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Archive for Tax Policy

National Taxpayer Advocate Report To Congress Released

On 1/14/15, Nina Olson, the National Taxpayer Advocate released her required annual report to Congress about problems with the tax system. As noted on the NTA website, the key parts of this 700+ page report are:

Most Serious Problems Legislative Recommendations Most Litigated Issues Volume 2: TAS Research and Related Studies

Some key points noted include:

• Tax law complexity (here + Executive Summary)
• The need to put taxpayer bill of rights into the Internal Revenue Code (here)
• Problems due to inadequate funding of the IRS (here + Executive Summary) Read more

E.U. NEWS – The Corporation Tax Bill (Northern Ireland)

The Corporation Tax (Northern Ireland) Bill was published on 8th January 2015. The British Government hopes the Bill will be passed before the UK General Election in May.

The Bill, if passed, would allow Northern Ireland to apply its new Corporation Tax rate on most trading profits from April 2015.

The current rate paid by companies in Northern Ireland is 21% while the rate in the Republic of Ireland is 12½%.

According to the UK Government Press Release “if the rate was lowered, around 34,000 businesses in Northern Ireland would stand to benefit including 26,500 SMEs.” Read more

New Developments (As of December 23, 2014)

Recently, there have been several important IRS and court opinions affecting various areas of taxation.

A. Distribution of benefits to estate beneficiaries.

An executor was aware that the estate would owe significant taxes but instead of distributing the assets to the beneficiaries, he had the estate distribute money to himself and other heirs. As a result, the estate did not have enough funds to pay the taxes. The IRS put a lien against other property owned by the executor. The executor appealed the IRS decision to a Pennsylvania District court. The court upheld the IRS decision stating that the executor is personally liable for depleting the assets of the estate [Stiles, D.C., PA]. Read more

Tax Extenders, Tax Extenders…. Check If You Won The Extender Lottery!!

Well, it is December 30th, 2014 and as I sit down to write up the last blog post of the year, I realize how much I have enjoyed writing this year! This blog has brought a lot of traffic my way, I have gained a few clients, engaged in some very interesting conversations with fellow professionals and learned a lot about the roller-coaster social media world! Thanks to my readers from the bottom of my heart!

The conversations around tax planning sessions these days has been how quickly can we file in the coming tax season (hopefully on time!) and of course the hype around the Tax Extenders Bill that Congress passed early this month and President Obama signed soon after. So what was the drama all about? Read more

Two Weeks To Benefit from the Recently Passed Tax Extenders Bill!

This past Friday, December 19, 2014, President Obama signed into law the Tax Increase Prevention Act of 2014 (HR 5771) which passed the the Senate on December 16th, 2014, that retroactively extended certain tax incentives which had expired on December 31, 2013 for one year.

Individual Tax Extenders:

– Research and experimentation credit;
– 50% first-year bonus depreciation;
– Increased expensing limits ($500,000/$2 million) for section 179 property;
– 15-year depreciation life for qualified leasehold improvements, qualified restaurant Read more

Tax Extenders Legislation Becomes Law

On Friday, December 19th, President Obama signed the tax extenders legislation into law that retroactively extends for one year the bulk of the temporary tax incentives that expired on December 31, 2013. The Tax Increase Prevention Act of 2014 (hereinafter “TIPA”) was approved on a bipartisan basis in the House of Representatives on December 3rd and the Senate on December 16th. Its passage and enactment mark the last significant action in connection to tax policy in the 113th Congress, which has now officially adjourned as the 114th Congress convenes on January 6, 2015. However, the tax extenders package is short-lived as the retroactive renewal of approximately 60 temporary provisions sunsets on December 31, 2014. For taxpayers who rely on these provisions for planning purposes, this means a return to uncertainty in just a few weeks as calendar year 2014 comes to a close. Read more

Congress Passes $42 Billion Tax Extenders Package: The Primary Tax Extenders Affecting The Real Estate Industry

On Tuesday, December 16th the U.S. Senate passed H.R. 5771 by a 76 to 16 vote reviving dozens of previously expired tax breaks for calendar year 2014 only.

Republicans and Democrats compromised on the one-year extension after the White House undercut negotiations on a broader bipartisan package, underscoring divisions between Democrats in the wake of this year’s heavy losses at the election polls this past November. Senators from both parties indicated that they would have preferred legislation that would have restored the tax extenders through calendar year 2015 (e.g., a 2 year extension package that would have retroactively reinstated the tax extenders for calendar year 2014 and forward through all of calendar year 2015). The bill is now awaiting President Obama’s signature in order for the bill to become law. It is highly anticipated that the President will Read more

Congress Passes $42 Billion Tax Extenders Package

On Tuesday, December 16th The U.S. Senate passed a $ 42 billion tax extenders package, by a 76 to 16 vote, reviving dozens of previously expired tax breaks for calendar year 2014 only.

Republicans and Democrats compromised on the one-year extension after the White House undercut negotiations on a broader bipartisan package, underscoring divisions between Democrats in the wake of this year’s heavy losses at the election polls this past November. Senators from both parties indicated that they would have preferred legislation that would have restored the tax extenders through calendar year 2015 (e.g., a 2 year extension package that would have retroactively reinstated the tax extenders for calendar year 2014 and forward through all of calendar year 2015). After the late night 76-16 vote on Tuesday, Read more

Target: Los Angeles, California – Think You Can Hide From The IRS? 

The U.S. Attorney’s Office in Los Angeles is taking on a pilot project to pin-point their investigations to the wealthiest zip codes in the L.A. metro area. The idea being that anyone who is selected for investigation in these areas will result in a higher tax liability than those who live in less affluent areas. The government is looking for non-filers, persons engaged in on-line and virtual currency transactions and businesses cheating or delinquent on employment taxes.

Non-Filers

When a taxpayer does not file and the IRS has information statements indicating a filing requirement, the IRS uses the data to file a return on behalf of the taxpayer if there is a projected balance owed. In 2012, the IRS used information statements to file 803,000 returns Read more

Analysis of The Tax Increase Prevention Act of 2014

On December 3, 2014, the House of Representatives made the latest move in this year’s epic congressional tax extenders showdown with the Senate, passing a bill entitled the “Tax Increase Prevention Act of 2014” (hereinafter “TIPA“)that would extend dozens of expired tax provisions through December 31, 2014.

TIPA would retroactively extend for one year, through the end of 2014, virtually all of the tax extenders that had previously been temporarily extended by the American Taxpayer Relief Act of 2012 (hereinafter “ATRA”). In addition to the tax extenders, TIPA corrects several technical and clerical errors in the Internal Revenue Code, as well as eliminating many superfluous provisions. However, as a caveat, TIPA still needs to be reviewed and passed by the Senate and a unified bill presented before President Obama for his signature Read more

Inflation Adjustments In The Tax Law

Our federal tax system includes numerous dollar amounts, such as for the standard deduction amount, personal exemption amount, credits, where different tax rates start and end, and defining the parameters of a “small taxpayer.” Some of these amounts are adjusted for inflation and others are not. Should they all be? That’s a good question.

I think where the tax rates of the graduated rate system start and end should be adjusted annually for inflation. This prevents “bracket creep” where a taxpayer is pushed into a higher tax bracket just because their income increased by the rate of inflation (yet their buying power and sense of wealth remained the same). The same logic calls for adjusting the standard deduction and personal exemption amounts. Read more

Bonus Depreciation Allowance Legislation And The CRS Report: Labor Resource Allocation And Tax Policy Issues

Introduction

Controversies surrounding depreciation allowance legislation pending in the 113th Congress involve labor resource allocation control decentralization tax policy issues. The Obama administration’s current section 530 attacks, vindicated through state unemployment agencies, manifest its policy focus on the labor resource reallocation control centralization controversy. Those states that have entered into a “Memorandum of Understanding” involving worker misclassification with the IRS and Department of Labor have inherently sided with the Obama administration in favoring labor resource allocation control centralization. Such control centralization, which now turns its focus to depreciation allowances, coalesces important factors underpinning success of the Affordable Care Act. Read more

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