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Tax Cuts 2.0
With signs of a slowing economy, pundits in D.C. have been wondering if a new round of tax cuts might be in the making as an economic stimulus. For the second time this week, Treasury Secretary Mnuchin waded into the question and confirmed administration officials are considering another tax cut bill for consideration in 2020 prior to the November elections. His comments yesterday were a repeat of comments made Monday referencing Tax Cuts 2.0 even while insisting the economy is still strong. It is a fine line to walk—assuring investors and businesses that the economy is strong while offering up the possibility a stimulus type of tax cut bill. All of this follows the administration’s recent flirtation with a payroll tax cut and/or indexing capital gains, both of which have been since rejected. But it certainly indicates the White House has little appetite for tax battles this fall, even further dimming prospects for a tax bill catch-all (extenders, etc…) this year.
Oh, and P.S., let’s remember that all tax bills must originate in the House, which—spoiler alert—is currently run by the Dems.
Report Highlights Effects of Shutdown and Budget Cuts on IRS Enforcement
The Treasury IG for Tax Administration (TIGTA) issued a Trends in Compliance Report, which set out in stark terms the negative effects of both a government shutdown and a diminishing IRS budget. Some highlights (or lowlights if you’re so inclined) include:
The decline in resources raises many questions for members of Congress, utmost of which is with a nearly $1 trillion budget shortfall, why would Congress continue to allow for an erosion in compliance activity—both for its deterrent effects and for its revenue effects?
- Returns examined in the Wage and Investment (W&I) Division decreased 38 percent, and the amount of proposed tax assessments declined 45 percent in January 2019 compared to January 2018.
- The Small Business/Self-Employed (SB/SE) Division examined 22 percent fewer returns and proposed tax assessments were 9 percent less for the first five months of the fiscal year (October 2018 through January 2019) compared to the same period in FY 2018.
- Overall, the agency audited less than 1 percent of the 152 million individual and 11.4 million business income tax returns and forms filed in FY 2018.
- IRS examined a total of 991,000 returns, a decline of 28 percent since FY 2014, when 1.4 million were examined.
- From FY 2014 to FY 2018, the number of staff assigned to the IRS’s examination functions decreased 24 percent.
Small Business/Self-Employed Division Hires
IRS announced on Wednesday a number of new hires in the SB/SE Division, including Eric Hylton as the new commissioner of the division. Hylton has a strong enforcement background, including a long tenure in the Criminal Investigation Division—a combination that at least here at HQ raises some eyebrows. De Lon Harris has been selected as the Deputy Commissioner for Examination and Darren Guillot was selected as the Deputy Commissioner for Collection and Operations Support. Both Harris and Guillot come from compliance and collections backgrounds.
New Withholding Calculator Webinar
IRS is offering a free webinar (2 CE for tax professionals) on Thursday, September 19, about all of the new and improved features of the withholding calculator.
Change in Accounting Method
Revenue Procedure 2019-37 provides rules for taxpayers to obtain the automatic consent of the IRS Commissioner to change a method of accounting under §451, as revised by the TCJA, and under the proposed regulations under §1.451-3 and §1.451-8.
Exempt Organization Reporting Requirements
IRS and Treasury have announced proposed regulations that would eliminate some of the donor reporting requirements for certain tax exempt organizations. The proposed regulations will provide for public input into the new changes, which come with a bit of a political backstory. On a related note, IRS provided penalty relief in Notice 2019-47 to certain exempt organizations under 501(a) that do not report the names and addresses of their contributors on the Schedule B of their Forms 990 or 990-EZ filed for a taxable year ending on or after December 31, 2018, and on or prior to July 30, 2019.
Relief for Certain Expats
IRS has provided relief to certain former U.S. citizens (individuals who have not filed U.S. tax returns as U.S. citizens or residents, owe a limited amount of back taxes to the United States, and have net assets of less than $2 million) to encourage them to come into compliance with their U.S. tax obligations.
| || EVERYTHING BUT THE KITCHEN SINK|
Full Moon Madness. In case you are pulling an all-nighter to meet tomorrow’s deadlines, be sure to head outside for a moment and look up. Tonight will be the last full moon on a Friday 13th until 2049.
Tough Week for Intuit. Santa Clara County, California, has filed suit against Intuit, the maker of TurboTax, for false advertising regarding its Free File program. This follows suits filed by the city of Los Angeles earlier this summer against Intuit and H&R Block over a similar issue. Now, the Colorado Department of Revenue is faulting TurboTax for mistakes on returns that resulted in one thrift store worker getting a $216 million tax bill, even though she makes less than $3,000 a year.
Update Your Address Book. IRS has updated its mailing address for employee plan determination letters, letter ruling, and IRA opinion letters effective immediately.
Of Photocopies and Frivolous Return Penalties. Peter J. Reilly discusses the recent tax court ruling (Gwendolyn L. Kestin v. Commissioner of IRS) against IRS that photocopies of a frivolous Form 1040X were not additional frivolous filings each subject to an additional penalty but rather non-return correspondence. We’re not so sure all of our members will agree on this one…
Trivia Does a Body Good. Alex Trebek is back as host of Jeopardy, which just began its 36th season, after fighting stage four pancreatic cancer.
“Almost everything you do will seem insignificant, but it is important that you do it.”
– Mahatma Gandhi
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NAEA E@lert | Volume 1: Issue 41
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