund?

Although Matt Gaetz, Florida First District Representative spearheaded an “Amendment to Stop The Spending of 300 MILLION of Taxpayer Money On A New FBI Building”, it was squashed in defeat. The Amendment to the House of Representatives Appropriations Bill on Wednesday , November 8, 2023, to prohibit funding for new FBI headquarters; 70 Republicans and 2043 Democrats rejected the Gaetz Amendment in a 273 -145 Vote, according to the House of Representatives Clerk Kevin McCumber.

Watch The Video Discussing Why Gaetz Presented this Amendment to House Members.

https://twitter.com/i/status/1722370295116206564

Want to know what House of Representatives supported the funding and who was against the Amendment, look at the chart below:

H R 4664      RECORDED VOTE      8-Nov-2023      9:27 PM
AUTHOR(S):  Gaetz of Florida Part B Amendment No. 54
QUESTION:  On Agreeing to the Amendment

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Written by | Posted in How Taxpayer Money Is Spent

IRS Using Artificial Intelligence To Investigate Hedge Funds, Private Equity And Partnerships

IRS Using Artificial Intelligence To Investigate Hedge Funds, Private Equity And Partnerships

According to an article in the New York Times written by Alan Rappeport  who covers the Treasury Department, the IRS has started using artificial intelligence to investigate tax evasion at multi-billion partnerships as it looks for ways to better police hedge funds, private equity groups, real estate investors and large law firms. The passing of Inflation Reduction Act set aside 80 Billion taxpayer dollars to target the wealthiest Americans to tackle complex tax cases.

The Inflation Reduction Act was passed on August 12, 2022 by the House of Representatives with all Democrats voting for it and all Republicans voting against the Bill with a 220 – 207 vote.

According to the IRS News site, the Founder of a purported artificial intelligence-driven fund has been charged with defrauding clients. An IRS criminal complaint was filed in federal court in Brooklyn charging Mina Tadrus, the founder and chief executive officer of Tadrus Capital, LLC, with wire fraud in connection with a scheme to steal from clients of his purported hedge fund. Tadrus was arrested this morning in Tampa, Florida and made his initial appearance in federal court in the Middle District of Florida where he was released on a $100,000 bond.

Breon Peace, United States Attorney for the Eastern District of New York, James Smith, Thomas M. Fattorusso, Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, New York Field Office (CI), and Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI) announced the arrest and charges.

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Written by | Posted in TaxConnections

Form 4797, Tax Planning, Sales Allocation And More (Free Webinar With 1 IRS CE Credit)

Form 4797, Tax Planning, Sales Allocation And More (Free Webinar With 1 IRS CE Credit)

Simply put, IRS Form 4797 is a tax form that’s used specifically for reporting the gains or losses made from the sale or exchange of business and income producing property used in a trade or business. However, this form often generates countless amounts of uncertainty and anxiety.

This course will assist tax pros in determining whether a transaction is a capital gain or ordinary income and what tax consequences are associated with each. Furthermore, assist on allocation of sales price and provide tax planning overview. Join us in deciphering the mystery of Form 4797.

Learning Objectives REGISTER HERE

– Analysis of Tax Planning and difference between the Seller’s and Buyer’s tax treatment
– Analysis of Allocation of Sales Price on different classes of assets
– Discovery Basic choices regarding the Allocation of Sales Price
– Correctly identify § 1231 Property.
– Examine the difference between §§ 1245 and 1250 Property.
– Inspect issues surrounding de minimis safe harbor of repair regulations.
– Assess Form 8594 and the seven classes of assets
– Differentiate between depreciation recapture and capital gain.
– Identify Unrecapture Depreciation.

1 IRS CE
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Written by | Posted in TaxConnections

How To Successfully Submit Forms 2848 & 8821(Free Webinar With IRS CE)

How To Successfully Submit Forms 2848 & 8821

TaxConnections thanks CPE provider Tax Practice Pro for this complimentary On Demand webinar from TaxPracticePro.com with two IRS CE earned. This On Demand webinar is called “How to Successfully Submit Forms 2848 & 8821”. Tax Practice Pro is a nationwide provider of live and webinar based Continuing Education. We help tax professionals grow.

REGISTER HERE

100% no charge. We do 25-30 CE each month, all based on a theme for the month. Tax Practice Pro kicks off each month with a free program, mostly to give back to the industry.

This webinar teaches the most effective process of preparing and submitting form 8821 (Tax Information Authorization) and form 2848 (Power of Attorney) to the IRS CAF unit in order to successfully access your taxpayer’s IRS records.
(2 IRS CE)
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Written by | Posted in Free Tax Webinar - 2 Credits Earned

Enrolled Agent Preparation Exam Course (By Nationally Recognized EA Exam Instructor Tax Mama)

EA Prep Exam

The only live & interactive online EA course – get your questions answered and doubts clarified right away!
REGISTER HERE
Includes these standalone study tools: Lambers, Gleim, and TheTaxBook*!
TaxMama® teaches tax law, practice and representation in live classes – from the ground up!
TaxMama® guides you through several tax return samples and forms to help you see how the tax laws and procedures work for real-world clients – not just for the exams!
TaxMama® teaches you how to read your clients minds, offers templates to help you start your own tax practice and screen clients, and gives you priceless tips to make your professional life easier after you become an EA!
TaxMama® students get additional test-taking coaching in twelve 4-hour Final Review sessions (four per exam part) in addition to the course lectures!
TaxMama® teaches you how to overcome your fear when facing exam questions!
TaxMama® students have unlimited access to a dedicated mentoring portal – even after they pass!
TaxMama’s® courses are all recorded, you have unlimited replays of all classes (video AND audio)
TaxMama’s® course is like a 3-year tax education in 6 months (or less)!
TaxMama® students can join lectures for free – every year (and can get CE for only a small fee)!
TaxMama’s® EA course provides up to 80 hours CE – including all 15 CE credits needed for the Reduced AFSP Certificate of Completion – helping you to improve your professional status before you get your EA credential!
TaxMama’s® EA course is easy to customize to fit your needs.
REGISTER HERE

Written by | Posted in TaxConnections

Introduction To TRUST, ESTATE, and GIFT TAXES (Free Webinar With 1 IRS CE)

Introduction To TRUST, ESTATE, and GIFT TAXES (Free Webinar With 1 IRS CE)

The transfer taxes are the gift tax, the estate tax, and the generation skipping transfer tax. While these are separate taxes from the income tax, some of the core concepts inform income tax issues as well. This webinar is a high-level overview of the gross estate and completed gifts, highlighting the intersection between estate inclusion and income tax issues.

1 IRS CE REGISTER HERE

Self-Study recording not available for NASBA CPE credit. However, you receive 1 IRS CE Credit.

As part of our strategic plan, we offer free courses to give back to the tax community by providing free CE. It is our way of thanking you for supporting us!

REGISTER HERE

View Upcoming Webinars

Written by | Posted in TaxConnections

Thinking About An Acquisition? Do Your Due Diligence!

Thinking About An Acquisition? Do Your Due Diligence!

When entertaining discussions about mergers and acquisitions ( M&A ), due diligence practices as they pertain to the state tax side of a deal are a key item. We frequently consult with clients that are in the process of either acquiring another company or looking to be acquired. In either case, the client wants to be aware of any potential state tax exposure areas so they can move forward appropriately and correctly negotiate the deal.

Often however, the due diligence process is the first time the company has addressed the multi-state landscape. Sometimes M&A deals fall apart because a target company does not have its sales tax house in order. If a suitor company does its due diligence and finds significant exposure related to years of non-compliance with sales tax collection or income tax filing, it can either derail an entire deal or significantly impact the purchase price.

What Are Some Due Diligence Questions To Ask If A Company Is Being Acquired?

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Written by | Posted in Acquisition Due Diligence

Navigating The Landscape Of 2024 Federal Tax Credits: A Guide For Tax Professionals

Navigating The Landscape Of 2024 Federal Tax Credits: A Guide For Tax Professionals

 As we move closer to 2024, it’s crucial for tax professionals and firms to start strategizing and planning for the upcoming federal tax credits. The landscape is ever-evolving, and being proactive is key to ensuring that your firm maximizes its benefits.

Why Plan Now?

Early planning provides ample time for due diligence, helping firms to:

Identify the most beneficial tax credits based on their specific financial situation.

Understand the implications and requirements of each tax credit.

Strategize on how to best utilize the credits for optimal tax savings.

 Tools & Resources

Ensure you have access to the latest tools and resources to navigate the complexities of federal tax credits. Stay updated with the IRS guidelines, and consider seeking advice from experts who specialize in this area.

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Written by | Posted in Federal Tax Credits Guide • Tax Planning

Commissioner Werfel Letter On Audit Disparity Issues In Areas Such As The Earned Income Tax Credit

Commissioner Werfel Letter On Audit Disparity Issues In Areas Such As The Earned Income Tax Credit

Text of the Sept. 18, 2023, letter IRS Commissioner Werfel shared with the members of Congress PDF updating them on agency enforcement efforts and efforts to address audit disparity issues in areas such as the Earned Income Tax Credit.

The following is the text of a letter sent to members of Congress on Sept. 18, 2023 by IRS Commissioner Danny Werfel updating them on agency enforcement efforts and efforts to address audit disparity issues in areas such as the Earned Income Tax Credit. Following the one-year anniversary of enactment of the Inflation Reduction Act (IRA) and my sixth months as Commissioner, I am writing to update you on our ongoing efforts to rebalance the IRS’ enforcement activities. The investment of resources under the IRA represents a generational opportunity for the IRS to refocus our energy on closing the tax gap by ensuring efficient and effective tax administration. This rebalancing effort centers around high-income and high-wealth individuals, complex partnerships, and large
corporations who are not paying the taxes they legally owe, as well as any bad actors who victimize taxpayers.This effort also recognizes that the vast majority of taxpayers want to comply with tax law.
We aim to make this simpler and easier to do, while allowing taxpayers to interact with the IRS in the ways that work best for them. For the first time, and thanks to the new resources provided by the IRA, the IRS will help taxpayers identify mistakes before filing, quickly fix errors that delay their refunds, and claim the credits and deductions they are eligible for. Helping taxpayers get it right at the time of filing will reduce the need for the IRS to contact taxpayers through notices, correspondence audits, and other enforcement activities. To that end, the changes we are making benefit all Americans by promoting fairness and accuracy and protecting all taxpayers from scams and schemes. Following a top-to-bottom review of enforcement and in line with our Strategic Operating
Plan, IRS has begun announcing sweeping efforts to overhaul compliance efforts to improve tax administration. For example, IRS is intensifying collections activities that focus on high-income taxpayers with more than $250,000 in recognized tax debt. This builds off earlier successes that collected $38 million from more than 175 high-income earners this past spring. In addition, IRS staff are closely examining potential non-compliance among large, complex partnerships, including 75 of the largest partnerships in the U.S. identified as higher risk for tax compliance with the help of new AI tools as well as hundreds of partnerships with over $10 million in assets and balance sheet discrepancies. In the near term, we will be sharing details regarding our stepped-up activities to address noncompliance among large corporations. These changes, which leverage the IRA’s investment in modernized technology, expanded data science, and right sizing of our
workforce, will significantly improve the IRS’s ability to address the tax gap, which was projected to be $540 billion per year for 2017-2019.

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Written by | Posted in Earned Income Tax Credit • IRS Notice

Gasoline Excise Tax Outdated – What Will Come From Recent House Hearing On This?

Gasoline Excise Tax Outdated - What Will Come From Recent House Hearing On This?

The federal gasoline excise tax that helps fund road construction and maintenance has been 18 cents per gallon since 1993! The tax is not tied to the price of gasoline or adjusted for inflation. It requires an act of Congress to increase the tax.

For many years there have been federal and state government studies and ones by think tanks and academics on alternatives to the gasoline excise tax to fund roads, mainly driven by the fact that we drive more fuel efficient cars each year and today many cars run on electricity not gasoline. Since 2008, Congress periodically transfers money from the general fund to the Highway Trust Fund to help it out.

What’s the remedy?

While the gasoline excise tax could be increased, that imposes a higher burden on those driving gasoline powered vehicles to fund the roads that are used by others as well. But at least tying the amount to inflation seems to make sense.

Fuel efficient cars and electric cars could be charged an annual registration fee equal to what they would likely pay in excise taxes if instead they drove a typical gasoline burning vehicle.

A road usage fee could be charged, such as a vehicle miles traveled tax (VMT), that has been heavily studied in Oregon and California (and likely elsewhere as well). It is not difficult to track how many miles someone drives and there are ways it can be paid monthly or at least annually when the owner registers their car with their state (with the state sending the tax to the federal government).

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Written by | Posted in Gasoline Excise Tax

New Speaker Of The House Of Representatives Michael Johnson – Where Does He Stand On Taxes?

Speaker Of The House Of Representatives - Michael Johnson

New Speaker Of The House Of Representatives Michael Johnson – Where Does He Stand On Taxes?

As the new Speaker Of The House of Representatives, people are asking where Michael Johnson (R) from the State of Louisiana stands on tax matters. Here is what we are able to find at this point.

According to Political, Though he’s rarely been involved in tax issues during his seven years in office, Johnson will now help decide whether there’s a year-end bipartisan tax deal and if lawmakers take another chunk out of the IRS’s budget.

His previous positions on tax legislation are mostly unsurprising. He’s opposed tax increases and has pushed to make Republican tax cuts permanent. At the same time, Johnson has been highly critical of Democrats’ Inflation Reduction Act, complaining it created “green energy slush funds” and pressing to rescind a one-time slug of money it provided the IRS.

Johnson’s inexperience with tax issues may benefit House Ways and Means Chair Jason Smith (R-Mo.) if the new speaker decides to cede power to committee chairs. In a speech Wednesday afternoon, Johnson told colleagues he intends to decentralize power in the chamber.

According to The Hill: Johnson was one of 57 Republicans to vote “no” on a $40 billion aid package to Ukraine.

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Written by | Posted in Michael Johnson- Speaker Of The House Of Representatives
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