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Nebraska legislative session wraps with tax cuts, contentious trans health-abortion bill

June 1, 2023 by

LINCOLN, Neb. (AP) — Nebraska lawmakers adjourned for the year on Thursday, wrapping up a particularly contentious session that saw nearly every bill before the body filibustered.

The filibuster effort led by Omaha Sen. Machaela Cavanaugh and a handful of allies was a protest over a bill that began as a measure to ban gender-affirming care for transgender minors but morphed to also included a 12-week abortion ban.

The effort greatly slowed the work of the Legislature, leading to long days that saw debate routinely stretch into the evening hours and forced leaders to attach bills as amendments in order to get legislation passed.

The tactic appears to have worked.

Speaker of the Legislature Sen. John Arch announced before adjournment Thursday that using the so-called “Christmas tree” bills, lawmakers passed 291 pieces of legislation out of more than 800 bills introduced. That’s compared to 281 bills passed in the last 90-day session in 2021.

Here’s a look at major legislation passed this session that will become law — and some that won’t.

___

TRANS HEALTH AND ABORTION:

Easily the most contentious bill of the 2023 session, the bill will prevent people under 19 from receiving gender-affirming surgery and restrict the use of hormone treatments and puberty blockers in minors when those restrictions go into effect Oct. 1. It will put the state’s chief medical officer — a political appointee who is an ear, nose and throat doctor — in charge of setting the rules for hormone therapies for minors already receiving that therapy and some teens deemed through an exhaustive process to need such therapy.

The law also imposes an immediate ban on abortions after 12 weeks of pregnancy, with exceptions for rape, incest and to save the life of the mother. That ban was shoehorned into the trans care bill as an amendment after a separate bill to ban abortion at about six weeks failed to overcome a filibuster.

The American Civil Liberties Union on behalf of Planned Parenthood of the Heartland has already filed a lawsuit, which argues that the law violates a state constitutional requirement that legislative bills stick to a single subject. The lawsuit is also asking for an injunction to block enforcement of the trans health and abortion restrictions until the court case is decided.

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GUNS:

Nebraska lawmakers passed a bill to allow people to carry concealed guns in the state without a permit. Its passage came as national attention has ramped up over gun violence in the wake of several mass shootings, including the March killing of six people at a Christian elementary school in Tennessee.

The passage came despite fierce opposition. A federal background check is still required to buy a gun, but the measure allows people to carry guns hidden in their clothing or vehicle without having to pay for a government permit or take a gun safety course.

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TAXES:

Lawmakers passed a slew of tax cuts, including an across-the-board state income tax cut that would slash individual and corporate tax rates gradually to a maximum of 3.99% by 2027. Currently, the top rates are just under 7%. Critics of the tax cut say the plan to slash income taxes for the highest earners immediately, while waiting until 2026 to cut taxes for middle-bracket earners, is unfair.

Lawmakers also delivered full tax exemption for Social Security benefits starting next year and expanded tax credits for child care.

Other measures provide property tax relief, including one that sees the state provide funding to community colleges instead of the funds coming from local property tax collections. The state funding would start at the amount the two-year colleges currently collect through local taxes and increase annually by 3.5%.

Another measure increases the amount of a property tax credit offered to property owners on their income tax returns. And another establishes a 3% annual cap — with some exceptions — on how much school districts can increase property tax requests.

In all, lawmakers approved tax cuts amounting to more than $6 billion in tax relief over the next six years, according to Gov. Jim Pillen, who had sought the cuts.

___

VOTER ID:

On the last day of the session, lawmakers passed a bill to comply with a voter ID requirement that voters mandated in November. The bill’s passage came despite a filibuster effort by conservative Sen. Julie Slama, who was the only lawmaker to vote against it. Slama had chaired the referendum effort that saw the voter ID question put on the ballot in November.

The bill allows a wide array of photo identification voters can present at the polls and gives rare exceptions for voting without a photo ID. Slama argued the bill flies in the face of what voters intended.

___

CRIMINAL JUSTICE AND PRISONS:

Also passing on the last day of the session was a bill creating several programs related to Nebraska’s criminal justice system. Crafted by Omaha Sen. Justin Wayne, the bill includes expansion of several programs, including a pilot program to establish parole-violation residential housing, a probationer incentive program and problem-solving courts, like drug courts and veterans courts.

The bill also speeds up parole for many prisoners, ensuring they are subject to transitional services rather than being released with no oversight — a practice called “jamming out.” Experts say those inmates who jam out of prison are at higher risk to reoffend.

Earlier in the session, lawmakers approved nearly $400 million to build a new prison to ease severe overcrowding in the state’s prison system. Critics of that appropriation say that without serious efforts to further change tough-on-crime sentencing mandates and create more centers to transition lower-level offenders back into the community, the new prison will be overcrowded on the first day it opens.

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EDUCATION AND SCHOOL CHOICE:

Lawmakers passed a bill to pump more than $300 million a year into public school funding, mostly from federal pandemic recovery dollars, starting next school year. Supporters note it’s the largest increase in state aid to public schools in the state’s history, but critics fear the boost won’t be sustainable for the long haul.

The public school funding boost accompanied a bill that funnels millions in taxpayer money from public coffers to scholarships for private school tuition. Opponents have already launched a petition in an effort to repeal the scholarship-funding bill at the ballot box in 2024.

The bill does not appropriate taxpayer dollars directly toward private school vouchers. Instead, it allows businesses, individuals, estates and trusts to donate a portion of owed state income tax — up to $25 million in just the first year — to private school tuition scholarships.

___

MISCELLANEOUS:

Among a hodge-podge of bills that made it through this year is one that requires Nebraska gasoline sellers to offer gas blends with 15% ethanol, know as E15. Starting next year, the requirement has at least half of pumps at new gas stations offering the E15 blend. Existing sites must replace more than 80% of the fuel storage and dispensing with E15.

Another measure added as an amendment to a vehicle titling bill repeals the state’s more than 30-year-old law requiring motorcycle riders to wear a helmet. The measure takes effect in January and applies only to riders 21 and older.

Another bill passed provides nearly $575 million to build an unfinished 1894 canal and reservoir system in southwestern Nebraska that would divert water from Colorado along the South Platte River to benefit agriculture, power generation and municipal drinking water in an increasingly parched region of the state. The measure invokes an obscure, 99-year-old water compact between the states that allows Nebraska to seize the land necessary to build that canal.

___

PASSED, BUT VETOED:

Republican Gov. Jim Pillen gutted several bills passed this year with line-item vetoes amounting to more than $140 million. One veto was a child welfare rate increase, amounting to $6 million. Another amounted to $20 million over two years that would have funded middle-income housing developments in urban areas and workforce housing in rural Nebraska, areas where officials have said a shortage of affordable housing has led to businesses being unable to fill open jobs.

Also vetoed were pay raises for legislative staff, increases to Medicaid payment rates for hospitals and nursing homes, funding for a pilot program related to childhood trauma and gun violence, and $3 million to fund a Lincoln housing facility for pregnant or parenting teens.

Lawmakers overrode only one line-item veto measure — an additional $1.1 million for the State Auditor’s Office to increase employee pay and hire more staffers.

Originally Appeared Here

Filed Under: Income Tax News

Funding Offers Promise for IRS Compliance Plans, Officials Say

May 29, 2023 by

Thanks to funding included in the Inflation Reduction Act, the IRS is planning compliance initiatives several years out, according to two agency officials speaking on May 17.

“If you’re familiar with the IRS in some form or fashion, you’re aware that funding has been a concern for the past 13 to 15 years,” said Paul Mamo, IRS assistant deputy commissioner for services and enforcement. “We’ve been operating in austerity for a long time. Having funding for several years out rather than worrying about the immediate budget cycle is fantastic.”

Mamo spoke at the 41st Payroll Congress in Denver along with Dan Lauer, director of examination for the IRS’s Small Business and Self-Employed Division.

“Think about everything that has happened,” Mamo said, “all of the acronyms that have been added to our vocabularies – TCJA, IRA, ACA, the CARES Act, EIP payments, unemployment, the advance child tax credit. All of these events, these pieces of legislation, they don’t come with funds. It’s hard to innovate in one space and keep the trains running on the other side. So, we’re excited to have this money.”

Treasury Secretary Janet Yellen laid out an ambitious plan for the IRS that starts and ends with improving customer service. “The core pieces,” Mamo said, “are hiring people and having the technologies and tools in place that will enable the IRS to execute its mission on behalf of taxpayers.”

Employee Retention Credit

Right now, the IRS is focused on “those three favorite letters – ERC – employee retention credit examinations,” according to Lauer.

“People think there’s a lot of fraud associated with the employee retention credit – and there is – but what I want to communicate to you is that are a lot of technical issues around a very complex credit, and there’s a lot of nuances and there’s three different legislative acts. So, there’s a lot to it, and it’s not as simple as ‘I was in business, I paid my employees, I should get this credit,’” Lauer said.

Notably, Mamo identified the ERC as the number one scam on the IRS’s dirty dozen list.

“One thing I find very perplexing is folks who go to their regular return preparer, who says, ‘I’m sorry, you don’t qualify for the credit,’ and then they go to someone else who says, ‘Come right in, sit down here for a few minutes and we’ll get you your $3 million back,’” Lauer said.

Anyone who can qualify someone over the phone or over their computer system in 10 minutes must be using artificial intelligence, Lauer said. “Because I don’t see how they can.”

Invariably, they are not performing their due diligence and asking the proper questions, he said. Are they asking where you operate your multiple businesses and whether the government orders to suspend operations were issued by the federal, state, or local government? Are they asking about the pecking order of the different credits available to the business and employees? Because the components used in one credit cannot be used in another. Did they talk to you about the fact that if you take this credit you have to reduce your wages on your income tax return?

“When the employee retention credit took fire, all of my agents had full caseloads,” Lauer said. “We had to work our way through the work in progress before getting to the credit retention cases,” he said. During filing season, many agents were reassigned to answer telephones, and amended returns piled up. “We’ll be working on these returns for the next couple years,” Lauer said

Next Up

After agents work through the ERC examinations, IRS plans to focus on withholding compliance, Lauer said. Backup withholding seems to confuse a lot of employers, he said, so that deserves attention. Also, withholding for nonresident aliens. “There’s a lot of confusion over treaties and visas and how they impact income and Social Security taxes,” he said.

IRS will focus more on auditing large employers and away from auditing smaller businesses, Lauer said.

IRS also plans to “take a more aggressive posture on worker classification,” he said, adding that it is important to maintaining our Social Security system. “Some industries have gotten a bit out of control,” without mentioning specifics.

“I don’t think a lot of people around the country realize how important the administration of payroll is to our tax system,” Lauer said.

Originally Appeared Here

Filed Under: Income Tax News

MTB Metals Closes First Tranche of Private Placement with over $1,570,000

May 26, 2023 by

Vancouver, British Columbia–(Newsfile Corp. – May 26, 2023) – MTB Metals Corp. (TSXV: MTB) (OTCQB: MBYMF) (FSE: E8H) (“MTB” or the “Company”) is pleased to announce that the Company has closed the first tranche of the non-brokered private placements for Flow Through and Non-Flow Through Units, as announced on May 4th. The funds will be used primarily for exploration on Mountain Boy’s Telegraph property in the Golden Triangle of British Columbia.

Lawrence Roulston, CEO, stated: “These new funds, added to the existing working capital, puts MTB in a strong position to continue exploration on our Telegraph copper-gold porphyry project. Field work will begin in early June with drilling scheduled to begin in August.”

Flow Through Offering

MTB raised gross proceeds of $1,199,889.40 from the sale 9,229,918 flow through units (the “FT Units”). Each FT Unit consists of one common share of the Company to be issued as a “flow-through share” within the meaning of the Income Tax Act (Canada) (each, a “FT Share”) and one common share purchase warrant (each whole warrant, a “FT Warrant”). The price of each FT Unit is $0.13. Each FT Warrant will entitle the holder thereof to purchase one common share of the Company at a price of $0.18 for a period of 24 months, expiring on May 26, 2025.

Non-Flow through Offering

In addition, MTB also closed a non-brokered private placement of 3,088,350 units (“Units”) at $0.12 per Unit for gross proceeds of $370,602. Each Unit consists of one common share and one common share purchase warrant (a “Warrant”). Each Warrant will entitle the holder thereof to purchase one common share of the Company at a price of $0.18 for a period of 36 months, expiring on May 26, 2026.

Finder’s fees of 7% cash and 7% in finder’s warrants were paid to eligible parties. Each finder’s warrant entitles the holder to purchase one common share of the Company at a price of $0.12 for a period of 36 months, expiring on May 26, 2026.

Story continues

All securities are subject to a four month hold period expiring on September 27, 2023.

The gross proceeds from the issuance of the FT Shares will be used to incur resource exploration expenses which will constitute “Canadian exploration expenses” as defined in subsection 66.1(6) of the Income Tax Act and “flow through mining expenditures” as defined in subsection 127(9) of the Income Tax Act (the “Qualifying Expenditures”), which will be renounced with an effective date no later than December 31, 2023 to the purchasers of the FT Units in an aggregate amount not less than the gross proceeds raised from the issue of the FT Shares. If the Qualifying Expenditures are reduced by the Canada Revenue Agency, the Company will indemnify each subscriber of FT Units for any additional taxes payable by such subscriber as a result of the Company’s failure to renounce the Qualifying Expenditures.

The securities offered have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any U.S. state securities laws, and may not be offered or sold in the United States or to, or for the account or benefit of, United States persons absent registration or an applicable exemption from the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, nor in any other jurisdiction.

About MTB

MTB has six active projects spanning 670 square kilometres (67,587 hectares) in the prolific Golden Triangle of northern British Columbia. With the focus on the Telegraph project, discussions are now underway leading to joint ventures and/or spinouts of other projects.

  1. Telegraph is located in the vicinity of 4 world-class porphyry deposits being advanced by major mining companies: Galore (Teck / Newmont), Schaft (Teck), Saddle (Newmont) and the operating Red Chris copper-gold mine (Newcrest / Imperial Metals). Field work by MTB on its 310 square kilometre property, together with earlier results, provides compelling evidence for the presence of one or more porphyrys similar to others in the area.

  2. The American Creek project is centered on the historic Mountain Boy silver mine. The project is road accessible and 20 km from the deep-water port of Stewart. There are multiple silver, gold and copper occurrences on the property, including a 2006 drill hole that encountered 5 kgs of silver over 5 metres.

  3. Red Cliff is a past producing gold and copper mine in which the Company holds a 35% interest.

  4. On the BA property, 182 drill holes have outlined a substantial zone of silver-lead-zinc mineralization located 4 km from the highway. Several targets with high-grade silver potential remain to be tested. Surprise Creek, to the north, hosts the same prospective stratigraphy.

  5. On the Theia project, work by MTB and previous explorers has outlined a silver bearing mineralized trend 500 metres long, highlighted by a 2020 grab sample that returned 39 kg per tonne silver (1,100 ounces per ton). Two other zones on the property produced copper values over 5%.

  6. Southmore is in the midst of some of the largest deposits in the Golden Triangle. It was explored in the 1980s through the early 1990s and was overlooked until MTB consolidated the property and carried out airborne geophysics and field work which confirmed several zones of gold and copper, with values up to 20% copper and 35 g/t gold.

On behalf of the Board of Directors:

Lawrence Roulston
President & CEO

For further information, contact:

Caroline Klukowski
info@mountainboyminerals.ca

NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

This news release may contain certain “forward looking statements”. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Any forward-looking statement speaks only as of the date of this news release and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise.

Not for distribution to United States Newswire Services or for dissemination in the United States

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/167735

Originally Appeared Here

Filed Under: Income Tax News

Rebate checks, Social Security income tax cuts plus new taxes and fees: How will bills at State Capitol impact your budget?

May 23, 2023 by

ST. PAUL, Minn. — The Minnesota Legislature adjourned for the 2023 session Monday night, sending the $72 billion, two-year state budget to Gov. Tim Walz’s desk for signature.

It includes direct rebate checks, tax relief for seniors on Social Security, and a new tax credit that Democrats say will make a huge dent in child poverty.

But scattered through the state’s spending plan are new revenue-raisers like increased sales taxes and other fees. Here’s a breakdown of who might see money back–and when Minnesotans might pay more.  

Rebate checks

The rebates are $260 per tax filer, $520 for married couples filing jointly plus an additional $260 per dependent, up to three. A family of five could see up to $1,300 back in their pockets.

Married couples filing jointly making under $150,000 per year and other tax filers making under $75,000 per year and are eligible for the one-time money back. It’s a cliff, meaning there is no phase-out if income exceeds those thresholds. 

Democrats leading the legislature have sought to target their tax relief to lower- and middle-income Minnesotans. 

“During the pandemic, it was very, very difficult for many people and many people fell far behind. Other people did quite well. A lot of people who were able to work from home actually saved money,” said House Speaker Melissa Hortman, DFL-Brooklyn Park. “So the way we looked at returning the surplus in the form of rebates was that it should be means-tested so that the people who need the money get it.”

The Minnesota Department of Revenue estimates 2.5 million households will qualify based on 2021 tax returns, which are the data used to determine eligibility. Minnesotans can expect to see those payments starting this fall.

They will receive it via direct deposit if they provided banking information when they filed their taxes last year or if they updated information using an online portal that will be operational this summer, according to the department.

Otherwise, a check will be mailed to the address listed on their 2021 tax return.

Child tax credit

What they’re calling the “centerpiece” to their tax bill is a child tax credit for low-income families that researchers at Columbia University predict will slash child poverty in Minnesota by one-third.

The credit is $1,750 per child and it starts to phase out for families making more than $35,000 per year. If Minnesotans make more than that, they might be eligible for a smaller credit depending on their income and how many children they have.

The Department of Revenue estimates 265,000 families will be impacted by this change, and the credit will be available after they file their income tax return next year. 

Social Security tax cuts

Last year, leaders in the divided legislature came to an agreement to fully eliminate the state’s tax on social security. But that deal unraveled before session ending, punting the issue to this year.

Democrats in total control this year ultimately decided to do a partial repeal instead, which will eliminate the tax for couples earning up to $100,000 and $78,000 for individuals. Right now, half of seniors in the state already don’t pay state taxes on those benefits. Leaders say the change will increase that total to 76%.

Gas tax and new delivery fee

A transportation spending package for the next two years will raise the gas tax in future years by indexing it to the inflationary index for construction costs. Any increase is capped at 3% and it will amount to a five-cent increase over the next four years, according to nonpartisan legislative staff. The current rate is 28.5 cents.

The last time the legislature passed a bill to raise the gas tax, which is constitutionally required to fund roads and bridges, was in 2008. Supporters say current revenues are not keeping pace to meet the needs of transportation infrastructure in disrepair. 

That same budget agreement also includes a 50-cent delivery fee that consumers will have to pay on most orders over $100 as an additional stream of money. 

There are exemptions on the fee, like groceries, food deliveries from restaurants, pharmaceutical drugs and baby products. Clothing, though exempt from general sales taxes, would be subject to the delivery fee. 

Sales tax increase in Twin Cities metro, other fees

The sales tax in the seven-county Twin Cities metro will increase by 1%. A housing package raises the rate by 0.25% with revenues dedicated towards affordable housing and rental assistance, and the transportation package raises it by 0.75% to support transit in the region. 

The change means Minnesotans will pay an additional $1 for every $100 purchase.

There are also changes that will increase car tab fees. In the environmental and natural resources budget, boating licenses fees will also go up–whether it’s a 40-foot watercraft or a sailboat.

In many cases, those costs will double. For a canoe, kayak, sailboard, paddleboard and paddle boats, registration fees will increase from $10.50 to $23, for example.

Other cost savings for families: free tuition, universal school meals. 

Earlier in the session, lawmakers approved a plan to provide free breakfast and lunch for all students in school, regardless of their parent’s income. 

Schools must enroll in the federal program for free and reduced priced meals to be eligible. The state would pick up the tab for the cost of covering everyone else who doesn’t qualify for the federal program, which is estimated to be $388 million line item in the next two-year budget.

That will save all families money. For example, If a family had two children enrolled at Apple Valley High School, who bought lunch every day, the change could save them more than $100 per month. 

For students whose families make less than $80,000 a year, they would be eligible for the “North Star Promise” scholarships under a new program passed this year.

Starting next school year, that funding will cover tuition and fees for residents who attend two- or four-year programs in the University of Minnesota or Minnesota State systems or at in-state tribal colleges.

The Minnesota Office of Higher Education estimates it will impact 15,000 to 20,000 students currently enrolled.

The amount awarded to a qualifying student would be determined after other grants, scholarships and financial aid are deducted from the student’s total costs to attend. Private school tuition is not covered.

Caroline Cummings

Caroline Cummings is an Emmy-winning reporter with a passion for covering politics, public policy and government. She is thrilled to join the WCCO team.

Originally Appeared Here

Filed Under: Income Tax News

DFL, Republicans reach deal on $2.6 billion infrastructure package

May 20, 2023 by

ST. PAUL — After months of uncertainty and negotiations, Democratic-Farmer-Labor and Republican lawmakers on Saturday, May 20, announced a deal on more than $2.6 billion in borrowing and spending on public infrastructure.

Minority Senate Republicans had held up the passage of a major public works borrowing bill for much of the session as they attempted to push DFLers to adopt bigger tax cuts and boost nursing home funding.

Just days before the legislative deadline, DFLers agreed to Republican requests to provide $300 million to nursing homes struggling with staffing shortages and growing costs.

“We are glad now that we came together and have this historic agreement that will help communities all across the state of Minnesota,” said Senate Majority Leader Kari Dziedzic.

It’s been more than two years since the Legislature passed a bonding bill — a major public works borrowing bill that helps fund projects like water treatment plants and roadwork across the state. Small local governments often rely on bonding to build essential infrastructure they’d otherwise struggle to afford.

In a statement, the Coalition of Greater Minnesota Cities hailed the deal as a victory for smaller communities across the state, an example of “what can be achieved when Democrats and Republicans work together for Minnesotans.”

“It is wonderful news that legislators finally came to an agreement on a much-needed and long-awaited bonding bill that serves the needs of Greater Minnesota,” said Thief River Falls Mayor Brian Holmer, president of the coalition.

So, what exactly will the infrastructure bill cover? House Speaker Melissa Hortman told reporters Saturday that the bill has $1.5 billion in borrowing, the part that needs Republican votes. The cash part is about $1.1 billion.

Much of the borrowing in the bonding bill is for statewide agency projects, such as for colleges, housing and corrections. More than $245 million is specifically marked for transportation projects, including local road improvement and bridge replacement programs. Close to $180 million in borrowing currently is marked for Minnesota State Colleges and Universities.

About $90 million in bonds and $185 million in cash for local projects is split between Democrats and Republicans.

Borrowing bills require three-fifths support from the Senate and House to pass. And even though Democrats have majorities in both chambers, they need GOP votes to get a supermajority on a bill. House Republicans joined DFLers in approving the $1.5 billion bonding bill earlier this year, but Senate Republicans blocked it, demanding more action on tax cuts as the state has a historic $17.5 billion surplus.

But soon it became clear that DFLers did not have any interest in entertaining Republican demands to fully repeal the Social Security income tax and increase the size of tax rebate checks. After months of offers from Republicans — and just days before the end of session — the deal came on just the nursing homes.

“If we’re going to save one thing, we’ve got to make sure we save our nursing homes,” said Senate Minority Leader Mark Johnson.

Before they secured Republican support, DFLers had planned to move forward with a $1.3 billion cash-only infrastructure some described as the “go it alone” bill. But now that there’s a borrowing deal, $300 million of that cash will go to nursing homes.

Republicans said the funding is vital for struggling nursing homes, and that a Health and Human Services bill the Senate passed Friday night did not do enough for long-term care, which they say is in a crisis due to staffing and costs.

Hortman pointed out the Health and Human Services budget bill that passed the Senate Friday night contains $100 million in no-interest loans for nursing homes and $90 million for workforce retention.

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Alex Derosier covers Minnesota breaking news and state government for Forum News Service.

Originally Appeared Here

Filed Under: Income Tax News

IRS whistleblower in Hunter Biden investigation removed from probe, his attorneys say

May 17, 2023 by

An IRS whistleblower who claims the Justice Department interfered with the Hunter Biden criminal probe says that “he and his entire investigative team are being removed” from the investigation, according to a letter sent Monday by his attorneys to Congress.

Whistleblower’s lawyer meets with congressional panels

One of the attorneys, Mark Lytle, met May 5 with members of the House Ways and Means and Senate Finance Committees to discuss what the whistleblower could tell investigators and how he could do so without running afoul of taxpayer privacy laws. Lytle wrote in an April letter to Congress that the unnamed IRS criminal supervisory special agent could shed light on how the years-long, high-profile investigation had been hindered by “preferential treatment and politics.” 

Whistleblower says he’s removed from probe

On Monday, the agent and his team were told they were being removed from the investigation “at the request of the Department of Justice,” Lytle and another attorney, Tristan Leavitt, wrote to Congress Monday.

Click here to view related media.

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A Justice Department spokesperson said the agency “cannot comment on the matter” and referred CBS News to Delaware U.S. Attorney David Weiss, who is overseeing the investigation.

“As to any investigation of Hunter Biden, as the Attorney General has said, that investigation is being handled by U.S. Attorney David Weiss, who has full authority to make investigative decisions and to bring charges in any jurisdiction as he deems appropriate,” the spokesperson said.

Weiss’ office did not return a request for comment.

The IRS said in a statement that it “is deeply committed to protecting the role of whistleblowers, and there are robust processes and procedures in place to protect whistleblowers.” 

“As IRS Commissioner Danny Werfel has stated, we will not tolerate retaliation against any IRS employee making a whistleblower allegation,” the agency said in its statement, which did not directly address the Hunter Biden investigation. “When suggestions of wrongdoing are raised, we work with all appropriate parties, including the Treasury Inspector General for Tax Administration, to ensure the integrity of the whistleblower process is safeguarded.”

Whistleblower Protection Act

It is not clear why the whistleblower and his team were removed from the investigation.

Tom Devine, a lawyer who has represented thousands of whistleblowers during the last 40 years, said it would violate the federal Whistleblower Protection Act if the agent were to be removed from the investigation because of his disclosures.

“That’s considered a significant change in duties and working conditions to remove you from a case, and if it’s because of your whistleblowing, that would make it a violation of the law,” said Devine, who is the legal director for the nonprofit Government Accountability Project, a whistleblower protection and advocacy organization.

Devine said even if the Justice Department believes it removed the agent and his team appropriately, there’s a “reverse burden of proof” required to prove he wasn’t being retaliated against.

“It’s a tough test. They have to show by clear and convincing evidence that they would have taken the same action for legitimate independent reasons, even if you never opened your mouth,” Devine said. 

Whistleblower claims his information contradicts testimony by “senior political appointee”

In an April interview with CBS News, Lytle said his “client wants to come forward to Congress.… He’s ready to be questioned about what he knows and what he experienced under the proper legal protections.” 

Lytle wrote in his April letter to Congress that the agent would contradict sworn testimony “by a senior political appointee.”

In a Senate hearing in March, Attorney General Merrick Garland vowed not to interfere with Weiss’ work. 

“I promise to ensure that he’s able to carry out his investigation and that he be able to run it,” Garland said on March 1.

When President Joe Biden took office, dozens of U.S. attorneys appointed by Trump were asked to resign, as is customary in a new administration, but Weiss, who was leading the investigation into Hunter Biden, was asked to stay.

Hunter Biden’s lawyers met with Justice Department officials on April 26 to address the ongoing investigation into the president’s 53-year-old son, according to two sources familiar with the meeting. 

The meeting, a status update at Hunter Biden’s request, included officials representing the department’s tax division and Weiss. 

Attorneys representing clients under federal investigation may request to meet with prosecutors for updates. Hunter Biden has not been charged and maintains his innocence in the matter. An attorney for Hunter Biden has previously declined to comment on the whistleblower’s claims.

The IRS and Treasury inspector general for tax administration have not responded to earlier requests for comment.

Trending News

Graham Kates

Graham Kates is an investigative reporter covering criminal justice, privacy issues and information security for CBS News Digital. Contact Graham at KatesG@cbsnews.com or grahamkates@protonmail.com

Originally Appeared Here

Filed Under: Income Tax News

Arizona Gov. Hobbs finally signs budget

May 14, 2023 by

By Howard Fischer
Capitol Media Services

PHOENIX — Gov. Katie Hobbs has inked her approval to the $17.8 billion budget she negotiated with Republican legislative leaders.

The governor, in a prepared statement Friday, touted the provisions of the plan she demanded be included, like “unprecedented investments in housing, education, tribal communities and healthcare.”

“Today, we showed what happens when pragmatic leaders come together and compromise to get things done for Arizonans,” Hobbs said.

Republicans had their own take on the deal, emphasizing that they quashed the goal Hobbs stated in her budget released in January to repeal the universal vouchers that allow any student, regardless of reason or need, to get state funds to attend private or parochial schools.
But they also pointed to a plan to give tax rebates to families with children — versus Hobbs’ preferred aid to working poor with children — saying they are simply giving taxpayers back some of what they paid in prior years.
Only thing is, the measure as crafted actually will result in some taxpayers getting back more than they paid. And it is crafted in a way to disqualify others who also had state income tax liability but chose to eliminate it by giving to certain charities.
And a tax attorney told Capitol Media Services that it even would allow someone to claim a credit for a live-in boyfriend or girlfriend of any age.
Hobbs, beyond her prepared statement, is not answering questions about the provisions of the tax rebate or anything else in the package. That will have to wait until a press conference on Monday.
Still, press aide Christian Slater acknowledged this isn’t the spending plan that his boss wanted.
“She will publicly tell you that she is not thrilled with every piece of it,” he told Capitol Media Services.
And that, he said, includes the tax relief she wanted.
In her budget, Hobbs sought to eliminate state sales tax on diapers and feminine hygiene products. That, she said, would have saved women and families $40 million a year.
More broadly, she proposed a new child tax credit that would give low-income parents $100 per year for each child. That had a $50 million price tag.
Instead, Hobbs acceded to a demand by the Arizona Freedom Caucus, composed of the most fiscally conservative GOP lawmakers, for what they said amounted to $260 million to rebate some of the taxes that people had paid in prior years.
It’s available to anyone who filed a full-year state income tax return for 2019, 2020 or 2021 who also claimed the state’s deduction for children.
If they had a tax liability for any of those three years, they will get a one-time $250 rebate for each child 17 or younger in 2021, up to a maximum of $750. Those with older dependents are eligible for $100 credits for each, again, up to three.
Sen. Jake Hoffman, R-Queen Creek, the leader of the Freedom Caucus, said Republicans favored that plan versus the one proposed by Hobbs because it gives back some of the money paid by those who actually paid taxes. By contrast, the governor’s plan had no such requirement to show a tax liability.
But the plan adopted has some quirks of its own.
It allows anyone who had at least $1 in liability in any of the three years to get back up to that full $750, regardless of how much — or how little — they actually owed the state. Put another way, some people will get back a “rebate” that far exceeds their actual tax bill.
There are a host of other conditions and provisions.
Only those who had dependents in 2021 are eligible. New parents in 2022 are not.
And tax attorney Bob Kamman pointed out there are other quirks.
Consider, he said a family with a 17 year old in 2021, the year the law uses to compute the rebate, but owed no tax that year. Kamman said the fact that family may have had children 16 or younger in 2019 and 2020 does not make them eligible for the $250-per-child rebate, meaning they are entitled to just $100 per child.
The legislation also cuts out those who are generous with donations.
Arizona provides dollar-for-dollar credits against state income taxes for contributions to certain causes. These include organizations that provide scholarships for students to attend private schools, money given to public schools for extracurricular activities, and cash to a host of other charitable organizations ranging from Adopt-A-Vet to the Yuma Community Food Bank.
Those donations can often wipe out someone’s income tax liability.
What it also does, under the terms of rebate provision inserted by Hoffman and colleagues, is make these same people ineligible for that new cash rebate of up to $750.
At the same time, Kamman said, the wording of the legislation is not limited to those with children. He said anyone with a dependent of any age qualifies for that $100 per person.
What that can include, he said, is someone who has a live-in boyfriend or girlfriend. If that partner earns no money, the taxpayer can declare him or her as a dependent and get $100 back from the state.
And there’s one more open question: Can taxpayers who find themselves locked out of the rebate plan go back and amend their 2021 returns to qualify?
Kamman gives the example of someone who itemized deductions on that 2021 return and had no tax liability. Yet if that same person claimed the standard state deduction, the tax bill would have been $100.
That suggests that someone could file an amended return — something allowed under Arizona law — removed the itemized deductions, pay the $100 and then get a rebate of $750 for the three eligible children they have.
Kamman acknowledged, though, that comes with the risk that the state Department of Revenue might not read the rebate law that way.
“You could try,” he said. “But it might not work and you would still owe $100.”
Kim Quintero, spokeswoman for Senate Republicans, said she has referred questions about the program to Hoffman and Senate research staff and would have no immediate comments.
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On Twitter: @azcapmedia

Originally Appeared Here

Filed Under: Income Tax News

Commercial fishing’s low tax-compliance rate draws IRS to New Bedford

May 11, 2023 by

NEW BEDFORD – The national average for federal tax compliance is 83.6% over every type of industry.

In the commercial fishing industry, that compliance rate drops to 65%, said Joleen Simpson, special agent in charge of the IRS Criminal Investigation, Boston Field Office.

“That’s well under the average. So we’re really trying to make sure that we have the industry come under compliance,” Simpson said.

As the nation’s number one commercial fishing port, New Bedford is very much on the radar.

“The statistics we have cover the six New England states but really the fishing industry is significant in Rhode Island, Maine and Massachusetts, with, of course, New Bedford being the most valuable port not only in New England but in the United States,” said IRS Criminal Investigation Supervisory Special Agent Matthew Amsden.

“So we can confidentally say the majority of the commercial fishermen impacted here are out of the New Bedford Port,” Amsden added.

According to data provided by the National Oceanic and Atmospheric Administration, during the four tax years 2018 to 2021, nearly $1 billion in fishing proceeds to New England crewmembers were reported to the Internal Revenue Service.

During this same period almost 35% of commercial fishing crew members (representing $255 million in proceeds) failed to report this income on their federal tax returns, according to the IRS.

Seven New England fishermen indicted, 3 from New Bedford

Seven New England fishermen, including three from New Bedford and one from Fall River, were charged last month with tax evasion and failing to file returns. The other three indicted were from Rhode Island, according to a press release from the IRS Criminal Investigation unit.

Symbiotic relationship:New Bedford’s fishing community is working with Vineyard Wind. Here’s how.

They were indicted by federal grand juries in Boston and Providence. They are presumed innocent until proven guilty beyond a reasonable doubt.

According to the indictments, the commercial fishermen each worked for fishing companies operating primarily out of New Bedford, or Point Judith, R.I.

They were paid as independent contractors with their employers filing 1099 forms with the IRS documenting their income.

They included:

Jorge Cazarin of New Bedford, who was charged with five counts of tax evasion and five counts of willful failure to file tax returns for 2016 through 2020.

According to the indictment, Cazarin worked as a commercial fisherman and deckhand for various companies, primarily out of Point Judith in Narragansett, R.I.

From about 2013 through about 2020, Cazarin attempted to evade income taxes due and owing on approximately $1.2 million in income he received as a commercial fisherman, according to the indictment.

Rodolfo Membreno of Fall River, who was charged with six counts of tax evasion for 2012 and 2017 through 2021 and four counts of willful failure to file tax returns for 2017 through 2019 and 2021.

From about 2013 through 2021, Membreno attempted to evade income taxes due and owing on approximately $1.4 million in income he received as a commercial fisherman, according to the indictment.

John Doe of New Bedford, who was charged with six counts of tax evasion for 2016 through 2021 and three counts of willful failure to file tax returns for 2016 through 2018.

From about 2012 through 2021, Doe attempted to evade income taxes due and owing on approximately $1.9 million in income he received, according to the indictment. Simpson declined to comment as to why an alias was used in the indictment because the case is pending.

According to a U.S. Dept. of Justice press release, “One of the defendants allegedly also used the name and Social Security number of another individual to conduct business as a further effort to hide income.”

Miguel Cruz Rubio of New Bedford, and Elizabethtown, N.C., who was charged with four counts of tax evasion for 2016 through 2019.

From about 2015 through 2020 Cruz Rubio attempted to evade income taxes due and owing on approximately $1 million in income he received as a commercial fisherman between 2010 and 2019, according to the indictment.

If convicted, each defendant faces a maximum sentence of five years in prison for each evasion count and one year in prison for each failure to file a tax return charge.

Commercial fishing’s low tax-compliance rate draws IRS to New Bedford

Priority to investigate high-income, non-filers

Generally speaking, Simpson said, the indicted individuals are considered to be “high-income, non-filers” with some form of affirmative act to avoid detection.

Simpson stated, “Congress has made it a priority to investigate instances of high income, non-filers. That is, individuals with significant taxable income who either fail to file tax returns or fail to report significant portions of that income from their federal tax returns. The New England commercial fishing industry lands squarely within this directive as many of the identified commercial fishermen are earning between $150,000 to $250,000 annually.”

IRS offers ‘voluntary disclosure’ program

She added the IRS does offer a “Voluntary Disclosure Practice.”

“If you have willfully failed to comply with tax or tax-related obligations, submitting a voluntary disclosure may be a means to resolve your non-compliance and limit exposure to criminal prosecution. A voluntary disclosure does not guarantee immunity from prosecution; however, a voluntary disclosure may result in prosecution not being recommended,” according to the IRS.

Simpson said it’s something for people in these situations to consider before it’s too late. “The last thing anybody wants is for one of our agents to come knocking on their door.”

“We’re hoping that with this message compliance goes up, but we will continue to be active in looking for cases that are within our jurisdiction in this industry,” Amsden said.

Asked if more indictments could be on the way, Amsden replied, “I would say our work in this industry is not complete.”

Originally Appeared Here

Filed Under: Income Tax News

LIGAND PHARMACEUTICALS INC Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

May 8, 2023 by

Caution: This discussion and analysis may contain predictions, estimates and
other forward-looking statements that involve a number of risks and
uncertainties, including those discussed in Part II, Item 1A. Risk Factors. This
outlook represents our current judgment on the future direction of our business.
These statements include those related to our future results of operations and
financial position, Captisol-related revenues and Kyprolis and other product
royalty revenues and milestones under license agreements, product development,
and product regulatory filings and approvals, and the timing thereof. Actual
events or results may differ materially from our expectations. For example,
there can be no assurance that our revenues or expenses will meet any
expectations or follow any trend(s), that we will be able to retain our key
employees or that we will be able to enter into any strategic partnerships or
other transactions. We cannot assure you that we will receive expected Kyprolis,
Captisol and other product revenues to support our ongoing business or that our
internal or partnered pipeline products will progress in their development, gain
marketing approval or achieve success in the market. In addition, ongoing or
future arbitration, litigation or disputes with third parties may have a
material adverse effect on us. Such risks and uncertainties, and others, could
cause actual results to differ materially from any future performance suggested.
We undertake no obligation to make any revisions to these forward-looking
statements to reflect events or circumstances arising after the date of this
quarterly report. This caution is made under the safe harbor provisions of
Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange
Act.

We use our trademarks, trade names and services marks in this report as well as
trademarks, trade names and service marks that are the property of other
organizations. Solely for convenience, trademarks and trade names referred to in
this report appear without the ® and ™ symbols, but those references are not
intended to indicate, in any way, that we will not assert, to the fullest extent
under applicable law, our rights or that the applicable owner will not assert
its rights, to these trade marks and trade names.

References to “Ligand Pharmaceuticals Incorporated,” “Ligand,” the “Company,”
“we” or “our” include Ligand Pharmaceuticals Incorporated and our wholly-owned
subsidiaries.

Overview

Our business is focused on acquiring or funding programs and technologies that
life science companies use to discover and develop medicines. Our business model
provides a diversified portfolio of biotech and pharmaceutical product revenue
streams that are supported by an efficient and low corporate cost structure. Our
goal is to offer investors an opportunity to participate in the promise of the
biotech industry in a profitable and diversified manner.

Our business model is focused on funding mid to late-stage drug development in
return for economic rights and outlicensing our technology platforms to help
partners discover and develop medicines. We partner with other pharmaceutical
companies to leverage what they do best (late-stage development, regulatory
management and commercialization) ultimately to generate our revenue. Our
Captisol platform technology is a chemically modified cyclodextrin with a
structure designed to optimize the solubility and stability of drugs. Our
Pelican Expression Technology is a validated, cost-effective and scalable
platform for recombinant protein production that is especially well-suited for
complex, large-scale protein production where traditional systems are not. We
have established multiple alliances, licenses and other business relationships
with the world’s leading pharmaceutical companies including Amgen, Merck,
Pfizer, Jazz, Gilead Sciences and Baxter International.

Our revenue consists of three primary elements: royalties from commercialized
products, sales of Captisol material, and contract revenue from license,
milestone and other service payments. We selectively pursue acquisitions and
drug development funding opportunities that address high unmet clinical needs to
bring in new assets, pipelines, and technologies to aid in generating additional
potential new revenue streams.

OmniAb Separation and Spin-Off

On March 23, 2022, we entered into the Merger Agreement, by and among our
company, APAC (which later became New OmniAb), OmniAb and Merger Sub, pursuant
to which New OmniAb combined with OmniAb, our then-antibody discovery business,
in a Reverse Morris Trust transaction. Pursuant to the Separation Agreement, we
transferred the OmniAb Business, including certain of our related subsidiaries,
to OmniAb and, in connection therewith, distributed (the Distribution) to Ligand
stockholders 100% of the common stock of OmniAb. Immediately following the
Distribution on November 1, 2022, in accordance with and subject to the terms
and conditions of the Merger Agreement, Merger Sub merged with and into OmniAb
(the Merger), with OmniAb continuing as the surviving company in the Merger and
as a wholly-owned subsidiary of New OmniAb. After the Distribution, we do not
beneficially own any shares of common stock in OmniAb and no longer consolidate
OmniAb into our financial results for periods ending after October 31, 2022. As
a result, OmniAb’s historical financial results are reflected in our
consolidated financial statements as discontinued operations.

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Business Updates

Travere Therapeutics (Nasdaq: TVTX) received FDA accelerated approval for
FILSPARI™ (sparsentan) for the treatment of IgA nephropathy (IgAN) on February
17, 2023, with commercial availability beginning in the last week of February. A
review decision on sparsentan for the treatment of IgAN in Europe by the EMA is
expected in the second half of 2023. On April 1, 2023, Travere announced
publication in The Lancet of the interim analysis of efficacy and safety data
from the ongoing pivotal, Phase 3 PROTECT Study evaluating sparsentan in adults
with IgAN. The data were simultaneously presented in a late-breaking trials
session at the World Congress of Nephrology 2023. On May 1, 2023, Travere
announced that the pivotal Phase 3 DUPLEX Study evaluating sparsentan in focal
segmental glomerulosclerosis (FSGS) did not achieve the primary efficacy eGFR
slope endpoint over 108 weeks of treatment compared to the active control
irbesartan. Travere reported that secondary and topline exploratory endpoints
trended favorably and a reduction of proteinuria was sustained through 108 weeks
of treatment. Travere plans to engage with regulators to explore a potential
path forward for sparsentan as a treatment for FSGS in the U.S. and Europe.

Viking Therapeutics (Nasdaq: VKTX) completed enrollment in its Phase 2b clinical
trial of VK2809 in patients with biopsy-confirmed non-alcoholic steatohepatitis
(NASH) with topline data on the primary endpoint expected in the first half of
2023. Separately, Ligand sold 3.2 million shares of Viking stock during the
quarter resulting in $43 million of net proceeds following Viking’s announcement
of positive data on their VK2735 obesity program. Ligand does not have any
direct economic interest in VK2735. As of March 31, 2023, Ligand owned 3.6
million shares of VKTX stock.

Novan (Nasdaq: NOVN) submitted an NDA to the U.S. FDA seeking marketing approval
for berdazimer gel, 10.3% (SB206) for the topical treatment of molluscum
contagiosum. The NDA has been accepted and assigned a PDUFA target date of
January 5, 2024.

Palvella Therapeutics (private) announced positive topline results from its
Phase 2 study of QTORIN™ rapamycin in microcystic lymphatic malformations; 100%
of participants were rated by physicians as being “Much Improved” or “Very Much
Improved” as measured on the Clinician Global Impression of Change following
12-weeks of dosing with QTORIN rapamycin. Results showed that QTORIN was
generally well-tolerated with no drug-related severe adverse events. QTORIN
rapamycin has the potential to become the first FDA-approved treatment for this
serious, rare genetic skin disease and has been granted Fast Track and Orphan
Drug Designation from the FDA for this indication. Palvella anticipates
initiation of a pivotal Phase 3 study in the second half of 2023.

Novartis AG (NYSE: NVS) announced that the FDA granted approval for a liquid
form of TAFINLAR® (dabrafenib) + MEKINIST® (trametinib) for the treatment of
pediatric patients one year of age and older with lowgrade glioma (LGG) with a
BRAF V600E mutation and who require systemic therapy. This is the first approval
of an oral Captisol-enabled product.

Sermonix (private) announced the initiation of a registrational Phase 3 clinical
study comparing targeted lasofoxifene in combination with the CDK 4/6 inhibitor
abemaciclib to fulvestrant plus abemaciclib in pre- and post-menopausal subjects
with locally advanced or metastatic ER+/HER2- breast cancer with an ESR1
mutation. Additionally, Sermonix announced that lasofoxifene improved
vaginal/vulvar symptoms relative to fulvestrant in a study of postmenopausal
women with locally advanced or metastatic estrogen receptor-positive ER+/HER2-
breast cancer with an ESR1 mutation.

Anebulo Pharmaceuticals (Nasdaq: ANEB) announced completion of dosing in its
randomized, double-blind, placebo-controlled, Phase 2 clinical trial evaluating
ANEB-001 as a potential treatment for acute cannabinoid intoxication. The
preliminary data showed ANEB-001 reduced effects of a 30 mg dose of THC, and
that delayed dosing of ANEB-001 rapidly reversed pre-existing THC effects.
Anebulo is targeting an End of Phase 2a meeting with FDA in the second quarter
2023.

Results of Operations

Revenue

(Dollars in thousands) Q1 2023 Q1 2022(a)

Change % Change
Royalties $ 17,154 $ 13,432 $ 3,722 28 %
Captisol – Core 10,622 6,226 4,396 71 %
Captisol – COVID – 5,896 (5,896) (100) %
Contract revenue 16,203 10,962 5,241 48 %
Total revenue $ 43,979 $ 36,516 $ 7,463 20 %

(a) Prior period amounts have been retrospectively adjusted to reflect the
effects of the Separation.

Total revenue increased by $7.5 million, or 20%, to $44.0 million in Q1 2023
compared to $36.5 million in Q1 2022 primarily due to a $5.2 million increase in
contract revenue which was driven by the achievement of milestone tied to FDA
approval of Travere’s FILSPARI. Royalty revenue increased by $3.7 million, or
28%, to $17.2 million in Q1 2023 compared to

23
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$13.4 million in Q1 2022 primarily due to the increase of Kyprolis sales and
sales of drugs using the Pelican platform. Core Captisol sales increased by $4.4
million, or 71%, to $10.6 million in Q1 2023 primarily due to the timing of
customer orders. There was no Captisol sales related to COVID-19 in Q1 2023,
compared with $5.9 million for the same period in 2022.

Royalty revenue is a function of our partners’ product sales and the applicable
royalty rate. Kyprolis royalty rates are under a tiered royalty rate structure
with the highest tier being 3%. Evomela has a fixed royalty rate of 20%.
Teriparatide injection has a tiered royalty between 25% and 40% on sales that
have been adjusted for certain deductible items as defined in the respective
license agreement. The Rylaze royalty rate is in the low single digits. Contract
revenue includes service revenue, license fees and development, regulatory and
sales based milestone payments.

The following table represents royalty revenue by program (in millions):

Q1 2023 Estimated Q1 2022 Estimated
Partner Product Effective Royalty Q1 2023 Royalty Partner Product Effective Royalty Q1 2022 Royalty
(in millions) Sales Rate Revenue Sales(a) Rate(a) Revenue(a)
Kyprolis $ 378.9 1.6 % $ 6.2 $ 298.6 1.5 % $ 4.6
Evomela 13.0 20.0 % 2.6 13.5 20.0 % 2.7
Teriparatide injection(b) 10.5 33.3 % 3.5 9.7 29.9 % 2.9
Rylaze 83.0 3.1 % 2.6 54.2 3.0 % 1.6
Other 158.9 1.4 % 2.3 76.3 2.1 % 1.6
Total $ 644.3 $ 17.2 $ 452.3 $ 13.4

(a) Prior period amounts have been retrospectively adjusted to reflect the
effects of the Separation.
(b) Teriparatide injection sales have been adjusted for certain deductible items
as defined in the respective license agreement.

Operating Costs and Expenses

(Dollars in thousands) Q1 2023 % of Revenue Q1 2022(a) % of Revenue
Cost of Captisol $ 3,717 $ 4,699
Amortization of intangibles 8,539 8,580
Research and development 6,663 9,179
General and administrative 10,855 11,925

Total operating costs and expenses $ 29,774 68% $ 34,383 94%

(a) Prior period amounts have been retrospectively adjusted to reflect the
effects of the Separation.

Total operating costs and expenses decreased by $4.6 million, or 13%, to $29.8
million in Q1 2023 compared to $34.4 million in Q1 2022.

Cost of Captisol decreased by $1.0 million, or (21)%, to $3.7 million in Q1 2023
compared to $4.7 million in Q1 2022, with the decrease primarily due to the
lower Captisol sales this quarter.

Amortization of intangibles remained steady in Q1 2023 compared to the same
period in 2022 as there have been no change to the gross balance of intangible
assets over these periods.

At any one time, we are working on multiple R&D programs. As such, we generally
do not track our R&D expenses on a specific program basis. Research and
development expense was $6.7 million for Q1 2023, compared with $9.2 million for
the same period of 2022, with the decrease primarily due to lower share-based
compensation, employee-related expenses and lab supply expenses.

General and administrative expense was $10.9 million for Q1 2023, compared to
$11.9 million for the same period in 2022, with the decrease primarily due to a
decrease in legal expenses in connection with the OmniAb spin-off.

Other Income (Expense)

(Dollars in thousands) Q1 2023 Q1 2022(a) Change
Gain (loss) from short-term investments $ 39,533 $ (12,877) $ 52,410
Interest income 1,435 134 1,301
Interest expense (240) (789) 549
Other income (expense), net 603 2,255 (1,652)
Total other income (expense), net $ 41,331 $ (11,277) $ 52,608

(a) Prior period amounts have been retrospectively adjusted to reflect the
effects of the Separation.

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The fluctuation in the gain (loss) from short-term investments is primarily
driven by the changes in the fair value of our ownership in Viking common stock
and other equity security investments, which contributed an unrealized gain of
$19.0 million in Q1 2023 as compared to an unrealized loss of $12.6 million in
Q1 2022. In addition, during Q1 2023 we sold 3.2 million shares of Viking
contributing to realized gains of $20.5 million compared to no Viking shares
sold in Q1 2022.

Interest income consists primarily of interest earned on our short-term
investments. The increase over the prior year was due to the increase in
interest rates, partially offset by the decrease in our short-term investment
balance.

Interest expense includes the 0.75% coupon cash interest expense in addition to
the non-cash accretion of discount (including the amortization of debt issuance
cost) on our 2023 Notes in both Q1 2023 and Q1 2022. The decrease in interest
expense was primarily due to the lower average debt outstanding balance in Q1
2023 as compared to Q1 2022. See Note 4, Convertible Senior Notes.

Other income (expense), net, in Q1 2023 decreased by $1.7 million as compared to
Q1 2022, primarily due to no debt extinguishment gain or loss in Q1 2023
compared to a $1.5 million gain on extinguishment of debt during Q1 2022. See
Note 4, Convertible Senior Notes.

Income Tax Benefit (Expense)

(Dollars in thousands) Q1 2023 Q1 2022(a)

Change

Income (loss) before income taxes $ 55,536 $ (9,144)

$ 64,680

Income tax benefit (11,922) (3,785)

(8,137)

Income (loss) from operations $ 43,614 $ (12,929)

$ 56,543

Effective tax rate 21.5 % (41.4) %

(a) Prior period amounts have been retrospectively adjusted to reflect the
effects of the Separation.

We compute our income tax provision by applying the estimated annual effective
tax rate to income from operations and adding the effects of any discrete income
tax items specific to the period. The effective tax rate for the three months
ended March 31, 2023 and 2022 was 21.5% and (41.4)%, respectively. The variance
from the U.S. federal statutory tax rate of 21% for the three months ended
March 31, 2023 was primarily due to Internal Revenue Code Section 162(m)
limitation on deduction for officer compensation, non-deductible incentive stock
option (ISO) related stock compensation expense, which were partially offset by
foreign derived intangible income tax benefit during the period. The variance
from the U.S. federal statutory tax rate of 21% for the three months ended
March 31, 2022 was primarily due to the tax deductions related to foreign
derived intangible income tax benefit as well as the research and development
tax credits, which were partially offset by Section 162(m) limitation during the
period.

Net Loss from Discontinued Operations

Net loss from discontinued operations for Q1 2023 and Q1 2022 was $1.7 million
and $2.5 million, respectively. See additional information in “Item 1. Condensed
Consolidated Financial Statements -Notes to Condensed Consolidated Financial
Statements-Note (2), Spin-off Of OmniAb.”

Liquidity and Capital Resources

As of March 31, 2023, our cash, cash equivalents, and short-term investments
totaled $282.7 million, which increased by $70.8 million from the end of last
year due to factors described in the Cash Flow Summary below. Our primary source
of liquidity, other than our holdings of cash, cash equivalents, and short-term
investments, has been cash flows from operations. Our ability to generate cash
from operations provides us with the financial flexibility we need to meet
operating, investing, and financing needs.

Historically, we have liquidated our short-term investments and/or issued debt
and equity securities to finance our business needs as a supplement to cash
provided by operating activities. Our short-term investments include U.S.
government debt securities, investment-grade corporate debt securities, mutual
funds and certificates of deposit. We have established guidelines relative to
diversification and maturities of our investments in order to provide both
safety and liquidity. These guidelines are periodically reviewed and modified to
take advantage of trends in yields and interest rates. Additionally, we own
certain securities which are classified as short-term investments that we
received as a result of a milestone and an upfront license payment as well as
3.6 million shares of common stock in Viking.

In May 2018, we issued an aggregate principal amount of $750.0 million of the
2023 Notes. During the three months ended March 31, 2023, no 2023 Notes were
repurchased. As of March 31, 2023, $76.9 million in principal amount of the 2023
Notes remain outstanding. We plan to use existing cash to pay off the remaining
2023 Notes on the maturity date. Since November 15, 2022, the 2023 Notes have
been convertible without regard to the conditions applicable to conversions
prior to

25
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such date and will continue to be until the close of business on May 11, 2023
(the second scheduled trading day preceding May 15, 2023, which is the maturity
date). It is our intent and policy to settle conversions through combination
settlement, which essentially involves payment in cash equal to the principal
portion and delivery of shares of common stock for the excess of the conversion
value over the principal portion. See Note 4, Convertible Senior Notes. In
advance of the Distribution of the shares of common stock of OmniAb to Ligand’s
shareholders on November 1, 2022, a notice of convertibility was delivered to
the holders of the 2023 Notes. No holders exercised their right to convert their
2023 Notes during the applicable period for conversion. After we completed the
Separation of the OmniAb Business, on November 15, 2022, the conversion rate was
adjusted to 4.8390 shares of common stock per $1,000 principal amount of the
2023 Notes which represents a conversion price of approximately $206.65 per
share. The maximum conversion rate of the 2023 Notes was adjusted to 6.2907 per
$1,000 principal amount of the 2023 Notes which represents a conversion price of
approximately $158.97. The conversion rate for the 2023 Notes was adjusted in
accordance with the requirements of the Indenture based on calculations
determined with reference to a valuation period of the first 10 consecutive
trading days after, and including, the ex-dividend date of the spin-off (as
determined in the Indenture). The conversion rate and maximum conversion rate
are subject to further adjustment under the circumstances and pursuant to the
terms set forth in the Indenture.

On September 30, 2022, we entered into the Sales Agreement with the Agent, under
which we may, from time to time, sell shares of our common stock having an
aggregate offering price of up to $100.0 million in “at the market” offerings
through the Agent. Sales of the shares of common stock, if any, will be made at
prevailing market prices at the time of sale, or as otherwise agreed with the
Agent. The Agent will receive a commission from the Company of up to 3.0% of the
gross proceeds of any shares of common stock sold under the Sales Agreement. The
shares will be issued pursuant to our shelf registration statement on Form S-3
(File No. 333-267678), including the sales agreement prospectus contained
therein, which automatically became effective upon filing with the SEC on
September 30, 2022.

We believe that our existing funds, cash generated from operations and existing
sources of and access to financing are adequate to fund our need for working
capital, capital expenditures, debt service requirements, continued advancement
of research and development efforts, potential stock repurchases and other
business initiatives we plan to strategically pursue, including acquisitions and
strategic investments.

As of March 31, 2023, we had $2.8 million in fair value of contingent
consideration liabilities associated with prior acquisitions to be settled in
future periods.

Cash Flow Summary
(Dollars in thousands) Q1 2023 Q1 2022

Net cash provided by (used in):

Operating activities $ 33,948 $ 52,011
Investing activities $ 10,549 $ 113,881
Financing activities $ (775) $ (170,421)

During the three months ended March 31, 2023, we generated cash from operations
primarily due to the increase in net income. We generated cash from investing
activities primarily from sale and maturity of short-term investments including
Viking shares. There was no repurchase of 2023 Notes during the three months
ended March 31, 2023.

During the three months ended March 31, 2022, we repurchased $165.8 million in
principal amount of the 2023 Notes for $163.7 million in cash, including accrued
interest of $0.4 million.

Critical Accounting Policies and Estimates

Certain of our policies require the application of management judgment in making
estimates and assumptions that affect the amounts reported in our consolidated
financial statements and the disclosures made in the accompanying notes. Those
estimates and assumptions are based on historical experience and various other
factors deemed applicable and reasonable under the circumstances. The use of
judgment in determining such estimates and assumptions is by nature, subject to
a degree of uncertainty. Accordingly, actual results could differ materially
from the estimates made. There have been no material changes in our critical
accounting policies and estimates as compared to the critical accounting
policies and estimates described in our 2022 Annual Report.

© Edgar Online, source Glimpses

Originally Appeared Here

Filed Under: Income Tax News

Trio of churches donate to Beard campaign, violating IRS rules

May 5, 2023 by

Two churches in Abilene and one in Merkel have made financial contributions to a pastor running for a hotly contested seat on the Abilene City Council, a clear violation of federal rules prohibiting nonprofits and churches from endorsing candidates, financial disclosure records show.

Fountaingate Merkel Church, Remnant Church and Hope Chapel Foursquare Church donated a combined $800 to the campaign of Scott Beard, senior pastor at Fountaingate Fellowship church, who is running for a seat on the seven-member City Council in Saturday’s election.

The donations represent a new level of brazenness as some churches across Texas and the United States become more active in political campaigns, a prominent expert said. Rules posted on the IRS’ website say campaign contributions from churches and other nonprofits “clearly violate the prohibition against political campaign activity.”

“This is absolutely something every church should know — and probably does know — that they’re not allowed to do,” said Sam Brunson, a law professor specializing in religion and tax exemption at Loyola University Chicago.

ProPublica and The Texas Tribune reported last year that church leaders in Texas and across the country endorsed candidates from the pulpit at least 20 times in apparent violation of the Johnson Amendment, a law passed by Congress in 1954. Three experts on nonprofit law, including Brunson, reviewed the sermons and said they crossed a line.

The IRS can strip violators of their tax-exempt status, but there’s only one publicly known example of it doing so, nearly 30 years ago. Brunson said this lack of enforcement has emboldened bad actors, and he called on Congress to explicitly tell the IRS it can also fine violators.

Beard told ProPublica and the Tribune in a phone interview Thursday that the churches did not know they weren’t allowed to donate to him and that he has sent the checks back.

Trio of churches donate to Beard campaign, violating IRS rules

“Look, we’ve made mistakes,” he said. “Every campaign makes them. I’m just kind of under the microscope because of me being a pastor, honestly.”

Dewey Hall, the pastor of Fountaingate Merkel Church, which is nearly 18 miles west of Abilene and not affiliated with Beard’s church, said Beard told him on Wednesday that his church’s $200 donation was illegal, but he thought Beard would “be a good councilman, and we need to have Christians in politics nowadays.”

A representative of Remnant Church, which Beard reported gave him $400, responded to a question via Facebook Messenger to say that its donation was intended for Fountaingate Fellowship Church, not Beard’s campaign.

“They must have a mistake,” wrote the representative, who did not identify themselves when asked. “We will look into it.”

Beard told ProPublica and the Tribune on Friday that he thought Remnant Church’s check was written to his campaign, but that he would review his records and talk to the pastor of Remnant Church.

Hope Chapel Foursquare Church, which gave $200, did not respond to a voicemail and email seeking comment.

The IRS declined to confirm whether it had received any complaints or was investigating.

A sign for Scott Beard is displayed in a vacant lot with Beard’s church, FountainGate Fellowship, in the lot beside this one March 16. Beard is the pastor.

Though the donations made by the churches are small, local races are typically lower-dollar affairs than legislative elections or statewide offices. The donations may also violate Texas election law, which prohibits both nonprofit and for-profit corporations from making political contributions to candidates or political committees. Violations are considered third-degree felonies.

The Texas Ethics Commission is charged with investigating such violations and can assess a civil penalty of up to $5,000 or triple the amount at issue, whichever is greater, said J.R. Johnson, the commission’s executive director. Agency commissioners also have the authority to refer violations to local district attorneys for criminal prosecution, he said.

In February, the commission issued a $12,400 civil penalty against a for-profit corporation that it found had made two prohibited donations worth a combined $3,700 to the campaign of a county clerk candidate in South Texas. The company didn’t respond to the commission, which issued a default judgment. A message left for the company was not returned; the president’s voicemail inbox was full.

According to the Texas secretary of state, Fountaingate Merkel Church formed as a nonprofit corporation in 2017 and Remnant did so in 2021. Hope Chapel is part of the California-based International Church of the Foursquare Gospel, which is formed as a nonprofit corporation. (The IRS automatically considers churches to be tax-exempt even if they don’t apply for that status directly.)

The Abilene City Council race has been marked by allegations of Johnson Amendment violations for months. At least five churches have displayed campaign signs for three conservative Christian candidates who have all vowed to protect children by removing what they deemed to be obscene books from the public library and banning family-friendly drag shows from the city.

Two of the candidates are pastors: Beard and Ryan Goodwin, a mayoral candidate, who is both a real estate agent and an associate pastor at Mosaic Church. The third candidate, James Sargent, who is running for a City Council seat, is an Air Force veteran and an auto mechanic who has made his identity as a Christian central to his campaign. Sargent’s campaign motto is “biblically founded | constitutionally grounded.”

All three organized to outlaw abortion in Abilene before the Supreme Court ruling that said it was not a constitutional right and prior to Texas enacting a near-total ban on the procedure.

In interviews with ProPublica and the Tribune, Sargent said the churches he asked to display his campaign signs said yes because they were willing to display all candidates’ campaign signs if asked, which Brunson said was not a defense to a potential Johnson Amendment violation. Goodwin said some churches asked him for his campaign sign, and he’s not concerned they’ll face IRS enforcement.

“What I think we’re seeing is a fiction of the law,” Goodwin said. If the issue were to ever reach the U.S. Supreme Court, he said, “churches would have a voice and wouldn’t have to worry about anything like this.”

Beard said the Texas Ethics Commission has so far notified him of three complaints about his campaign this election.

One complaint stemmed from Beard telling his congregation at the end of a service to pick up his campaign signs in the church foyer.

Michael Bob Starr, the former commander of Dyess Air Force Base in Abilene, filed the most recent ethics complaint about Beard’s campaign, alleging that Beard had not reported the in-kind donations his church had made to his campaign, specifically his church allowing him to use its property for his campaign activities. Starr told ProPublica and the Tribune on Thursday that he will submit another complaint to the commission about Beard accepting donations from the three churches even though Beard sent the checks back.

Starr, who ran unsuccessfully in the Republican primary for Congress in 2016, can’t vote in the City Council election because he doesn’t live within city limits, and he’s upfront about his friendship with Beard’s opponent, Brian Yates. During their time in the Air Force, Starr said, he and Yates traveled to countries run by those who believed they had a mandate from God and those who tried to impose their religion on others. He said that’s why he’s speaking up.

Beard told ProPublica and Tribune on Thursday that he is cooperating with the Texas Ethics Commission regarding Starr’s first complaint.

Beard stands by his belief that the nation was founded as a Christian nation and if it doesn’t turn back to God, it will fall like the Roman Empire and other great civilizations have throughout history.

Originally Appeared Here

Filed Under: Income Tax News

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