Tax Notes

"The blockbuster Moore opinion turned out to be only a dull roar and will be reviewed separately; for now, the income tax is safe. "The outright repeal of the Chevron doctrine is more important than Moore and will have profound application to Treasury regulations because the federal revenue laws are the first and most interpreted of all federal statutes. "Every law firm representing taxpayers in litigation will be advising on those possibilities. A forthcoming article of mine will address that. "On a more mundane level, the Court decided one pure legal issue in an estate tax case in a way that will upset many corporate-shareholder redemption agreements and require rethinking the use of corporate-owned life insurance on shareholders by closely held corporations. "The Court also issued several nontax opinions that either referred to tax cases or applied principles that could be applied to tax cases." Perspective: Jasper L. Cummings, Jr., presents his 13th annual review of the Supreme Court’s term in tax rulings, which this year shows a blasé attitude about tax cases, continued progress toward complete reliance on seemingly neutral interpretive methods that can be selectively applied, and supernova rulings outside tax that could affect tax issues.

President Biden once again used a controversial figure to describe the income tax rate of wealthy individuals. Speaking alongside Vice President Kamala Harris in Prince George’s County, Maryland, on August 15 — their first joint event since Harris succeeded him as the Democratic presidential nominee — Biden repeated his claim that billionaires pay an effective tax rate of 8.2 percent. “We have 1,000 billionaires in America. You know what their average tax they pay is? Eight-point-two percent,” Biden said, arguing that his proposal to introduce a minimum 25 percent income tax on those with a net worth of $100 million or more would yield $500 billion over 10 years for government coffers. The figure that Biden uses to describe billionaires’ tax rate, which he has alternatively said is 8.5 percent or 8.3 percent, has been flagged by fact-checkers as misleading because it incorporates unrealized capital gains, which aren’t taxed. Continue reading ⬇️ (Photo by Maryland GovPics via Flickr)

What happens after you leave a tip on the table? Perspective: Martin A. Sullivan explains how tips are taxed in the food and beverage industry to illustrate the potential effects of eliminating taxes on tip income 👇

"I've been working with immigrant families for 20 years. I have never once had any family that was even a tax protester," Sarah Lora said. "I believe if there is fraud happening, it's one or two bad actors." Listen to the full discussion: pod.link/TaxNotesTalk

A government watchdog has released former President Trump’s public financial disclosure forms, revealing debts related to his legal troubles. Citizens for Responsibility and Ethics in Washington (CREW) posted the documents August 15, which Trump, the Republican presidential nominee, is required by law to submit as a candidate for federal office. The federal forms do not require Trump to release his tax filings, which he has declined to make public. The forms, which CREW has divided into several parts, include financial information on Trump’s assets, liabilities, and income streams. Candidates must report the assets and liabilities in broad ranges, and Trump had been granted an extension to file the report. Continue reading 👇

"So even when taxpayers can get their returns prepared, they are more often than not being prepared incorrectly. "And then once the earned income tax credit is disallowed, taxpayers often don't realize they have to file a special form in future years to claim the credit. And if they don't do that, then it gets disallowed. "So we often see years of disallowed earned income tax credits — again, that very large credit. And one piggybacks off the other. "If your earned income tax credit's disallowed, so is your child credit. So we have folks coming into the clinic with years of disallowed credits and them not really understanding why they were disallowed. "And then often by the time they get to us, the statute of limitation has run for either filing an amended return to fix the problem or filing the original return. And taxpayers just give up. We've seen a lot, especially during the pandemic years, taxpayers just gave up." Leslie McLean, director of the low-income taxpayer clinic at DNA-People’s Legal Services, discusses the barriers Navajo Nation members face when filing their taxes and attempting to claim credits 👇

This week’s employee spotlight features Tax Notes Today State editorial assistant Kat Salmon: “When I was looking for jobs, I wanted a position that would require me to learn new skills while in an office setting. Tax Analysts was just the place to do that.” Kat joined the Tax Notes Today State team in November 2023. “As an editorial assistant, I upload state-tax-related documents and summarize them for our readers. I also perform light copy editing to ensure headlines and summaries follow the style guides we use. “It’s surprising how much teamwork is involved in this role. “When we aren't uploading documents ourselves, we're uploading ones pitched by our reporters for their articles. If one of us has a question about the document we're working on, someone is always there to answer. “I also like how Tax Analysts emphasizes the importance of work-life balance.” Outside work, Kat enjoys reading and listening to music. “Music and books have always been a constant in my life, so don't be surprised if you see me reading a new book or talking about a band I recently discovered.” Learn more about Tax Analysts careers at https://hubs.ly/Q02L7vWD0

Our Partner (US Corridor), Anshu Khanna, penned an insightful op-ed column titled What India’s New Dematerialization Rules Mean for Global Investors for Tax Notes- US. In this column, Anshu breaks down the detailed requirements of India's new rules, highlighting key features, timelines, applicability to global companies with subsidiaries in India, and the financial penalties for noncompliance. She also addresses the pressing concerns of global investors, particularly the need for dematerialization of shares held in India and the procedural implications, including the necessity of obtaining a tax registration number in India. Read more here: https://lnkd.in/g26U4FQf #DematerializationRules #GlobalInvestors #teamnangiaandersenindia

At Procedurally Taxing this week on Tax Notes guest contributor Justin Schwegel has a terrific four part series discussing Fowler v. Commissioner, 155 T.C. 106 (2020). Under Fowler, documents transmitted to the IRS through its e-filing system that meet the criteria outlined in Beard v. Commissioner are returns notwithstanding an IRS electronic rejection. As Justin discusses, the principle in Fowler has far-reaching implications, including the statute of limitations on assessment, civil penalties, the validity of the IRS's use of the substitute for return procedures, the possible discharge of tax liabilities in bankruptcy, and the ability of taxpayers to receive refunds on rejected returns that reflect an overpayment. For good measure, the series concludes with practical recommendations for the IRS. That requires moving away from emphasizing its convenience to a process that respects the taxpayer right to a fair and just tax system. As an added bonus, changes should lessen significant downstream costs to the IRS, taxpayers and practitioners. This series is all outside the paywall, with the final post linking to the entire series. https://lnkd.in/e5pTCQDQ

As the pitch for exempting tips from federal income tax draws endorsements on the presidential campaign trail, two similar proposals in Congress face timing- and cost-related roadblocks to passage this year. Legislation on exempting tips from tax has prompted renewed interest, but prospects for movement by year-end are unclear. The bills were proposed after former President Trump pitched the idea at a June 9 campaign rally. Vice President Kamala Harris, the Democratic presidential nominee, endorsed eliminating taxes on tips for service and hospitality workers and raising the minimum wage at an August 10 event. The No Tax on Tips Act (S. 4621), introduced by Sen. Ted Cruz, R-Texas, would eliminate the federal income tax on cash tips through an above-the-line deduction, and legislation from Reps. Matt Gaetz, R-Fla., and Thomas Massie, R-Ky. — the Tax Free Tips Act of 2024 (H.R. 8785) — would exempt tips from both income and employment taxes. Neither proposal includes an income cap or limits on what industries would qualify for the exemption. Cady Stanton explains. Read for free ⬇️