Key Takeaways
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IRS switches estimated tax mailing address.
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Chief Counsel nominee says acting commissioner who resigned "should have been shot."
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Nominee says it was a figure of speech taken out of context.
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ACA tax credits loom large in shutdown showdown.
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IRS looks to shut out some surprising tip break beneficiaries.
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Taxing the wealthy - what do they pay, what can they pay.
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One car, seven $7,500 tax credits.
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A tax pro remembers a client lost on 9/11.
What's happening in D.C.? Find out from our man in Washington, Alex Parker, when he hosts our Quarterly Legislative Update Wednesday, September 17, at Noon Central. No Charge, 1 hour CPE available. Register here.
What To Know About Estimated Tax Payments, Including A Recent IRS Address Change - Kelly Phillips Erb, Forbes. "Depending on where you live, you might be used to mailing your federal estimated tax payments to the IRS location in Cincinnati, Ohio. However, that has changed as the IRS sheds employees and otherwise consolidates its operations. Now, there are three locations—two in Charlotte, NC, and one in Louisville, KY—for you to use, again, depending on where you live."
If you received vouchers from your preparer for estimated tax payments, that address may be outdated. To avoid postal issues, it's always best to pay online.
Resignation with Extreme Prejudice
Korb’s Comments on IRS Resignations Alarm Top Finance Democrat - Cady Stanton, Tax Notes ($):
In closed-door interviews with bipartisan committee staff ahead of his confirmation hearing, IRS Chief Counsel nominee Donald Korb criticized IRS officials who resigned in the first few months of the second Trump administration, Senate Finance Committee ranking member Ron Wyden, D-Ore., said at the September 10 hearing.
“The recent resignation of a career IRS official who served as acting commissioner came up” during Korb’s conversations with staff, Wyden said. “Mr. Korb said that the individual should have been shot for his decision to resign. He also said that all the senior career officials who made the decision to leave the IRS afterwards did so because they wanted to show off to their woke friends.”
IRS Top Lawyer Pick Prodded on Comments About Ex-IRS Officials - Erin Slowey and Zach Cohen, Bloomberg ($):
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When asked about the remarks about O’Donnell, Korb said, “In this case, I wish he had not left when he did.” Korb added that the words were taken out of context and were a figure of speech.
If confirmed, Korb, who previously served as chief counsel during the President George W. Bush administration, would lead the office that crafts regulations and other guidance, advises other divisions of the IRS during audits, and provides general legal services to the agency.
The Shutdown Clock and Tax Credits
GOP Taxwriters Mulling ACA Credit Tweaks to Avert Shutdown - Katie Lobosco and Cady Stanton, Tax Notes ($):
How to potentially modify and temporarily extend the Affordable Care Act premium credits was a topic of discussion during a closed-door meeting of House Ways and Means Committee Republicans September 10, several members told Tax Notes.
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Many Republicans don’t have the appetite to extend the Democrat-backed subsidies, which could cost $335 billion over a decade if made permanent. But some moderate GOP lawmakers have backed a bipartisan bill to extend the credits through 2026.
Ways and Means GOP has ‘tense’ meeting on ACA tax credits - Meredith Lee Hill and Benjamin Guggenheim, Politico:
Most fiscal hawks deeply oppose an extension. But even a few conservative members of the Ways and Means panel say privately that they could see a deal coming together later this year, acknowledging the political necessity to act.
Insurers Warn Against Delay in Extending Obamacare Subsidies - Lauren Clason, Bloomberg ($):
The enhanced subsidies—in the form of advance tax credits—were enacted under President Joe Biden as a temporary measure during the Covid-19 pandemic, but have become a political flashpoint amid concerns around the high cost of living and the broader economy.
Thune Shuts Door on Obamacare Subsidy Extensions in Funding Bill - Erik Wasson, Bloomberg ($). "Senate Majority Leader John Thune says there will not be an extension on Affordable Care Act subsidies in Congress’ stopgap funding bill."
Tipping Point
OnlyFans Dominatrix Surprised by Trump Tax Cut Could Be Left Out - Caitlin Reilly, Bloomberg ($):
But the Houston-based OnlyFans Ltd. creator, who goes by the title Mistress professionally, had her hopes raised when the Trump administration issued guidance last week including digital content creators like Green among the job categories eligible for the break, along with dancers, waitresses and golf caddies.
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Late Wednesday, after Bloomberg published a story about influencers who were potential beneficiaries, Treasury’s Assistant Secretary of Tax Policy Ken Kies said in a statement the department would issue further guidance in the coming weeks declaring ineligible tips collected in connection with “illegal activity, prostitution or pornography.”
Whether that sort of content-based exclusion would fly under free speech law is another issue. Stay tuned for another exciting collision of taxes and First Amendment law.
Tariff Thursday
Trump Warns of Doom if Tariffs Are Ruled Illegal. Others See a Tax Cut. - Andrew Duehren, New York Times:
“That would be a boost to the economy,” said Alex Durante, a senior economist at the Tax Foundation, a think tank that generally favors lower taxes. “You would be doing a tax cut. You would be undoing a tax increase, and you would provide relief to lots of businesses and consumers.”
Tariff Case Could Give Trump Massive New Fiscal Powers - Greg Ip, Wall Street Journal. "If the court sides with Trump, it could hand the president sweeping fiscal authority long the purview of Congress. It could enable the president, by simply invoking an emergency with some foreign element, to justify almost any revenue measure in response: not just tariffs, but other taxes, too."
Taxes Worldwide
Tax News & Views International Weekly: Making the U.S./OECD Tax Agreement Work - Alex Parker, Eide Bailly:
In the initial announcement, both sides claimed that they would create a “side-by-side” system that would avoid applying Pillar Two taxes on U.S.-based companies—even when they would otherwise be taxed by the under-taxed profits rule, which kicks in when a multinational entity has an effective tax rate of 15% or less in a single jurisdiction.
According to Tax Notes, one plan under discussion would create an exemption applying to taxpayers from countries with existing systems that are considered “robust” enough. In this sense, the new exemption wouldn’t apply to the U.S. explicitly—even though it’s likely it would apply to no one else—but would rather be based on supposedly objective criteria.
What The Rich Pay, and How Much They Can Pay
What’s the Tax Rate for the Forbes 400? - Adam Michel, Liberty Taxed. "Depending on the definitions and assumptions, estimates of the effective tax rate for the Forbes 400 range from 38 percent to as high as 73 percent, when including charitable giving. Recent estimates that claim billionaires pay lower tax rates than the average American rest on flawed methods that, when corrected, show the US tax system remains highly progressive, which means as income rises, so do tax rates."
Here's What Would Happen If We Seized All the Wealth From America's 800 Billionaires - Jessica Riedl, Reason:
That would raise enough revenue to finance the federal government for 9 months.
US Effective Tax Rates Remain Highly Progressive, Despite Some Economists’ Claims - William McBride, Tax Policy Blog. "Targeting wealth at the top through higher taxes has a certain appeal, but it also comes with a lot of drawbacks, including increased avoidance and reduced incentives to invest."
Blogs and Bits
Remembering 9/11 heroes by volunteering on Patriot Day - Kay Bell, Don't Mess With Taxes:
Still, Uncle Sam believes volunteers should get some tax benefits. The Internal Revenue Code lets you deduct the value of in-kind donations you make as a volunteer.
IRS Regulation Preventing SALT Cap Workarounds Upheld - Parker Tax Pro Library. "The court interpreted Code Sec. 170 and its implicit quid pro quo principle to allow the regulation's prohibition of a tax deduction when the taxpayer receives a corresponding tax credit from the recipient of the donation."
IRS warns taxpayers: Social media advice can lead to costly penalties - Martha Waggoner, The Tax Adviser. "Since 2022, the IRS has seen a surge in questionable refund claims, singling out the fuel tax credit and the sick and family leave credit as ones that attract fraudulent claims. It has imposed over 32,000 penalties, totaling $162 million, James Clifford, IRS director of Return Integrity and Compliance Services, said in a news release."
Tax Policy By Executive Order: The Unsettled Boundaries Of IEEPA - Elena Spatoulas Patel, TaxVox. "The problem with tax policy determined 'by the stroke of a pen” instead of through the legislative process is that it is inherently volatile."
It Only Counts As One
Tax Court Rejects Clean Vehicle Credit for Older Car - Trevor Sikes, Tax Notes ($, Taxpayer names omitted):
Foley noted that despite the section 30D clean vehicle credit being available only for the year in which the new vehicle was placed in service, the [taxpayers] had claimed the maximum credit every year from 2013 through 2019.
Claiming the $7,500 credit for the same car every year for seven years means the taxpayers thought their 1040 should pay them $52,500 for a car that listed in 2013 for $39,995. Now that would be an incentive - but no, it doesn't work that way. From the Tax Court opinion:
It's 9/11
NEVER FORGET! - Robert Flach, The Wandering Tax Pro:
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