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Archive for Tax Policy

Tax Reform: Hope Springs Eternal This Fall

Nina Olson

The next few weeks and months are shaping up to be an exciting time for advocates of tax reform. To be sure, the details of a tax reform bill have been shifting almost daily. But that is hardly surprising. If tax reform is to pass, a lot of key players with differing priorities and goals ultimately will have to agree on a unified approach. And if an agreement is eventually reached, the daily gyrations will be quickly forgotten.

There are, of course, many goals of tax reform. On a policy level, these include achieving greater economic efficiency, fairness, and international competitiveness. As an IRS official, I generally don’t take a position on these broad policy issues. Read more

Capital v Operating Lease—Tax Reporting Implications

We often encounter taxpayers who do not quite fully understand how to report for income tax purposes the lease agreements they have entered into for business use assets, particularly automobiles. Leased property includes real estate, machinery, and other items that a taxpayer uses in his or her business and does not own.

Payments for the use of this property may be deducted as long as they are ordinary, necessary and reasonable. However, special rules and limitations apply to business use of the taxpayer’s rented personal residence and leased automobiles.  More information on these topics can be found in: Read more

Keep Up With Tax Policy— Two Important Hearings Today!

If you have been reading our blogs, we have been chronicling the tax legislative process through the House Ways and Means Committee. (If not, you can click here to read the previous blogs in the process.) We have also been looking at the impact of FATCA.

These are of note because today, there will be live hearings looking at the tax filing season and the unintended consequences of FATCA.

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If Robots Replace People, Should They Be Paying Taxes?

William Rogers

The capability of artificial intelligence has reached a point that it is no longer a question of if robots will replace people, but a matter of when. Highly automated factory floors, driverless cars, and computerized medical diagnoses all exist today. In the not too distant future it is plausible that a large percentage of highly skilled jobs will be performed by robots. In the fields of engineering, finance, and scientific research computers have already surpassed the ability to process data in a far superior manner than the brightest humans on the planet.

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California’s Prop 55 – Poor Tax Policy

California’s tax hike, Prop 55 on the 11/8/16 ballot, passed (62-38). Its story dates back to 2012.

In 2012, a need for revenue led voters to enact two temporary tax increases (Proposition 30). The state sales tax was increased from 7.25% to 7.50% for four years (2013 through 2016). Also, new personal income tax brackets (10.3, 11.3, and 12.3 percent) were added to the existing top rate of 9.3 percent for seven years, starting at income levels greater than $250,000. The income tax rate increase was retroactive back to January 1, 2012.

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IRS Wins Big At 2016 Summer Olympics

Barry Fowler

With the exciting 2016 Summer Olympics not too far behind us, the thrill of victory for the American athletes may be diminishing slightly. What’s probably coming up for many of them though is the tiring topic of taxes.

Just how much of their wins will they have to turn over to Uncle Sam?

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Tax Positions Of The Major Presidential Candidates And Their Impact On Non-Profit Organizations

John Stancil

When one embarks on looking at what might happen with taxes, that path is fraught with many hazards. What a candidate says may not be what is actually proposed. What the elected candidate proposes may be modified or totally shot down by Congress. What Congress passes may not be signed by the President. However, I have my crystal ball and can foresee what the future holds in terms of future changes in taxes. Yeah, right. Unfortunately, that crystal ball is extremely cloudy and I cannot say with certainty what will happen.

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Too Big To Jail: Why Justice Department Did Not Prosecute HSBC

William Byrnes

The House Financial Services Committee on Monday released a staff report of its investigation into the U.S. Department of Justice’s decision not to prosecute HSBC or any of its executives or employees for serious violations of U.S. anti-money laundering laws and related offenses.

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Would Broader Sales Tax Base Deliver Savings?

Annette Nellen

A review of a few recent sales tax advisory opinions, issued by the New York State Department of Taxation and Finance, reminds us of the complexities of sales tax exemptions and special definitions of taxed items.

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House Republican Blueprint And Postcard Size Tax Return

Annette Nellen

On June 24, 2016, the House Republicans released their tax reform blueprint, the last part of their “Better Way” plan. The plan includes reasons for tax reform and the basics of the plan. There is no legislative language so the details are not all there. But, here are some highlights:

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US Taxpayers Are Receiving $10,000 Penalty Assessments

Ron Marini

We recently posted an article discussing an influx of calls from businesses who have recently received penalty notices regarding late filed or non-filed Form 5472. The Internal Revenue Service imposes an automatic penalty of $10,000 whenever an individual or company is late in filing an information return disclosing their interest in a foreign corporation, regardless of whether there is any associated under-reporting of income or tax deficiencies.

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Proposed IRS Regulations Oppose Court Decision

Annette Nellen

Continuing with my list of ten news items and activities from 2015 that I think have particular tax policy relevance.  Today, for my fourth item is an odd and unfortunate way that the IRS is telling us they disagree with a 2013 court decision. In August 2015, the IRS issued proposed regulations under Section 199, Income attributable to domestic production activities – REG–136459–09 (8/27/15). This provision was added in 2004 and provides a “bonus” deduction for taxpayers engaged in domestic manufacturing which is broadly defined to include some construction, film production, and software development. It is a fairly complex provision that involves numerous definitions and allocations to identify the specified income that then generally produces a 9% deduction for the taxpayer.

The issue helps show the complexity that is involved when special rules exist. Special rules require precise definitions to know what qualifies and what does not. The particular issue I’m referring to what constitutes minor assembly (no 199 deduction) versus production (generates a 199 deduction).

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