Tax Alerts
Tax Briefing(s)

By Michael Cohn December 06, 2023

The Internal Revenue Service is sending more than 20,000 letters rejecting questionable claims for the Employee Retention Credit as it continues to combat scammers and promoters encouraging businesses to file claims for the pandemic tax credit.

In September, the IRS declared a moratorium on processing new ERC claims through the end of the year after receiving a flood of claims pushed by so-called "ERC mills" advertising the tax credit on TV, radio, billboards and robocalling pitches. At the time, IRS Commissioner Danny Werfel said the IRS has received around 3.6 million ERC claims, and its inventory of open claims was over 600,000, nearly all of which had been received within the past 90 days.  

By Greg Stohr December 04, 2023

Democratic dreams of imposing a wealth tax on the richest Americans risk being snuffed out by the U.S. Supreme Court in a dispute over a $14,729 bill.

Calls to tax assets in addition to income have grown since Senator Elizabeth Warren ran for the White House on the issue in 2020, with President Joe Biden's 2024 budget requesting a "billionaire minimum tax" to ease the federal deficit. But in a case set for argument Tuesday, the justices will consider whether the Constitution effectively precludes Congress from putting a levy on stock holdings, real estate and other wealth.

"The case literally could involve trillions of dollars and directly affect the way our economic and tax systems work because it calls on the court to decide whether a wealth tax might be constitutional," said John Yoo, a University of California at Berkeley law professor who helped draft a brief in the case for the anti-tax group FreedomWorks.

By Michael Cohn November 21, 2023

The Internal Revenue Service said Tuesday it would postpone the $600 threshold for reporting transactions on Form 1099-K for the second year in a row, and begin to phase in a threshold of $5,000 starting in 2024.

In conjunction with the announcement, the IRS released Notice 2023-74 announcing the delay of the $600 threshold for third-party settlement organizations for calendar year 2023. The American Rescue Plan Act of 2021 lowered the old threshold from $20,000 to $600 as a way of collecting more taxes from people and businesses who receive payment through third parties such as eBay, PayPal, Airbnb, Venmo, Etsy and more, but many taxpayers and tax professionals had worried that it would prompt a flood of 1099-K forms arriving in the mail for people who had never been subject to the requirement.

Last December, the IRS postponed the new threshold for a year (see story). But many taxpayers and the IRS itself remain unprepared for the change, and last week, the Government Accountability Office released a report predicting the IRS would receive 30 million more 1099-K forms than usual, for a total of 44 million forms (see story).

By   Alex Tanzi October 12, 2023

Monthly checks for the more than 71 million people receiving retirement or disability benefits in the U.S. will get a 3.2% increase next year, the smallest gain since 2021, reflecting a significant cooling in the rate of inflation.

The cost-of-living adjustment, known as COLA, will apply to Social Security benefits starting in January and Supplemental Security Income benefits beginning on Dec. 29, the Social Security Administration said Thursday.

The annual COLA, designed to ensure that the purchasing power of Social Security beneficiaries isn't eroded by inflation, is calculated from the consumer price index. The slowdown in CPI from its decades-high last year means a much smaller boost for seniors in 2024 than in the past two years.

By Michael Cohn October 10, 2023

Even though the effective date of the new beneficial ownership rules under the Corporate Transparency Act is less than 90 days away, most businesses are either unaware of the reporting obligations they face or uncertain how they will comply.

A survey released Tuesday by Wolters Kluwer polled 669 U.S.-based companies, along with 328 law firms and accounting firms, about their general awareness of and readiness for complying with the CTA's new beneficial ownership rule. While the rule will apply to approximately half (51%) of the firms that participated in the survey, about three-quarters (74%) of those companies for which the CTA rule will be applicable indicated they only became aware of the rule by having taken the survey. Many respondents who are aware of the CTA were unsure (41%) whether the beneficial ownership rule, as implemented by FinCEN, would apply to them, despite their company's reporting status and revenue size.

By   Michael Cohn October 10, 2023

The Internal Revenue Service and the Treasury Department released guidance on how buyers of electric vehicles can transfer their tax credits to automobile dealers and get advance payments that effectively lower the cost.

Under the Inflation Reduction Act of 2022, buyers of electric vehicles can opt to transfer their new clean vehicle credit of up to $7,500 and their previously owned clean vehicle credit of up to $4,000 to a car dealer starting Jan. 1, 2024. In effect, that will reduce the vehicle's purchase price by giving consumers an upfront down payment on their vehicle at the point of sale, as opposed to needing to wait to claim the credit on their tax return the following year. Only vehicles purchased under the consumer clean vehicle credits are eligible for the tax benefit. 

New claims will not be processed until January 2024 at the earliest.

By Mike Giangrande, J.D., LL.M.

The IRS announced today that they have stopped processing all new Employee Retention Credit (ERC) refund claims and will continue their moratorium at least through December 31, 2023. (IR-2023-169)

In IRS Commissioner Werfel’s words:

“The IRS is increasingly alarmed about honest small business owners being scammed by unscrupulous actors, and we could no longer tolerate growing evidence of questionable claims pouring in. … The continued aggressive marketing of these schemes is harming well-meaning businesses and delaying the payment of legitimate claims, which makes it harder to run the rest of the tax system.”

By   Leslie Kaufman August 16, 2023

It's been exactly one year since President Joe Biden signed the Inflation Reduction Act, securing a core part of his domestic agenda with what's by far the most significant climate law in U.S. history. There's been no shortage of numbers attesting to the rapid transformation of the American economy: $86 billion in private investment, 51 new or expanded plants for producing solar panels, 10 new factories for making batteries, more than 100,000 clean-energy jobs.

By Michael Cohn August 02, 2023

The Internal Revenue Service hopes to process all of the tax correspondence, notice responses and nontax forms it receives digitally in the next two years in an effort to reduce the amount of time-consuming paper it receives in the mail.

June 29, 2023

The IRS has been sending a special follow-up mailing to taxpayers in several states affected by disasters to reassure them that they have extra time to file and pay their taxes. This new mailing will be sent in the next few weeks to residents in California, Alabama, Arkansas, Florida, Georgia, Indiana, Mississippi and Tennessee which are designated disaster areas that received the CP14 Balance Due collection notices in late May and June from the IRS. While the earlier mailings were sent out as a legal requirement, the current mailings reiterate that taxpayers have until later this year (to October 16th) to timely pay under the disaster declaration. The letter in English and Spanish includes additional information to help taxpayers understand the disaster relief they have received.

By  Greg Stohr June 30, 2023

The U.S. Supreme Court tossed out President Joe Biden's plan to slash the student debt of more than 40 million people, rejecting one of his signature initiatives as exceeding his power.

The justices, voting 6-3 along ideological lines, sided with six Republican-led states that sued to challenge the program, which by one estimate would have cost $400 billion over 30 years.

By  Michael Cohn June 08, 2023, 1:22 p.m. EDT 7 Min Read

Congress' recent move to shift $21.4 billion in funding away from the Internal Revenue Service as a condition for increasing the debt limit isn't deterring the tax agency from moving ahead with its strategic plans to hire more employees, improve taxpayer service and modernize its technology, but it could slow down efforts to close the tax gap and audit more high-income taxpayers and corporations.

And IRS officials are still emphasizing one of their priorities: preventing fraudulent claims for the widely advertised Employee Retention Credit.

By  Michael Cohn April 18, 2023, 10:33 a.m. EDT

The Internal Revenue Service's new commissioner, Danny Werfel, lauded the agency's performance this tax season, thanks to the extra funding from last year's Inflation Reduction Act.

"This marks a special time for the nation with the arrival of the tax-filing deadline," he said during a press conference Monday. "This was a big year for the IRS in many ways. The agency really had its hands full during the pandemic, handling three rounds of stimulus payments and many other changes needed to support our country and our fellow citizens. This is really the first tax season we've had since 2019 where the IRS and the nation were on normal footing, so this was a test of the IRS, and I'm pleased to report that the IRS delivered a solid 2023 filing season by any measure. You can see this progress in every aspect of our operations. The IRS stepped up to help taxpayers in many different ways this tax season. The IRS has answered more calls from taxpayers seeking our help, provided more in-person assistance and offered more online."

The IRS and FTB have extended tax return filing and payment deadlines for those in affected CA counties (all CA counties, except for Lassen, Modoc, and Shasta counties) until October 16th.

Standard Mileage Rates for 2023

Every year, Americans donate billions of dollars to charity. Many donations are in cash. Others take the form of clothing and household items. With all this money involved, it's inevitable that some abuses occur. Current tax law cracks down on abuses by requiring that all donations of clothing and household items be in "good used condition or better."

To our business clients:

To our business clients:

July 1 Change to 2022 Standard Mileage Rates

BONUSES- Just a reminder - holiday bonuses are subject to all payroll taxes.

So that the reporting for this fringe benefit is not so burdensome, the IRS allows employers to include the personal use of business-owned cars during November and December in the following year's W-2s. This means that W-2s for 2022 need to include the value of the personal use of the vehicles from November 1, 2021 to October 31, 2022 and that this value can be calculated now. Those clients using computerized payroll systems which prepare W-2s will have to inform the system of this fringe benefit value which needs to be included in payroll before the end of December.

With certain key exceptions, employers must pay nonunion, non-exempt employees (who are not working an alternative workweek schedule) at least time and one-half pay for: *Hours worked in excess of eight hours in one day, *Hours worked in excess of 40 hours in one workweek, and *The first eight hours worked on the seventh day of work in a given workweek.

All businesses are required to report independent contractors, to whom they will be issuing a 1099-MISC form, to the California Employment Development Department. The information provided will be forwarded to state and local child support agencies to help in their efforts to locate parents who are delinquent in their child support obligations.

California's state-run college saving program, Golden State Scholarshare Trust allows parents and others to put aside tax-deferred money for college.

The Internal Revenue Service is still working on the details of how it is going to help taxpayers that may have fallen for deceptive marketing that led them to improperly receive employee retention tax credits.

The IRS has announced that calendar year 2023 would continue to be regarded as a transition period for enforcement and administration of the de minimis exception for reporting by third party settlement organizations (TPSO) under Code Sec. 6050W(e).

The IRS has released the annual inflation adjustments for 2024 for the income tax rate tables, plus more than 60 other tax provisions. The IRS makes these cost-of-living adjustments (COLAs) each year to reflect inflation.

The 2024 cost-of-living adjustments (COLAs) that affect pension plan dollar limitations and other retirement-related provisions have been released by the IRS. In general, many of the pension plan limitations will change for 2023 because the increase in the cost-of-living index due to inflation met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged.

The IRS reminded taxpayers who may be entitled to claim Recovery Rebate Credit (RRC) to file a tax return to claim their credit before the April-May, 2024 deadlines. It has been estimated that certain individuals are still eligible to claim RRC for years 2020 and 2021. The deadlines to file a return and claim the 2020 and 2021 credits are May 17, 2024, and April 15, 2025, respectively. Additionally, the IRS reminded that taxpayers must first file a tax return to make their RRC claims irrespective of income slab and source of income.

The Internal Revenue Service is looking to improve its customer service metrics as well as improve its technology offerings in the coming tax filing season.

The Internal Revenue Service announced the launch of the first phase of rolling out business taxpayer accounts, as well as enable taxpayers to respond to notices online.

The U.S. Supreme Court has granted a petition for certiorari in the case of A. Bittner, CA-5, 2021-2 USTC ¶50,242 . In Bittner, the U.S. Court of Appeals for the Fifth Circuit held that each failure to report a qualifying foreign account on the annual Report of Foreign Bank and Financial Accounts (FBAR) constituted a separate reporting violation subject to penalty. This means that the penalty applies on a per-account basis, not a per-form basis. The Fifth Circuit disagreed with a Ninth Circuit panel that adopted a per-form interpretation ( J. Boyd, CA-9, 2021-1 USTC ¶50,112).

Probably one of the more difficult decisions you will have to make as a consumer is whether to buy or lease your auto. Knowing the advantages and disadvantages of buying vs. leasing a new car or truck before you get to the car dealership can ease the decision-making process and may alleviate unpleasant surprises later.