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03 Feb 2021

We Need More Tax Policy Discussion!

We have a few proposed changes under consideration that very much need a deep policy discussion rather than only a cost estimate and a general like or dislike. Here are three such items:

1. What is an appropriate phase-out rule for the next economic impact payments? The current ones cause a credit to still be allowed for high income taxpayers who have a few children. The CASH Act (H.R. 9051; 116th Congress) that the House passed late 2020, called for EIP of $2,000 including for dependents. If a married couple has 4 dependents, they credit would be $12,000. The phaseout rule would not cause this entire credit to reach $0 until AGI reached $390,000! That is not an income level in need of assistance typically.

2. Should the TCJA be made permanent? On 12/22/20, Senator Grassley sent a letter to President-elect Biden suggesting this. While this could be done with a single piece of legislation, it really needs major tax policy discussions. This should include what the goals were of the TCJA beyond the need to reduce the corporate tax rate and move the international tax system for businesses to be more territorial rather than worldwide. Examples of things to discuss:

One comment | Tags: SALT CAP, Tax Policy, TCJA

15 Dec 2020

Written by Annette Nellen | Posted in Tax Policy

Common Sense And Tax Policy – Any Connection?

I think that often, there is some common sense consideration of tax policy before enacting or changing tax rules. One example was the 1954 decision to enact IRC section 174 to allow for expensing of R&D expenditures. That simplified the law to avoid uncertainties and taxpayer/IRS disputes on the life for amortization purposes of these expenses. It also incentivized these expenditures that also benefit the economy through new technologies to improve our lives. I’m sure we can find more recent examples too.

Of course, before leaving my example, I should note that the 2017 Tax Cuts and Jobs Act modified the R&D expensing rule starting after 2021 to require R&D expenditures to be capitalized each year and amortized over 5 years (15 years for foreign R&D). That’s an odd provision for a piece of legislation intended to improve international competitiveness of our tax system when most other countries have research incentives in their tax law, but oh well. (I think we’ll see this rule forever postponed and hopefully repealed at some point to go back to expensing.)

No comments | Tags: Tax Policy

28 Sep 2017

Written by Nina Olson | Posted in Tax Policy

Tax Reform: Hope Springs Eternal This Fall

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

No comments | Tags: IRS, Nina Olson, proposals, Tax Reform

22 Aug 2017

Written by John Dundon | Posted in Tax Policy

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

One comment | Tags: Business Use Assets, capital lease, Income Tax, Operating Lease

26 Apr 2017

Written by Kat Jennings | Posted in Tax Policy

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.

One comment | Tags: FATCA, House Ways and Means, livestream, tax legislation

23 Feb 2017

Written by William Rogers | Posted in Tax Policy

If Robots Replace People, Should They Be Paying Taxes?

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.

3 comments | Tags: artificial intelligence, displaced workers, robot tax, universal basic income

15 Nov 2016

Written by Annette Nellen | Posted in Tax Policy • United States

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.

One comment | Tags: California, prop 30, prop 55, Tax Hike

23 Sep 2016

Written by Barry Fowler | Posted in IRS • Tax Policy • Tax Reform

IRS Wins Big At 2016 Summer Olympics

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?

No comments | Tags: 2016 Olympics, Congress, income tax bill, victory tax

21 Sep 2016

Written by John Stancil | Posted in Non-Profit Tax • Presidential Candidate Tax Plans • Tax Policy • United States

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

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.

No comments | Tags: charity act, Clinton, non-profit organizations, NPOs, pass-through entities, Tax Plans, tax proposals, Trump

15 Jul 2016

Written by William Byrnes | Posted in Tax Fraud/Evasion/Crimes • Tax Policy • United States

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

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.

No comments | Tags: anti-money laundering laws, Department of Justice, House Financial Services Committee, HSBC, William Byrnes

13 Jul 2016

Written by Annette Nellen | Posted in Sales/Use Tax • Tax Policy

Would Broader Sales Tax Base Deliver Savings?

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.

No comments | Tags: Annette Nellen, New York, value-added tax, vat

05 Jul 2016

Written by Annette Nellen | Posted in Tax Policy • Tax Reform • Tax Updates • United States

House Republican Blueprint And Postcard Size Tax Return

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:

No comments | Tags: better way, gop, republican blueprint, tax plan

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Tax Reform: Hope Springs Eternal This Fall

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Capital v Operating Lease—Tax Reporting Implications

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If Robots Replace People, Should They Be Paying Taxes?

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California’s Prop 55 – Poor Tax Policy

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

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