Federal
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April 21, 2023
The Tax Angle: No Easy Answers On Code's Fairness
From a look at lawmakers' opinions about the tax code in the midst of the current filing season to the latest effort to raise the federal debt limit, here's a peek into a reporter's notebook on a few of the past week's tax stories.
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April 21, 2023
US Laundering, Casino Bribery Suit Too Vague, Co. Says
The U.S. government's lawsuit claiming $310,000 from a Northern Mariana Islands business fails to tie those funds to specific criminal tax evasion or money laundering that would warrant civil asset forfeiture and should be dismissed, the business told an islands federal court Friday.
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April 21, 2023
Crypto Mechanism Upgrade Doesn't Create Gain, Loss
A taxpayer with cryptocurrency doesn't receive a gain or loss because an upgrade to the currency's native ledger changes the consensus mechanism to validate transactions, the Internal Revenue Service's Office of Chief Counsel said in a memorandum released Friday.
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April 21, 2023
Ga. Biz Owners Urge Congress To Extend Pass-Through Relief
Lawmakers must extend the Tax Cuts and Jobs Act's 20% deduction for qualified pass-through income to help small businesses, witnesses told the House Ways and Means Committee on Friday during a field hearing held in Peachtree City, Georgia.
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April 21, 2023
IRS Provides Figures For Bond Interest Income Exclusions
The Internal Revenue Service has published data on the nationwide average purchase price for U.S. residences and state- and territory-specific average purchase price safe harbors, which are used to determine whether bond interest can be excluded from gross income.
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April 21, 2023
Senate Bill Seeks Restriction For Clean Vehicle Credits
Electric vehicles would be stripped of eligibility for the clean vehicle tax credit if their manufacturer benefited from any of three past energy-related government initiatives under a bill introduced in the U.S. Senate.
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April 21, 2023
Weekly Internal Revenue Bulletin
The Internal Revenue Service released its weekly bulletin, which included proposed rules that would revise how certain microcaptive insurance transactions are to be reported and which are deemed abusive after court decisions upended guidance the government previously relied upon.
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April 21, 2023
3rd Circ. OKs IRS Access To Del. Microcaptive Insurance Docs
The IRS can proceed with a summons seeking microcaptive insurance records from Delaware's insurance department after the Third Circuit affirmed on Friday a lower-court ruling finding that federal law requiring the disclosure of the records trumps state law barring their release.
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April 21, 2023
Tax Avoidance School Operators Owe $93K, 9th Circ. Says
A couple who run a business called Freedom Law School that teaches tax avoidance schemes are liable for $93,000 in taxes and penalties for failing to report their own income, the Ninth Circuit ruled, upholding a U.S. Tax Court decision.
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April 20, 2023
9th Circ. Snuffs Out CBD Co.'s Appeal Of Tax Arbitration Order
The Ninth Circuit tossed a CBD company's challenge to a lower court order requiring it to arbitrate a co-founder's claims that the business neglected to withhold $5.2 million in taxes from stock compensation, saying the company failed to prosecute its case.
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April 20, 2023
Engineer Wins Split Tax, Export Trials In DOD Poaching Case
A Texas federal judge granted a request from a Chinese-born engineer for separate trials on charges of export violations and tax fraud, saying the tax allegations aren't sufficiently connected to claims that he improperly took a work laptop with sensitive military information to China.
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April 20, 2023
Squire Patton Atty Nominated To Lead Ohio County Law Dept.
An Ohio partner at Squire Patton Boggs LLP with more than two decades of experience representing public entities has been nominated by Cuyahoga County, home to Cleveland, to serve as its new law director.
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April 20, 2023
CPAs Ask IRS For Clarity On Digital Asset Losses
The Internal Revenue Service should clarify its guidance on how tax rules apply to losses of digital assets in light of recent crypto exchange bankruptcies including FTX's, the American Institute of Certified Public Accountants said in a letter to IRS Commissioner Daniel Werfel.
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April 20, 2023
IRS Releases Foreign Insurance Calculation Guidelines
The Internal Revenue Service published values Thursday for certain foreign insurance companies to use when calculating their minimum effectively connected net investment income for taxable years beginning after 2021.
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April 20, 2023
Tax Court Ends Whistleblower Case Over Lack Of Jurisdiction
The U.S. Tax Court dismissed a whistleblower award case Thursday because the Internal Revenue Service didn't act on her claims, leaving the court without jurisdiction, the Tax Court said.
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April 20, 2023
Investors Must Report Annuities from Trusts, Tax Court Says
The annuity payments a group of investors received after their charitable remainder annuity trusts sold property are taxable income, the U.S. Tax Court ruled Thursday, upholding a determination by the Internal Revenue Service.
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April 20, 2023
Peruvian Siblings Can't Quell IRS' Bank Records Summonses
A Florida federal court on Thursday dismissed a suit and denied an evidentiary hearing request by three Peruvian siblings trying to keep the Internal Revenue Service from accessing their bank records on behalf of the Peruvian government.
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April 20, 2023
CPA Owes $5.5M Penalties Over Meal Deductions, Court Told
An accountant who has tangled with the government for decades over whether mariners can deduct free meals should pay $5.5 million in penalties for helping sailors illegally claim thousands of the deductions, the government told a California federal court.
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April 20, 2023
Senate Bill Would Hike Social Security Taxes On High Earners
People with income of more than $400,000 would face increased Social Security and Medicare taxes under a bill introduced in the U.S. Senate, with the goal of extending the solvency of the programs.
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April 20, 2023
Pension Plan Segment Rates Rise In April
Segment rates for calculating pension plan funding rose in April, the Internal Revenue Service said Thursday.
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April 20, 2023
House Bill Seeks To Raise SALT Deduction Cap
The federal government's state and local tax deduction would increase to a cap of $15,000 annually for individual filers under a bill introduced in the House of Representatives.
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April 20, 2023
Senate Bill Would Create 'Fair Share' Tax On High Earners
A so-called fair share tax would be imposed on people with adjusted gross incomes of $1 million or more under a bill introduced in the U.S. Senate.
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April 19, 2023
House Panel To Examine Claims Big-Name Tax Case Was Bungled
The House Ways and Means Committee will investigate allegations by an Internal Revenue Service employee of the federal government's mishandling of a high-profile case, committee Chairman Jason Smith said Wednesday.
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April 19, 2023
9th Circ. Panel Prods Film Exec's Challenge To IRS Summons
A Ninth Circuit panel on Wednesday questioned whether a film executive had shown enough evidence for dismissal of an IRS summons for documents related to his prosecution in Italy for tax evasion.
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April 19, 2023
China Benefits Most From US Energy Credits, GOP Says
Chinese Communists, not rural or working-class Americans, are the primary beneficiaries of new U.S. renewable energy credits intended to ease the impact of global warming, House Republicans said Wednesday at a hearing called to disparage Democrats' new tax and climate law.
Expert Analysis
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10 Things to Know About US Competent Authority Assistance
Taxpayers should consider seeking U.S. competent authority assistance to help eliminate double taxation from a transfer pricing adjustment, especially now that the competent authorities are resolving cases virtually and more quickly, say attorneys at Thompson & Knight.
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Lessons From Tax Court's Nixing Of Investor's Energy Credits
The U.S. Tax Court's recent ruling in Olsen v. Commissioner, the first of 200 cases involving individual taxpayers who invested in a tax shelter involving solar equipment, is a case study in how not to structure an energy tax credit investment, says David Burton at Norton Rose.
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Partial Repeal Could Resolve Biden's SALT Cap Dilemma
Lawmakers' calls to repeal the cap on federal deductions for state and local taxes are controversial because doing so could cost over $600 billion, but a partial repeal could be accomplished on a revenue-neutral basis, providing relief to some, if not most, affected taxpayers, says Joseph Mandarino at Smith Gambrell.
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Alcohol Taxation Provides Good Model For Cannabis Taxes
Although the alcohol taxation system isn't perfect, it could serve as a useful template for cannabis taxation with a three-tier licensing scheme and tax rates based on potency, says Louis Terminello at Greenspoon Marder.
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US Advance Pricing Agreements, Amid COVID And Before
Steptoe & Johnson's Matthew Frank, former director of the U.S. Advance Pricing Agreement Program, shares insights from an Internal Revenue Service report revealing an uptick in APA completions amid the pandemic, discusses trends over the program's 30-year history, and suggests ways taxpayers and the IRS could bolster program participation.
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High Court Hotels.com Case Could Alter Appellate Strategy
If the U.S. Supreme Court upholds the Fifth Circuit in the upcoming San Antonio v. Hotels.com case, ruling that district courts may not amend taxable appellate costs, it could reprioritize the incentive structure and decision-making calculus of appeals, says Patrick Hammon at McManis Faulkner.
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Choosing A Branch Or Subsidiary For Overseas Expansion
Samuel Pollack and Naoko Watanabe at Baker McKenzie examine the corporate and U.S. tax law considerations involved in deciding whether a branch or subsidiary is the most efficient way to expand operations overseas, now that recent Treasury regulations clarified the complicated international tax regime created by the Tax Cuts and Jobs Act.
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Why S Corporation Payments Are Almost Always Wages
The recent U.S. Tax Court ruling in Lateesa Ward v. Commissioner has employment and income tax lessons about why payments from an S corporation to its sole shareholder are wages and not distributions of profit in most cases, says Bryan Camp at Texas Tech University School of Law.
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3 Arthrex-Adjacent High Court Cases Could Affect PTAB's Fate
As patent practitioners await a decision on the constitutionality of Patent Trial and Appeal Board judges in U.S. v. Arthrex, they should keep their eyes on three other pending U.S. Supreme Court cases that, while not IP-related, involve overlapping legal issues, including the severability doctrine, says William Milliken at Sterne Kessler.
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Surveying Global Tax Updates For Sovereign Wealth Investors
As the market transitions to a post-pandemic phase, sovereign wealth fund and other foreign institutional investors must evaluate how recent U.S., EU and U.K. tax changes may affect their private fund investments, say attorneys at Morgan Lewis.
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Offshore Wind Push Is Good News For NYC Building Owners
With a surge of federal and state support for offshore wind power in New York state, the projects now in development should greatly benefit New York City building owners seeking to comply with the city's Climate Mobilization Act, says Raymond Pomeroy at Stroock.
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Coke, 3M Tax Cases May Not Settle Blocked Income Debate
Even if the challenged U.S. Department of the Treasury regulation on blocked income is struck down by the U.S. Tax Court in the pending Coca-Cola and 3M cases, the obligations of a taxpayer that had, but failed to avail itself of, alternative means to secure payment will remain an open question, say Matthew Frank and Amanda Varma at Steptoe & Johnson.
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OCC Rule Misaligned With Some Tax Equity Safe Harbors
The Office of the Comptroller of the Currency's recently finalized rule on national banks' participation in tax equity financings aligns with safe harbor guidance for renewable energy investments, but not with safe harbor structures for historic preservation and carbon capture tax credits, say attorneys at Nixon Peabody.