After a two-year vacancy, the Internal Revenue Service (IRS) has a Chief Counsel again. Michael Desmond, a California tax attorney originally nominated by President Donald Trump last year, was confirmed 83-15 today by the Senate to oversee regulation drafting and provide guidance on federal tax law matters to the agency. Read more here.
The U.S. Senate is scheduled to vote to confirm Michael Desmond as Internal Revenue Service (IRS) Chief Counsel as soon as this week, and to IRS Commissioner Chuck Rettig, confirmation would be a benefit to the tax agency.
The New Hampshire Senate unanimously approved S.B. 242 last week, a bipartisan bill that aims to protect state businesses from the effects of last year's Wayfair decision, which allows states to impose sales and use tax regulations on e-retailers and other out-of-state sellers that do not have a physical presence in the state but that do meet dollar or transaction thresholds that create an economic nexus.
The Treasury Inspector General for Tax Administration (TIGTA) recently reported on self-employment tax compliance in light of the growth of the gig economy. The IRS last estimated that self-employment taxes accounted for $69 billion of the annual tax gap. TIGTA reviewed Forms 1099-K for tax years 2012 through 2015 issued by the top nine payer companies participating in the gig economy. Over 260,000 instances of potentially underreported payments were identified, and the number of discrepancies increased 237 percent from 2012 to 2015. Due to the large volume of discrepancies identified, the IRS' Automated Underreporter (AUR) program declined to work on 59 percent of total cases, including over 2,800 taxpayer cases in which there was potential underreporting for all four years of Forms 1099-K reviewed. The total potential payments related to those taxpayers was $2.7 billion.
Recent news accounts have claimed that federal taxpayers are receiving smaller tax refunds for the 2018 filing season, implying that their taxes are higher as a result of the 2017 Tax Cuts and Jobs Act. According to research by the Wall Street Journal, however, although refund amounts are indeed lower this year for many individuals, it is not necessarily a result of higher taxes.
Nevada-based tax preparer and former IRS employee Thomas Bidegary was recently sentenced to five years in prison for conspiring to commit tax fraud, causing a tax loss of nearly $260,000 to the federal government. Between 2009 and 2014, Bidegary prepared false tax forms claiming fictitious business losses that he used to obtain larger refunds than were due to his clients who "invested" in his businesses.
National Taxpayer Advocate Nina E. Olson recently released a report to Congress concerning the problems facing taxpayers with respect to their interactions with the Internal Revenue Service (IRS). For the 2018 filing season, she cites the government shutdown as the top concern: "The five weeks could not have come at a worse time for the IRS---facing its first filing season implementing a massive new tax law, with a completely restructured tax form." Severely outdated technology is the biggest roadblock to overcoming this challenge, which will require a major shift in federal funding strategy to fix.
The IRS recently released its annual report to Congress on the Whistleblower Program, which awarded over $312 million to whistleblowers and collected $1.4 billion in FY 2018. Awards in this period represent 21.7% of total proceeds collected based on whistleblower claims, a significant increase of nearly 4 percentage points as compared to FY 2017. The IRS generally waits at least 8 years before issuing awards to ensure a final determination of proceeds can be made first.
The Internal Revenue Service (IRS) recently issued final regulations and related guidance on the new qualified business income (QBI) deduction created by the 2017 Tax Cuts and Jobs Act. Eligible business owners and taxpayers can now deduct up to 20 percent of their qualified business income or real estate investment trust dividends on their federal tax return beginning after December 31, 2017.