Tax Alerts
Tax Briefing(s)

By Jeff Stimpson January 10, 2024

The Internal Revenue Service has substantially improved taxpayer services and has good plans for improvement, but it continues to struggle with such problems as paper processing, response times for tax professionals, and ID theft and the Employee Retention Credit conundrum, according to the 2023 Annual Report to Congress from National Taxpayer Advocate Erin Collins.

"Overall, the magnitude of successes exceeded the areas of weakness in 2023, and most metrics showed significant improvement from the depths of the [COVID-19] pandemic," Collins writes in the report's preface. The report adds that the IRS virtually eliminated its backlog of unprocessed original [1040s] and substantially improved telephone service."

Still, problems remain.

To our business clients.


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.”

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."

The following information should serve to remind you of how to calculate the value of the personal use of business-owned cars for W-2 purposes and how to withhold taxes on it:

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 announced a new Voluntary Disclosure Program that gives at employers who received erroneous Employee Retention Credit funds the opportunity pay them back at a discounted rate.

The IRS has provided certain eligible taxpayers with automatic relief from additions to tax for failure to pay income tax for tax years 2020 and 2021Relief is only available to taxpayers who filed an eligible return during the relief period, which begins on either the date the IRS issued an initial balance due notice or February 5, 2022, whichever is later, ends on March 31, 2024.

The IRS has issued final regulations regarding the de minimis safe harbors from the penalties under Code Sec. 6721 for failure to file information returns and Code Sec. 6722 for failure to furnish payee statements. The regulations also include the time and manner a payee may elect out of the safe harbor, as well as rules on reporting basis of securities by brokers as it relates to the de minimis safe harbors. The final regulations adopt the 2018 proposed regulations with only minor modifications.

The Treasury Department and the IRS have issued guidance pertaining to the new credit for qualified commercial clean vehicles, established by the Inflation Reduction Act of 2022 (P.L. 117-169). Notice 2024-5 establishes a safe harbor regarding the incremental cost of certain qualified commercial clean vehicles placed in service in calendar year 2024.

The IRS and the Department of Treasury (the Treasury) have announced that they intend to propose regulations to implement the product identification number (PIN) requirement with respect to the energy efficient home improvement credit under Code Sec. 25C as amended by the Inflation Reduction Act of 2022 (IRA) (P. L. 117-169). The IRS has also requested comments on the PIN requirement under Code Sec. 25C(h) (PIN requirement) by February 27, 2024.

Taxpayers may rely on an IRS notice that describes forthcoming regulations for the alternative fuel vehicle refueling property credit. The notice focuses on the census tract requirement added by the Inflation Reduction Act of 2022 (P.L. 117-169). 

The IRS has provided relief from the failure to furnish a payee statement penalty under Code Sec. 6722 to certain partnerships with unrealized receivables or inventory items described in Code Sec. 751(a) (Section 751 property) that fail to furnish, by the due date specified in Reg. §1.6050K-1(c)(1), Part IV of Form 8308, Report of a Sale or Exchange of Certain Partnership Interests, to the transferor and transferee in a Section 751(a) exchange that occurred in calendar year 2023.

The IRS has issued a notice addressing the availability of administrative exemptions from the requirement to file certain returns and other documents in electronic form. The notice also addresses the availability of information about the procedure to request a waiver of the requirement to file electronically Forms 1120, 1120-S, 1120-F, and 1065. In addition, thr IRS has provided information about resources pertaining to failed attempts to electronically file Forms 1120, 1120-S, and 1120-F using IRS filing systems.

Although 2023 was a year of transition for the IRS and taxpayers, National Taxpayer Advocate Erin Collins has reason to be more optimistic for 2024.

An increased emphasis on millionaires who may be evading taxes by Internal Revenue Service compliance staff has resulted in collection of $482 million to date, agency Commissioner Daniel Werfel reported.

Department of the Treasury Secretary Janet Yellen touted the corporate transparency that will come with the new beneficial ownership reporting requirements, which went into effect at the start of 2024.

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.