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NAEA Advocates for Enrolled Agents at Treasury and IRS
This week Executive Vice President Robert Kerr, EA, and Legislative Counsel Jeff Trinca met with Assistant Secretary for Tax Policy David Kautter (who you may recall keynoted at the May 2019 NAEA officer installation) and Department of Treasury attorneys to discuss the IRS’s missed deadline for providing guidance on the use of private sector electronic signatures. Kerr and Trinca reviewed the statutory requirements as established under the Taxpayer First Act (Pub. L. No. 116-25), along with the congressional report language accompanying the legislation. Next, we expect Congress will be weighing in with IRS on this important issue, long pursued by NAEA.
That same day, Kerr and Trinca met with Sharyn Fisk, the new director of the Office of Professional Responsibility, to discuss a variety of issues, including Circular 230, return preparer standards, and legislative initiatives NAEA is pursuing in advance of our upcoming Fly-In Day. What legislative initiatives? Details to follow, but NAEA has long been interested in defending EAs from encroachment by the states and other federal agencies.
Administration Unveils Its FY21 IRS Budget—Good, Not Great, but Good
The budget proposes $12 billion in base funding for the agency that collects 97 percent of all federal revenue. The proposal is an increase of just under $500 million, $300 million of which would be directed toward “modernizing IRS’s information technology infrastructure and enhance taxpayers’ ability to interact with the IRS securely and electronically, improving the time it takes for IRS to resolve concerns.”
For the second year in a row, the administration is proposing separate legislation appropriating $15 billion over 10 years to hire additional compliance personnel. The budget document claims once the staff is trained and fully operational they would generate $5 in additional revenue for every $1 spent, for a net 10-year return of $64 billion.
NAEA has two main issues with this budget submission:
- Passing a separate supplemental appropriations bill for IRS compliance to receive a positive revenue boost has been floated before, and Congress has ignored it. We do not think it will be any different this time. We would instead urge policymakers to “suck it up” and provide IRS with a reasonable increase in its compliance presence.
- The budget fails to provide an inflation increase for IRS personnel. The FY20 budget included additional funds for enforcement only to have over half used instead for covering inflation adjustments. In the end, it will be up to Congress to exercise its constitutional powers of the purse.
Tax Policy Changes in Proposed FY21 IRS Budget
The budget also includes several compliance proposals estimated to increase federal revenues:
- Reinstate the Department of Treasury’s authority to regulate paid tax preparers ($479 million over 10 years).
- Give IRS the authority to correct more errors on tax returns before refunds are issued, including denying a tax credit if taxpayers fail to include required paperwork, the taxpayer-provided information was not correct, or taxpayers exceed a lifetime limit ($17.11 billion over 10 years).
- Require a valid Social Security number for work in order to claim child tax and other dependents credits ($72.795 billion over 10 years).
- Eliminate the automatic 30-day extension for Form 1099-K ($9 million over 10 years).
A few state items of interest:
- The Arizona Department of Revenue has announced taxpayers may download and print Forms 1099-G by going to AzDoR’s website.
- The Colorado Department of Revenue recently adopted an administrative rule in the wake of a temporary individual and corporate income tax rate reductions provided by a Taxpayer Bill of Rights surplus provision.
- The Ohio Supreme Court has ruled income received from corporate stock options that were earned by an employee as part of a compensation package while employed in the City of Cleveland, but not exercised until after retirement (and relocation from Ohio), was still subject to Cleveland income tax.
IRS issued proposed regulations providing guidance for employers on the amount of federal income tax to withhold from employees’ wages in light of recent IRC changes in the wake of the Tax Cuts and Jobs Act (TCJA), which provides for “flexible and administrable rules” for withholding. There is a lot to unpack, but IRS’s news release frames the issue nicely:
In general, the proposed regulations…are designed to accommodate the redesigned Form W-4 …to be used starting in 2020, and the related tables and computational procedures in Publication 15-T. The proposed regulations and related guidance do not require employees to furnish a new Form W-4 solely because of the redesign of the Form W-4.
KPMG summary is here.
In Rev. Rul. 2020-05, IRS modifies two earlier (2009) revenue rulings to bring into alignment with TCJA tax code changes that state the cost of insurance does not reduce the basis of an insurance contract. And once again, we turn the microphone over to KPMG for further explanation and analysis.
| || EVERYTHING BUT THE KITCHEN SINK|
Today is Valentine’s Day—and while it may be too late to order your beloved something on Amazon—you could still nick out for a bottle of bubbly and a bouquet (though we gave you ample warning last week). Among things we love: Charlie Munger, because he is 96 and a self-made billionaire who says precisely what he means about investment (in this case, Elon Musk); CityLab in general (and this piece on why NYC stopped building subways); and “My Funny Valentine” (Chris Botti/Sting; Chet Baker (of course); Linda Ronstadt; and Matt Damon—because The Talented Mr. Ripley is to be seen to be believed).
Otherwise, we offer a lovely list of tax-related items, personally curated especially for America’s Tax Experts®:
- ICYMI: NAEA President Jerry Gaddis, EA, recently wrote a letter to IRS Commissioner Chuck Rettig expressing the frustration of EAs with the current methods IRS representatives use to authenticate our members. These methods require EAs to provide SSNs, DOB, source of income and other private financial information over the phone.
- BNA reports IRS earlier this week “pulled language from its website that would have subjected millions of users of the popular video games Fortnite and Roblox” to a new Form 1040 attachment requirement to disclose virtual currency. Here is IRS’S now-updated website.
- Thanks, but no thanks: TIGTA reports IRS has effectively expanded options for cash payments, but few are taking up the agency on the offer. The audit outlines how taxpayers may pay with cash at a participating retailer—a multistep process—in case the reader is interested in sharing with clients or at his/her next cocktail party (post April 15, of course).
- The latest Tax Notes Talk podcast features Harvard professor and former CEA chair Jason Furman, discussing arguments for a wealth tax and suggesting alternatives to reduce the wealth gap.
- Thank you Captain Obvious: IRS’s latest tax tip (2020-18) asserts gathering records before preparing tax return makes filing go smoother.
- CNBC recently advised workers 65 and older on how to move into and out of Medicare.
- The Procedurally Taxing blog this week features a guest blogger, who writes on how one works through an employer’s failure to file Forms W-2 or 1099 with IRS.
- A California district court has denied a preliminary injunction in an Uber lawsuit arguing the constitutionality of the Golden State’s new worker classification law (see also “AB 5”) and several Akin Gump attorneys take a deeper dive into the details.
- Now for something different: Roll Call outlines the Senate process to approve judges and suggests a necessary pivot going forward.
“So, fall asleep love, loved by me…for I know love, I am loved by thee.’”
— Robert Browning (1812-1889), English poet, in A Woman’s Last Word
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NAEA E@lert | Volume 2: Issue 8
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