Income Tax News

LINCOLN — Nebraska’s refundable income tax credit program for K-12 school property taxes is officially off the books, and new revisions will close the door for most taxpayers to get such relief on taxes paid in 2024.

Legislative Bill 34, passed 40-3 at the end of the Legislature’s summer special session on property taxes last month, revised the existing tax credit program first established in 2020 by LB 1107. The earlier process required taxpayers to apply for an income tax deduction the year after paying their property taxes. Tax statements are sent to taxpayers each December and are typically paid in two installments over the following year.

State Sen. Steve Erdman of Bayard, center. To his right, State Sen. Mike McDonnell of Omaha reaches out to State Sen. Tom Brewer of north-central Nebraska. July 30, 2024. (Zach Wendling/Nebraska Examiner)

Now, the LB 34 credit will appear first on that property tax statement. While the changes make the process of returning funds to taxpayers upfront and automatic, some officials have discovered what they say will hurt some taxpayers because of the legislation.

​​“It is a retroactive property tax increase for ‘23 [assessed taxes],” State Sen. Steve Erdman of Bayard told the Nebraska Examiner.

Erdman, one of three senators to oppose LB 34, said his opposition was vindicated when he discovered that the expedited process skips over providing a credit for taxes paid in 2024, moving straight to the 2025 cycle.

“You can go on forever and never make up that loss,” Erdman said. “The question I have is, ‘Whose money is it?’ It’s the people’s money.”

LB 34 increased the funds allocated for the tax credit program to $750 million, an increase of $185 million over the amount previously budgeted for the income tax credit. That leaves at least $565 million that could have gone to taxpayers on their 2025 tax returns but now won’t, Erdman said. The difference will be paid when taxpayers file their returns in April 2025.

‘No net difference’

Elkhorn State Sens. Lou Ann Linehan and Brad von Gillern, the chair and vice chair of the Legislature’s Revenue Committee, defended LB 34 as getting needed relief to more taxpayers through more advantageous timing. They said the state didn’t have enough funds for what would have been duplicate tax credits.

State Sens. Lou Ann Linehan of Elkhorn and Tom Brandt of Plymouth meet at the front of the legislative chamber near Clerk of the Legislature Brandon Metzler. Aug. 17, 2024. (Zach Wendling/Nebraska Examiner)

About 45% of Nebraskans hadn’t been claiming the LB 1107 refundable credits, according to the Nebraska Department of Revenue.

“LB 34 provides equitable property tax relief to all Nebraskans,” the department said in a statement. “It is critical that Nebraskans automatically receive this credit rather than loaning government funds for a full year.”

Linehan and von Gillern said the cash flow to taxpayers will be the same because relief still comes in 2025 just at the direct point that taxpayers are paying; von Gillern said there will be “no net difference.”

“There’s no panic about people not getting their credit, that’s all I can say really,” von Gillern said Friday. “I’ve looked at this thing forwards and backwards trying to find a problem, and the problem that Senator Erdman is talking about is not a problem.”

Linehan added the state had “only one $750 million,” which was paid for in part through state budget cuts and cash transfers.

“People are calling it ‘a skipped year.’ You can’t get a credit and pay less, too,” Linehan said. “You could, but that would cost $1.5 billion.”

‘Retroactive property tax increase’

Erdman was joined by State Sen. Justin Wayne of Omaha and organizations representing county officials and certified public accountants in arguing that the “missing year” will never be made up.

Taxpayers who had been claiming the credit “would have been far better off if we didn’t have a special session,” Erdman said.

“This is backwards. To say that over time we’re going to make up the loss of your credit for ‘23 is not telling the truth,” Erdman said. “It’s an increase in property tax for ‘23. Plain and simple retroactive property tax increase.”

Linehan had tried to usher through greater relief on behalf of Gov. Jim Pillen. She initially introduced LB 1 during the special session. It was projected to increase total property tax relief up to 50%, largely through imposing new sales taxes on more than 100 currently exempt goods and services.

Erdman also reintroduced his “EPIC Option” proposals, which would eliminate property, income and corporate taxes in favor of a consumption and excise tax base.

But both approaches were quickly swatted down during the session.

‘We were actually hurting people’

Wayne, Erdman, Linehan and 12 other senators wanted to pause the session until after the November election, contending that more options needed to be considered to provide more relief. But 29 of their colleagues disagreed, voting to end the session after 17 days.

Erdman said that had senators listened to the appeal, the Legislature could have provided “meaningful” relief and “we wouldn’t be in this position.”

“We jammed it through, and now we have the result that we have,” Erdman said.

Wayne has said the session “could have been an email” based on how it ended. He said there were other revenue options, such as legalizing and taxing online sports betting or recreational marijuana. Both proposals were offered during the session but were not debated.

Erdman said the unused credits from years past should have been used to pay for both the “front-loaded” credit and one more year of the income tax credits.

Wayne directed criticism over the session’s “failure” at many people, including state senators of all political stripes who are running this year for the Legislature or Congress and who supported LB 34. Wayne said they “voted for a property tax increase, and there’s no way around it.”

“They either didn’t read the bill or they knew what they were doing, and I think that’s a huge problem,” Wayne said. “It was a rush to get something done and do something mediocre, and we were actually hurting people in the process.”

Counties, accountants brace for impact

Jon Cannon, executive director of the Nebraska Association of County Officials. (Courtesy of NACO)

Jon Cannon, executive director of the Nebraska Association of County Officials, said county officials are particularly sensitive to property tax concerns, since they oversee property valuations, budget requests and tax statements.

“We are the whole process, and we get all the complaints,” Cannon said. “We have a vested interest in property tax relief or reform being delivered to our taxpayers. If there’s a missing year or if there’s something that’s going to affect our taxpayers, we’re going to hear about it.”

Asked whether local governments could make up the funds through cuts, Cannon said there isn’t $600 million sitting around that officials “could just go ahead and set on fire.”

“That’s $600 million of roads and bridges for our part of the property tax ask,” Cannon said. “That $600 million is paying for something that we think is a public good.”

Brian Klintworth, chair-elect of the Nebraska Society of Certified Public Accountants. (Courtesy of Brian Klintworth)

Bryan Klintworth, chair-elect of the Nebraska Society of Certified Public Accountants, said some taxpayers will see a tax credit for the taxes assessed in 2023 if they paid their taxes by Dec. 31, 2023. If so, they could have claimed the credit when filing their tax returns in 2024.

“That’s where there’s this kind of weird dichotomy,” Klintworth said.

Erdman said people will notice when they file their income taxes next year and will ask why the credit isn’t available. He says that is when it will “hit the fan.”

Cannon and Klintworth said the issue might be argued by some as “semantics” but that the end result is a lost year or “missing year” of tax relief.

“Even though you come out the same in the calendar year, it does affect the timing of it, too, in those installment payments,” Klintworth said, such as in monthly mortgage escrow accounts.

A ‘sleight of hand’

Erdman said he is disappointed that state leaders won’t own up to “confiscating” taxpayer dollars. He said he first thought it was an unintentional result but now sees it as an intentional “sleight of hand.” 

State Sen. Justin Wayne of Omaha talks with State Sen. Lou Ann Linehan of Elkhorn on the floor of the Legislature. Aug. 16, 2024. (Zach Wendling/Nebraska Examiner)

He pointed to a “comparative analysis” from the Revenue Department that outlines the credit timing under LB 1107 as “property taxes paid” and LB 34 as “property taxes assessed.”

The explainer leaves out “2023 property taxes assessed” in December 2023 statements.

“Don’t look at what I’m doing here, look over here at this,” Erdman said.

Wayne said middle class and working class taxpayers, as well as anyone who has a mortgage and pays in installments, will be the ones sorting through an immediate tax increase in exchange for a potential decrease in future years. 

“We can say none of it matters, but it does matter to those who are struggling right now with increased property taxes to pay to stay in their home,” Wayne said.

Erdman and Wayne said the $185 million in new tax relief, which amounts to about 3.5% of the $5.3 billion in property taxes paid in 2023, will also be eaten away by inflation or general increases in property taxes before tangible benefits of LB 34 are realized.

‘You take what you can get’

Gov. Jim Pillen, left, hands State Treasurer Tom Briese one of three property-tax related proposals that the Legislature passed earlier in the day on Aug. 20, 2024. Briese was a state senator from Albion from 2017 to 2023. (Zach Wendling/Nebraska Examiner)

State Treasurer Tom Briese, a former state senator from Albion, joined Pillen, Linehan and von Gillern in celebrating LB 34 and for amending LB 1107, which Briese and Linehan championed in 2020. Briese said “one of the biggest stumbling blocks” in property tax relief consistently is finding new revenue streams to replace the local tax burdens.

“You have many folks on the left unwilling to do that, and you have a slice of folks on the far right unwilling to do that,” Briese said. “But those of us that are serious about property tax relief, serious about solving the property tax issue, are willing to do that.”

Briese said he is still optimistic lawmakers can find a long-term solution to property tax relief.

“I guess in this business you take what you can get, and that’s what the Legislature did,” Briese said. “I commend the Legislature for that.”

‘Bring it in January’

Erdman said he’s not sure the Legislature will have the “intestinal fortitude” to bring an amendment in January to correct the issues he has raised. He sees two fixes: Let Nebraskans collect the credit when they file their tax returns in 2025 or double the credit for one year.

State Sen. Brad von Gillern of Elkhorn. Aug. 13, 2024. (Zach Wendling/Nebraska Examiner)

“The Legislature and the governor had planned for this to be a decrease in property tax when in reality it’s actually an increase,” Erdman said. “We have to have an increase so we can give you a decrease. Think about that. We have to increase your taxes so we can give you a decrease for next year. How strange is that? Yeah, that’s crazy.”

State Sen. Julie Slama of Dunbar said the first bill introduced in 2025 should come at Pillen’s request and distribute the relief for 2024 taxes paid. She said funding should be through existing state resources, not other increased taxes.

“This is either malicious incompetence from the Pillen administration at best, or straight-up malicious at worst,” Slama said in a text message.

Erdman, Wayne and State Sen. Steve Halloran of Hastings, the third lawmaker to oppose LB 34, won’t return next year due to term limits, and neither will Linehan.

Von Gillern, who is in his second year as a lawmaker, will return and confirmed there is nothing to prevent senators from introducing legislation in January if they see any issues with LB 34, but they’ll need to find the funding.

“Bring it in January if you want to do it,” von Gillern said, “along with the fiscal note.”

LB 1107 credits claimed over time

• For taxes paid in 2020 — $82 million in tax credits claimed out of $125 million appropriated for school taxes (66%).
• For taxes paid in 2021 — $422 million in tax credits claimed out of $548 million appropriated for school taxes (77%).
• For taxes paid in 2022 — $562 million tax credits claimed out of $763 million possible for school and community college taxes (74%); $598 million appropriated.
• For taxes paid in 2023 (through July 2024) — $477 million tax credits claimed out of $809 million possible credits for school and community college taxes (60%); $660 million appropriated.

Taxpayers in Douglas, Lancaster and Sarpy Counties pay half of their property taxes by April 1 and the rest by Aug. 1; all other taxpayers pay by May 1 and Sept. 1. Some taxpayers choose to pay by Dec. 31 as soon as they receive their statements, changing when the credit is available. Tax returns are usually due by April 15.

More tax credits were available for taxes paid in 2022 and 2023 than legislatively appropriated. That’s because the Nebraska Department of Revenue increased the credit percentage in an attempt to repurpose previously unused credits.

Source: Patrick Roy, legislative and media coordinator, Nebraska Department of Revenue

Originally Appeared Here

The following article first appeared in the Insights section of CliftonLarsonAllen’s website. It is reposted here with permission.

Many employers unknowingly made false employee retention credit claims after falling prey to companies engaging in aggressive schemes.

Now, for the second time, the IRS is offering a way to repay improper credits.

The IRS has been closely monitoring ERC activities and cracking down on fraudulent practices.

To address this issue, the IRS has again opened a voluntary disclosure program as a way for employers to repay ERC funds that were improperly claimed. 

Explore what the VDP could mean for employers who received the credit but were not entitled to it.

Evolution of ERC claims

The IRS issued multiple warnings, generic legal advice memorandums, and the “dirty dozen” article warning taxpayers against aggressive schemes for claiming COVID-related relief with the employee retention credit program. 

September 2023: The IRS announced a moratorium on processing new refund claims through the end of the year to get a better handle on fraudulent claims and to slow the process to identify claims that may be less than reputable. 

October 2023: It issued instructions on how to withdraw improper ERC claims. 

November 2023: The IRS clarified an area of grey many promoters used to seduce employers into believing they were eligible for the credit. It issued a general legal advice memorandum discussing in depth why OSHA guidelines alone are not sufficient to support an ERC claim.  

While a GLAM does not officially bind the IRS, taxpayers, or the judiciary, it provides a clear perspective on how IRS agents will treat claims based on OSHA directives.

December 2023: The IRS initiated a voluntary disclosure program for employers who received their funds and wanted to return them. 

August 2024: The IRS opened the VDP for a second time with slightly less generous terms for employers. This program is available until Nov. 22, 2024.

The IRS also lifted its moratorium and is in the process of issuing close to 50,000 payments to employers awaiting refunds—and simultaneously is issuing 30,000 rejection letters for “high-risk” claims.  

VDP Helps Employers Who Paid Exorbitant Fees

The IRS is sympathetic to the fact that many employers are unable to repay the credit because of their agreement with the vendor who assisted in the preparation of the refund claim.  

In many instances, the fees aren’t refundable unless the IRS audits and disallows the credit. IR-2024-213 requires the employer to repay only 85% of the refund as part of the agreement. 

Employers unable to repay the required percentage may be considered for an installment agreement.

If the IRS paid interest on the employer’s ERC refund claim, the employer doesn’t need to repay that interest.

Employers unable to repay the required percentage may be considered for an installment agreement on a case-by-case basis.

Interested employers must apply to the VDP by Nov. 22, 2024. 

Who Is Eligible?

Any employer who already received the ERC for a 2021 period but isn’t entitled to it can apply if the following are also true:

• The employer is not under criminal investigation and has not been notified they are under criminal investigation.
• The employer is not under an IRS employment tax examination for the tax period for which they’re applying to the VDP.
• The employer has not received an IRS notice and demand for repayment of part or all of the ERC.
• The IRS has not received information from a third party that the taxpayer is not in compliance or has not acquired information directly related to the noncompliance from an enforcement action.

What Do Employers Need to Apply?

To apply, the employer must first file Form 15434, Application for Employee Retention Credit Voluntary Disclosure Program, available on IRS.gov. Submit the form using the IRS Document Upload Tool. 

Employers will be expected to repay their full ERC, minus the 15% reduction allowed through the VDP.

Employers will be expected to repay their full ERC, minus the allowed 15% reduction.

Employers not able to pay the amount in full will have the option to set up an installment agreement under certain conditions.  

If the employer outsources their payroll to a third party, the third party is required to file the form on behalf of the employer.

Should You File a Protective Claim?

Many employers have filed income tax returns reflecting lower wage expenses due to their ERC claims—without having received their ERC refunds.

With the three-year statute of limitations for 2020 income tax returns either closing soon or having closed already, taxpayers and practitioners are concerned they’ll run out of time to potentially reclaim those lost wage deductions if the ERC claims are denied. 

Claiming the ERC causes the employees’ wages generating the ERC to be not deductible for income tax purposes.

Consequently, employers who claim the ERC on amended payroll tax returns after they have filed their original income tax return are generally required to file amended income tax returns or administrative adjustment requests to reflect the ERC claims.

Filing the amended income tax returns has been complicated by the IRS’s delays in processing ERC claims and general rhetoric about the high percentage of improper or high-risk claims (estimated by the IRS to be as high as 90% of total claims). 

The taxpayer could pay additional income tax only to have their ERC claims ultimately denied by the IRS.

The extended five-year statute of limitations for assessment of Q3 2021 ERC claims further increases the risk of employers facing contradictory outcomes.

The taxpayer could pay additional income tax only to have their ERC claims ultimately denied by the IRS after the three-year statute of limitation has closed on the 2021 income tax return.

Generally, if your right to a refund is contingent on future events and may not be determinable until after the time period for filing an amended return expires, you can file a protective claim for refund.

However, it’s uncertain whether the agency will recognize a protective claim for refund related to ERC refunds and related wage expenses as effective.

Consult a qualified tax professional to determine a specific course of action.

Originally Appeared Here

RALEIGH, N.C. — RALEIGH, N.C. (AP) — Vice President Kamala Harris announced a sweeping set of economic proposals on Friday meant to cut taxes and lower the cost of groceries, housing and other essentials for many Americans.

“Look, the bills add up,” she declared, trying to address the financial concerns that are at the top of voters’ minds and that Republican Donald Trump is attempting to blame on her.

During a speech in the battleground state of North Carolina, Harris said that “building up the middle class will be a defining goal of my presidency” as she promoted her plan for a federal ban on price gouging by food producers and grocers. She also proposed $25,000 in down payment assistance for certain first-time homebuyers and tax incentives for builders of starter homes.

“Every day across our nation, families talk about their plans for the future, their ambitions, their aspirations for themselves, for their children. And they talk about how they’re going to be able to actually achieve them financially, because, look, the bills add up,” Harris said. “Food, rent, gas, back to school clothes, prescription medications. After all that, for many families, there’s not much left at the end of the month.”

She stressed tax breaks for families, as well as middle- and lower-income people, promising to expand the child tax credit to up to $3,600 — and $6,000 for children in their first year of life. The vice president also wants to enlarge the earned income tax credit to cover people in lower-income jobs without children — which the campaign estimates would cut their effective tax rate by $1,500 — and lower health insurance premiums through the Affordable Care Act.

Overall, the plans represent a continuation of many Biden administration priorities.

Harris isn’t looking for any radical departures from President Joe Biden, who stepped down from the race last month and endorsed her. Still, the vice president has embraced a dash of economic populism, shifting away from Biden’s emphasis on job creation and infrastructure to matters more closely tied to easing the cost of living -– food prices, housing costs and tax breaks for families.

Much of what she’s proposing would require congressional approval, which is far from assured in the current political environment, though, and Harris’ campaign has offered scant details on how to pay for the ideas.

The vice president is seeking to blunt Trump’s attacks on her. He responded to her speech by posting on his social media account, “Kamala will implement SOVIET style price controls.” He gave his own speech Thursday, during which he displayed popular grocery store items meant to represent the high cost of food.

Some of Trump’s economic advisers offered further rebuttals to Harris’ plans before she spoke on Friday, with Brian Hughes, a spokesman for the former president’s campaign, calling them representative of a “socialist and authoritarian model.”

Kevin Hassett, a former chairman of the Council of Economic Advisers during the Trump administration, called it “completely preposterous” for the government to play a role in setting food prices, a reference to Harris’ proposed federal ban on “corporate price-gouging” on food.

In her speech, Harris offered stark contrasts with Trump’s economic proposals, including his call for steep tariffs on foreign goods. She said that her opponent “wants to impose what is, in effect, a national sales tax on everyday products and basic necessities that we import from other countries.”

“It will mean higher prices on just about every one of your daily needs,” Harris said. “A Trump tax on gas, a Trump tax on food, a Trump tax on clothing, a Trump tax on over-the-counter medication.”

She added, “At this moment, when everyday prices are too high, he will make them even higher.”

Year-over-year inflation has reached its lowest level in more than three years, but food prices are still 21% above where they were three years ago. A Labor Department report this week showed that nearly all of July’s inflation reflected higher rental prices and other housing costs, a trend that, according to real-time data, is easing. As a result, housing costs should rise more slowly in the coming months, contributing to lower inflation.

Harris’ grocery pricing proposal would instruct the Federal Trade Commission to penalize “big corporations” that engage in price spikes and it singles out a lack of competition in the meat-packing industry for driving up meat prices.

Monica Wallace, a county clerk who attended Harris’ speech, called the vice president’s economic plans “what we need.”

“I have a mother who is receiving services, and just in food stamps alone, she’s still not able to afford food that will last her,” Wallace said.

Comparing Harris to Trump, Wallace said she sees the vice president as someone “definitely for the middle and lower class,” whereas the former president is “for the people who make the money to do any and everything that they want.”

Polls nonetheless show that Americans are more likely to trust Trump over Harris when it comes to handling the economy: Some 45% say Trump is better positioned to handle the economy, while 38% say that about Harris. About 1 in 10 trust neither Harris nor Trump to better handle the economy, according to the latest Associated Press-NORC Center for Public Affairs Research poll.

Riding a resurgence of enthusiasm since the Democrats’ campaign reboot, Harris has embarked on a battleground state blitz in recent weeks that has broadened the number of races viewed as competitive by strategists. In North Carolina, Democrats are navigating renewed energy with caution in an economically dynamic state that hasn’t been won by a Democratic presidential candidate since Barack Obama in 2008.

Gov. Roy Cooper told Friday’s crowd, “I have that 2008 feeling.”

“That’s the last time we voted for a Democratic nominee for president, Barack Obama,” Cooper said.

North Carolina State University political science professor Steven Greene said that the state “went from a situation where Joe Biden was almost surely going down in defeat here, whereas Kamala Harris has a very real chance of winning,”

Deborah Holder, a 68-year-old Raleigh resident who runs six McDonalds restaurants, said of the vice president, “Her culture is something that is going to be a huge strength for her, because she’ll be able to look at the rest of us not just as her constituents, but as people that she has dealt with in all walks of life,”

Harris is trying to strike a balance in defining her own image and economic agenda while still giving credit for the Biden administration’s track record. Her speech in North Carolina came a day after the president was asked if Harris might distance herself from his economic record and responded, “She’s not going to.”

In their first joint speaking event since Biden dropped out, he and Harris were in Maryland on Thursday where they showcased successful negotiations to lower prices for Medicare recipients on 10 prescription drugs.

But Harris spent far more time talking about Trump than Biden in North Carolina, promising “to build an America where everyone’s work is rewarded and talents are valued, where we work with labor and business to strengthen the American economy.”

“And where everyone has the opportunity,” she said “not just to get by, but to get ahead.”

__

Associated Press writers Meg Kinnard in Chapin, South Carolina, and Will Weissert in Washington contributed to this report.

Originally Appeared Here

Cracking down on syndicated conservation easement scams was a slam dunk for the IRS.

Groups of wealthy investors assembled by aggressive tax planners were claiming tax deductions for charitable donations of land that were so outsized that they practically invited investigation.

Yet a series of missteps—including a refusal to issue regulations for taxpayers to follow, relying on older rules vulnerable to legal challenges, and being caught backdating documents in a key case—has jammed up the IRS’s efforts to stamp out what it calls an abusive tax shelter that has cost the government billions of dollars.

“Missed opportunity is the right way to think about it,” David Foster, a partner at Kirkland & Ellis LLP who’s represented donors in many syndicated conservation easements fights, said about the IRS’s strategy. “There were a lot of judgments made that, one by one, you could defend but that collectively when you look at them all together didn’t work out the way anybody—or the government—thought they would it.

“There was just a sort of fundamental strategic miscalculation in how to approach enforcement with respect to easements.”

Tax lawyers say the agency is now repeating a key mistake in what may be its next big fight against billions of dollars in allegedly fraudulent claims for Covid-era employer tax credits.

The IRS didn’t provide comments or make an official available for an interview after several requests.

Original Sins

Syndicated conservation easement abuse in some cases could be staggering and defied common sense. How can a charitable deduction for four, five, even six times what a piece of land is worth possibly be legal? How can anyone claim scrub brush in Arkansas is worth as much as oceanfront property?

Still, outgunned early on by the highly experienced lawyers hired by easement sponsors and investors, IRS agents struggled with how to address the growing flood of cases across the board, rather than battle each claimed deduction on its specifics.

The IRS homed in on abusive deductions as early as 2010 and could have written rules to meet the moment, said Michelle Levin, a shareholder at Dentons who has represented easement donors. But instead, the agency dusted off old regulations in an effort to disallow large numbers of easements at once, tax lawyers said. That decision would come back to bite the agency.

“One of the things the IRS did terribly wrong in the easement situation is they did not prepare any guidance,” Levin said. “They’ve had plenty of time putting together regulations, and that would’ve been a better way to administer this issue.”

Perhaps the most notable of the old regulations that the IRS leaned on was Treas. Reg. 1.170A-14(g)(6)(ii)—also known as the proceeds clause. It’s a rule dating to the 1980s that required all charitable donations to be done in perpetuity for a taxpayer to claim the deduction.

Critics of the IRS approach say the agency used this rule to pounce on anything that could potentially be read as infringing on that requirement. “There’s no way for them to distinguish between the good and the bad, so they just treat them all the same,” Levin said.

Say, for example, “there’s a road across the property, but the landowner retains the right to repair the road or move the road in case of damage to the road. And it’d be like, ‘Well, that’s not a perpetuity then,’ and so that would take down the entire thing,” said Adam Looney, a University of Utah professor and former Treasury Department official.

“So you can imagine that if you’re a bona fide land trust doing a good transaction, the risk that your whole transaction could get blown up by some stupid technicality, it made it very hard to operate,” Looney said.

Proceeds Clause

Had the agency issued guidance on how it would use the proceeds clause, the approach may have worked, Foster said. Instead, it left itself open to procedural challenges that culminated in a March ruling by the US Tax Court that the rule itself was invalid, because the agency failed to consider all comments in accordance with the Administrative Procedures Act.

That forced the agency to fight each case on the valuations claimed for each easement.

“If the government was legitimately concerned about what the proceeds clause could have looked like or what it should have looked like, then it could have very easily said, ‘If your proceeds clause reads like this, we don’t have an issue,’” Foster said. “They didn’t choose to do that. But to be clear, that’s because the proceeds clause litigation was never about the proceeds clause, and it was about a government strategy to zero out large swaths of claims.”

New rules are a common way for IRS to bolster areas of concern in the code, and its rule-writing process in recent years has been forged through legal challenges and strict adherence to APA requirements.

“They’ve done that in other contexts, with charitable remainder trust and charitable lead trusts, right? They say issue guidance and say, ‘Here are the terms you need to include in these trusts in order for them to comply,’ and they should have done that,” said Nancy McLaughlin, a University of Utah law professor.

Congress finally stepped in in 2022, passing a law limiting conservation easement deductions to 2.5 times the basis for properties owned for less than three years. That year, the IRS got to work on regulations that limit partnerships’ and pass-throughs’ ability to claim conservation easement deductions, and finalized those rules in June.

But by then, a growing mountain of cases had amassed at US Tax Court. The court is still dealing with at least 750 such cases, Judge Ronald Buch wrote in a recent opinion.

Wins Come In

Oddly enough, recent Tax Court rulings effectively dragged the IRS into its first winning streak against conservation easements in years, said Russ Shay, an independent consultant and former public policy director at the Land Trust Alliance, which advocates for land trusts and conservation organizations.

The agency has been racking up a series of wins that practitioners credit to a new approach focused on valuations rather than quirks in the law.

“It’s really Tax Court judges that pushed the IRS to abandon their long-term aversion to dealing with valuations and looking for their shortcut ways to disqualify cases which they haven’t found,” Shay said.

Diana Norris, the alliance’s Conservation Defense Network and Tax Manager, said the IRS has also found some success digging into the operations of the donor to find potentially disqualifying issues.

“We’ve seen the IRS focus more on the business models in the abusive transactions rather than winning on hypertechnical arguments affecting land conservation,” she said. “More cases on valuations; more cases on how the partnerships hold these interests and how they’re classified; are they investments or inventory?”

Still, it’s unclear whether the IRS has adjusted its strategic thinking on tax avoidance through conservation easements or is merely reacting to Tax Court decisions.

The agency’s next big fight—employee retention credit fraud—dwarfs the problem of conservation easement abuse. The agency reported 1.4 million backlogged ERC claims as of last month and said up to 70% have shown signs of an unacceptable level of risk, though it has gotten pushback on its estimates.

The IRS has tried to cut down on the number of cases it will have to potentially argue in court by offering partial amnesty to taxpayers who don’t want to risk an audit of their claims.

Bigger Fights

To be sure, there are massive differences between ERC claims and conservation easement deductions.

Conservation easements have been in place for decades, while Congress passed the ERC program and the IRS hurriedly implemented it to get money to businesses trying to survive the Covid-19 global pandemic. That left little time to write regulations, and by the time the agency realized that was a problem, it felt it was too crunched for time to go through the rulemaking process, said Christopher Ferguson, a partner at Kostelanetz LLP.

But, as with conservation easements early on, the IRS has relied on subregulatory guidance for ERCs. It still has yet to propose formal regulations to police the space. And after US Supreme Court decisions in Loper Bright and Corner Post, which cleared previous limits on legal challenges to agency regulations, the IRS’s subregulatory guidance on ERC could be more vulnerable to legal challenges than if it had issued official regulations, Ferguson said.

This approach contrasts to the agency’s recent efforts to write rules addressing other areas of potential abuse, particularly by partnerships.

The IRS issued proposed regulations on basis shifting in June, saying it expected the change to raise more than $50 billion over 10 years. Its spring regulatory agenda listed three other rule writing projects underway—including those on disguised sales of partnership interests, transactions involving equity interests of a partner, and the definition of a limited partner for material participation.

Levin at Dentons said the agency could write rules on the employee retention credit if it wants to, and might save itself some trouble if it does.

“They have the authority,” she said. “They just haven’t learned from their mistake.”

Originally Appeared Here

The Internal Revenue Service (IRS) announced a new coalition with members of the tax industry on Friday seeking to counter the growth of scams threatening tax systems and taxpayers.

The new “Coalition Against Scam and Scheme Threats” (CASST) initiative was convened at the request of IRS Commissioner Danny Werfel.

It will “work to expand outreach and education about emerging scams, develop new approaches to identify potentially fraudulent returns at the point of filing and create infrastructure improvements to protect taxpayers as well as federal, state and industry tax systems,” the IRS said in an Aug. 16 press release.

The agency has reported a rising number of identity theft cases. In the 2024 filing season, the IRS confirmed 15,242 instances of fraudulent returns, indicating they were filed by scammers to claim refunds owed to other people. The agency prevented the issuance of more than $180 million in refunds related to these returns.

The 2024 number was more than 20 percent higher than the confirmed identity theft cases during the 2023 season.

Additionally, the IRS’s Identity Theft Victims Assistance unit received 294,138 reports of identity theft in fiscal year 2023, according to a report by the Taxpayer Advocate Service. This is the second highest in five years and more than 217 percent up compared to fiscal year 2019.

The CASST task force will “better protect taxpayers from falling prey to unscrupulous actors by leveraging multilateral relationships across the tax ecosystem to minimize the filing of fraudulent tax returns,” the IRS stated.

In addition to the IRS, other members of the joint effort include the Federation of Tax Administrators which represents state tax agencies, national tax professional organizations, and leading tech firms operating in the tax industry.

Groups like the American Coalition for Taxpayer Rights and the National Association of Computerized Tax Processors have announced their support for the program. In total, the joint effort has the backing of more than 60 different groups from the private sector.

The joint effort aims to put in new protections by the 2025 filing season to prevent taxpayers from being scammed. The group will work to make structural changes to improve the ability to spot and stop the scams.

This includes improving PTIN and EFIN validation as well as steps to counter “ghost preparers,” referring to fake tax preparers who encourage people to claim credits and benefits for which they don’t qualify. They charge a hefty fee from taxpayers and then disappear after the return is prepared, leaving taxpayers to deal with the consequences of incorrect claims.

Scamming Taxpayers

Over the past months, the IRS has issued warnings about several scams targeting taxpayers. In April, the agency issued an alert over fake charities seeking donations from unsuspecting people.

“We see repeated instances of scammers using major disasters as a way to prey on well-meaning taxpayers. In these tragic situations, many people want to help, but con artists too frequently come in posing as charitable groups to take advantage of the situation, stealing money and personal information,” said Werfel.

“People should remember it’s important to never feel pressured to give donations immediately. They should do some research and only donate to clearly established charities that help victims.”

Some scammers make use of the IRS’s offer in compromise (OIC) program to mislead taxpayers. OIC is an initiative aimed at helping taxpayers who cannot pay federal tax debts.

Many taxpayers are applying for the program after being pushed into it by scamsters who charged excessive fees for their services, the IRS stated.

Earlier in March, the IRS warned taxpayers about phishing scams designed to steal their personal information. Identity thieves are attempting to trick taxpayers into clicking online links that entice them to submit private info or download malware to their systems.

IRS warned people not to click any unsolicited communication claiming to be from the agency as it could load malware onto their computers and steal information.

Then, there were scams that encouraged taxpayers to apply for refunds for which they are not eligible. For instance, some taxpayers were found claiming fuel tax credits that are only applicable for certain business activities such as running a farm or purchasing aviation gasoline. Taxpayers were found to have created fictional household employees to claim refunds.

“The IRS has seen hundreds of thousands of dubious claims come in where it appears taxpayers are claiming credits for which they are not eligible, leading to refunds being delayed and the need for taxpayers to show they have legitimate documentation to support these claims,” the agency said.

From The Epoch Times

Originally Appeared Here

3 min read Last Updated : Aug 15 2024 | 2:34 PM IST

The deadline for reassessment of old Income Tax Returns (ITRs) is approaching. By August 31, individuals may receive notices under Section 148 of the Income Tax Act if their income has escaped assessment, particularly if the escaped income is ~50 lakh or more for the assessment year (AY) 2018-19 or later.

 

What has Budget 2024 proposed?

 

The Finance Bill 2024 proposed amendments to Section 148A of the Income-Tax (I-T) Act, establishing new time limits for issuing notices. 

 

For income escaping assessment of ~50 lakh or more, the Section 148A notice must be issued within five years from the end of the assessment year. Notices under Section 148, following a Section 148A notice, have a maximum time limit of five years and three months from the assessment year-end. These changes will take effect from September 1, 2024.

 

Therefore, for AY 2018-19, as per the existing provisions, the notice under section 148 for the reopening of assessment could have been issued up to ten years from the end of the relevant assessment year, i.e., March 31, 2029. 

 

However, the time limit for the same has been reduced i.e. up to June 30, 2024, as per the proposed provisions effective from September 1, 2024. Therefore, the time limit for notice to be issued under Section 148A and 148 would be August 31, 2024,

 

Rajarshi Dasgupta, Executive Director – Tax, AQUILAW said, “Starting from September 1, assessments for AY 2018–19 will be time barred. In the instance of an income escaping assessment of ~50 lakh or more for AY 2018–19, the prescribed deadline for issuance of a notice under Section 148 or an order under Section 148A is August 31, 2024.”

 

“Upon receiving a notification under Section 148A, it is essential for the recipient to verify if the notice was issued within the prescribed time frame,” he said.

 

Who can receive notice under section 148

 

If the income that escaped the assessment is ~50 lakh or more and it relates to AY 2018-19 or later, then it is likely that you will get a section 148 notice by August 31, 2024.

 

Expert suggests how to respond to a notice under Section 148:

 

Review the notice: Start by checking if the Assessing Officer has provided the reasons for issuing the notice under Section 148. If the reasons are not included, you should request a copy from the Assessing Officer.

 

Respond promptly: You have 30 days to respond to the notice. This can be done by filing a return or submitting a written reply with all the necessary details and supporting documents.

 

Agreeing with the notice: If you agree with the reasons provided by the Assessing Officer, promptly file your return. If you’ve already filed, send a copy of it to the Assessing Officer.

 

Accurate filing: When filing a return in response to a Section 148 notice, ensure that all your income and expenses are accurately declared to avoid any penalties.

 

Challenging the notice: If you believe the notice is invalid or that the reasons for reopening the assessment are unjustified, you can challenge it before the Assessing Officer or take the matter to higher authorities.

 

Outcome of the challenge: If your challenge is successful, the Court will halt the assessment proceedings. If not, the Assessing Officer will proceed with the reassessment.

First Published: Aug 15 2024 | 2:34 PM IST

Originally Appeared Here

The Treasury Department and the Internal Revenue Service said Friday that Connecticut will be the latest state to join the IRS Direct File program for free tax preparation. 

Last week, New Mexico joined the roster after Oregon, New Jersey and Pennsylvania also joined in recent weeks and months after 12 other states tested it this past tax season.

“The Direct File tool will make it easier and more convenient for the average person to file their taxes, and it will help them save both time and money by avoiding the need to purchase for-profit tax filing software,” said Connecticut Governor Ned Lamont in a statement. “We’re grateful to the U.S. Department of the Treasury and the Internal Revenue Service for making this resource a reality, and we appreciate that Connecticut residents will benefit from this service in the upcoming filing season.”

The free online filing system was pilot tested last tax season in 12 states, and the IRS announced plans in May to make the program permanent. It invited all 50 states, as well as the District of Columbia, to join the program. The dozen states where it was available this filing season include Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming. 

Internal Revenue Service headquarters in Washington, D.C.

Stefani Reynolds/Photographer: Stefani Reynolds/B

At least 290,000 people will be eligible to use the system in Connecticut. “Thanks to President Biden’s Inflation Reduction Act, more than 290,000 Connecticut taxpayers will be able to file their taxes online for free, directly with the IRS this coming filing season,” said Treasury Secretary Janet Yellen in a statement. “Direct File will save Connecticut residents time and money and help ensure they receive the tax benefits they are owed. After a successful pilot this filing season, we are pleased to expand the program as a permanent offering and welcome Connecticut as the latest new state to offer this free option to taxpayers.” 

However, the expansion of the program has been blasted by a group of Republican senators, led by Senate Finance Committee ranking member Sen. Mike Crapo, R-Idaho, and Finance Committee member Sen. John Barrasso, R-Wyoming, who sent a letter last week to IRS Commissioner Danny Werfel. 

“We write with serious concerns regarding your agency’s recent unilateral and unauthorized action to create a permanent Internal Revenue Service (IRS) Direct File tax preparation program… The American people do not want an all-encompassing IRS acting simultaneously as the tax collector, tax auditor, tax enforcer and tax preparer,” the senators wrote. “Taxpayers already have access to numerous free tax-filing options and dozens of national non-profit entities offer tax preparation services at no cost… The IRS does not have unlimited resources and should focus on improving information technology systems, data privacy and long-standing customer service issues.”

They noted that less than 140,000 taxpayers utilized the program, far short of the expected 300,000 participants, and even farther short of the potential user pool. Of the estimated 19 million eligible tax filers from 12 selected states, only 0.7% of taxpayers used the program, they pointed out. They also said the relevant provision in the Inflation Reduction Act only authorized a feasibility study, not the creation of a federal tax program.

The IRS, for its part, said the pilot exceeded expectations with more than 140,000 Americans successfully filing in the five weeks the program was widely available following extensive product testing. Filers claimed more than $90 million in refunds and saved an estimated $5.6 million in tax preparation fees on their federal returns alone.

Originally Appeared Here

A new program passed by City Council in June will allow eligible Philadelphia homeowners to freeze their property tax bills at a lower amount.

The low-income property tax freeze is expected to be designed similarly to the senior citizen tax freeze, but the revenue department is still working on how to implement the program. Applications aren’t yet available.

Councilmember Jamie Gauthier introduced the legislation to create the program, empowered by corresponding state legislation passed by Democratic State Rep. Jared Solomon of Northeast Philly.

The legislation had been introduced in a previous session, Gauthier said, by then-Councilmember Cherelle Parker on behalf of Councilmember Darrell L. Clarke.

Gauthier represents the Philadelphia City Council’s 3rd District, where residents in majority Black neighborhoods, including Parkside and Kingsessing, will see some of the steepest property tax hikes in the city.

After a months-long delay, the city released new property assessments on Wednesday. New valuations are available online by searching a tool on the city’s website (property.phila.gov) and the city said it started sending notices about new assessments and new tax bills Wednesday.

“We were really spurred into action due to the last round of property assessments,” Gauthier said. Her office was flooded with calls from constituents who were scared, frustrated and angry with their sharp tax increases.

“[Philadelphia has] always prided ourselves on the fact that homeownership is high, even among moderate and low-income people,” Gauthier said. “We want to make sure that remains who we are.”

The revenue department is still crafting the regulations around executing the low-income property tax freeze, but here’s what we already know about the program.

How does the tax freeze work?

Under the program, the amount of property tax owed is set at the 2024 amount and does not increase, even if a home’s value increased with the 2025 assessment.

If a valuation decreases, the bill will decrease.

Eligible Philadelphia homeowners have to apply for the program and be approved before benefiting from the tax freeze.

The freeze will not be retroactive, but will hold property taxes at the 2024 amount for enrolled homeowners, Gauthier said.

Who qualifies for the tax freeze?

Single Philadelphia homeowners who make no more than $33,500 annually, and married couples who make no more than $41,500 annually are eligible for the program.

The cutoff is based on the highest income allowed by Pennsylvania’s PACENET pharmaceutical assistance program.

There is no minimum income requirement.

How do I apply?

The revenue department aims to make applications available by September, according to department spokesperson Christian Crespo. The deadline to apply will be January 31, 2025, Crespo said. Homeowners who are accepted into the program will see the relief on their 2025 tax bill, due March 31.

Gauthier spokesperson Harrison Feinman said residents will be expected to provide proof of income.

Examples of proof of income according to the senior citizen tax freeze application include, but aren’t limited to:

1. Social Security award letters

2. Pension statements

3. Bank statements

4. Pay stubs from a current employer

5. Tax returns

6. Child support and alimony

When an application exists, it will be available for download to be printed and mailed to the Department of Revenue, or completed online at the Philadelphia Tax Center website (tax-services.phila.gov).

Can the new program be combined with any other existing relief or exemptions?

The low-income property tax freeze, like the senior citizen freeze, can be combined with the city’s homestead exemption, which knocks $100,000 off a property’s valuation for enrolled Philadelphia homeowners.

“In fact, if we receive an application from a homeowner who qualifies for the programs but doesn’t have the Homestead Exemption, we will automatically add the Homestead Exemption to their account,” Crespo, the department spokesperson, said. He added that the tax freeze has greater benefit than the longtime owner occupants program.

The freeze can also be combined with the owner occupied payment agreement, which offers monthly payment plans to Philadelphia homeowners with past due real estate tax bills.

Originally Appeared Here

Would ensure Pennsylvanians can file federal and state taxes for free starting next year

WILKES-BARRE — Gov. Josh Shapiro this week joined U.S. Department of the Treasury (Treasury) Secretary Janet Yellen, leaders from the Pennsylvania Department of Revenue (DOR), Representative Brendan Boyle, and Representative Mary Gay Scanlon to announce that Pennsylvania will join IRS Direct File for filing season 2025, ensuring people have access to a free, easy-to-use online tool when they file their federal taxes next year.

Direct File will build on myPATH, Pennsylvania’s free tool to file state income taxes and apply for tax cuts like the Property Tax/Rent Rebate.

Gov. Shapiro said he believes we need to meet people where they are and make it easier to access government services online. That’s why the Shapiro Administration worked with the Treasury to bring this program to Pennsylvania. Direct File has already been proven successful at saving taxpayers’ money — in a pilot program across 12 states earlier this year, 140,000 taxpayers claimed more than $90 million in refunds and saved an estimated $5.6 million in filing fees using the free online filing tool.

“Filing your taxes should be free and easy — that’s why we’re improving our digital services and adopting IRS Direct File here in Pennsylvania,” Shapiro said. “Thanks to the Biden-Harris Administration’s Direct File initiative, Pennsylvanians will be able to save money by filing both their state and federal taxes at no cost on an easy-to-use platform. There should be no wrong door to access government services, and the Shapiro Administration will continue to bring human-centered, user-friendly, reliable, and accessible digital services to every Pennsylvanian to help lower costs and break down barriers.”

Secretary Yellen said thanks to President Biden’s Inflation Reduction Act, more than 1.5 million Pennsylvanians will be able to file their taxes online for free, directly with the IRS in Filing Season 2025.

“Direct File will save Pennsylvania taxpayers time and money and help ensure they receive the tax benefits for which they are eligible,” Yellen said. “Direct File is one of the many ways the Biden-Harris Administration is working to lower costs in everyday life, and we are pleased to welcome Pennsylvania as the next state to offer this new free option to taxpayers.”

“We know from our experience that many Pennsylvanians spend a lot of time and money every year to ensure their personal income tax returns are filed timely and accurately. That’s why we’re eager to bring Direct File to Pennsylvania, because it will be a free and simple online filing tool that will relieve stress and a financial burden for many of our taxpayers,” said Secretary of Revenue Pat Browne.

Using the Direct File online filing tool, qualifying taxpayers will first be able to complete their 2024 federal tax returns. Following that step, Direct File will direct qualifying taxpayers to Pennsylvania’s state income tax filing system, myPATH, where they will be able to file and complete their 2024 Pennsylvania state returns.

Some information, including W-2s and demographic information, will automatically be uploaded to their state return to help save time and ensure folks don’t have to input their information twice.

AG DeFoor: Performance audit of PennDOT bridge inspection process shows need for improvements

Auditor General Timothy L. DeFoor this week highlighted the need for PennDOT to implement process improvements for its bridge inspections, especially those bridges rated in overall poor condition or in critical or imminent risk of failing.

“I am here to tell you as an auditor that processes matter,” Auditor General DeFoor said. “It’s important for our safety and the investment of our tax dollars that all bridge inspection reports are consistent, filed on time and the qualifications of the teams doing the inspections are readily available. By implementing the process improvements identified by our auditors, PennDOT can provide consistent reporting that ensures these bridges can be maintained, repaired and replaced without having a major bridge failure.”

DeFoor said that a bridge rated in overall poor condition does not mean that it is about to fail and that steps need to be taken to repair or replace the bridge, but it can still be used safely while that process is ongoing.

The audit had three objectives:

• Determine the process for inspecting state-owned bridges identified as having the Overall Condition of Poor;

• Evaluate whether PennDOT complied with applicable laws, regulations, standards, policies and procedures, and guidelines regarding inspecting bridges identified as being in an Overall Condition of Poor; and

• Determine and evaluate compliance with PennDOT’s policies and procedures for responding to bridges identified as having the Condition Rating of Critical, Imminent Failure and Failed.

The audit has seven findings and made 24 recommendations. The findings and recommendations focused around ensuring PennDOT consistently followed its policies and procedures regarding the timing, writing and information included in the bridge inspection reports.

“There is a path forward to correct these issues, and for the most part, PennDOT agreed,” Auditor General DeFoor said. “PennDOT is working to reduce the number of bridges in poor condition by repairing or replacing them as time and tax dollars allow.”

Pennsylvania has the third-largest number of bridges in the nation and PennDOT is responsible for the inspection of roughly 25,400 state-owned bridges. State-owned bridges are on average more than 50 years old.

During the audit period from July 1, 2020, through May 10, 2023, nearly $1.2 billion dollars of taxpayer dollars were allocated to rehab and replace them.

Pa. invests more than $30M in municipal traffic signal upgrades

Gov. Josh Shapiro and Department of Transportation Secretary Mike Carroll this week announced that 73 municipalities will receive more than $30 million to support traffic signal upgrades, increasing safety and mobility across Pennsylvania’s communities through the Pennsylvania Department of Transportation’s (PennDOT’s) “Green Light-Go” program — increasing safety and mobility across Pennsylvania’s communities by relieving congestion and improving traffic flow.

Many Green Light-Go grants help municipalities improve congestion and traffic flow by upgrading to newer technologies in detection — which in turn allow traffic signals to respond to real-time traffic demand.

“Gov. Shapiro has made clear that state government’s top priority should be serving the people of our Commonwealth and improving the services we provide that make a difference in Pennsylvanians’ lives,” said Secretary Carroll. “The safety improvements supported by the Green Light-Go program will help municipalities relieve congestion and traffic flow and keep Pennsylvanians moving safely and efficiently. I’m proud that the Department of Transportation will continue to help our communities improve mobility for Pennsylvanians as we continue to deliver real results across the Commonwealth.”

Green Light-Go grants are provided as reimbursement to municipalities for updates to improve the efficiency and operation of existing traffic signals. These projects will be funded through the appropriation for fiscal year 2024-25.

Grant funding through the Green Light-Go program may be utilized for a range of operational improvements including, but not limited to: light-emitting diode (LED) technology installation, traffic signal re-timing, developing special event plans and monitoring traffic signals, as well as upgrading traffic signals to the latest technologies.

In Luzerne County, Butler Township will receive $26,400 for a left turn phase warrant study, design and left turn signal installation at Route 309 & Corporate Dr. intersection.

Rep.Kosierowski to host license plate replacement event Aug. 10

State Rep. Bridget M. Kosierowski, D-Waverly, will host a license plate replacement event on Aug. 10, to help motorists learn whether they need a new license plate and, if so, to help them apply for a free replacement.

The free event will take place from 9 a.m. to 1 p.m. Aug. 10, at Northeast Title & Tag, 215 South State St. in Clarks Summit.

“We’re teaming with the Pennsylvania State Police to help people address an important but sometimes overlooked issue,” Kosierowski said. “State law prohibits driving with a license plate that is illegible – meaning that it’s blistered, peeling or discolored; has lost reflectivity; or has at least one number or letter that can’t be recognized from 50 feet away. Plates with any of these problems qualify for free replacement, and our event will make the whole process easier.”

Motorists must bring their unexpired PA driver’s license and current vehicle registration card in order to apply for a replacement plate.

Residents are encouraged to call Kosierowski’s office at 570-562-2350 to pre-register or learn more about the event.

Sen. Casey, colleagues push for legislation to protect refinery jobs, energy security

U.S. Sen. Bob Casey, D-Scranton, this week led a bipartisan group of his colleagues to urge the U.S. Senate Committee on Environment and Public Works (EPW) and U.S. House Committees on Agriculture, Energy and Commerce, and Natural Resources to protect oil refinery union jobs and energy security by taking up the Safeguarding Domestic Energy Production and Independence Act.

Casey’s legislation would bring down runaway compliance costs associated with the Renewable Fuel Standard (RFS) and ensure that Pennsylvania’s independent oil refineries can afford to continue production. The Members urged the Committees to combat volatile prices of Renewable Identification Number (RIN) credits to protect jobs and energy security.

The legislators wrote:

“Refineries in the Philadelphia region are struggling under the heavy burden of RINs compliance and costs. Collectively, these refiners directly employ thousands of hardworking men and women in our energy industry and support the employment of tens of thousands more through the supply chain. The Safeguarding Domestic Energy Production and Independence Act is a commonsense compromise that would support the transition to renewable fuels while restoring long-term certainty for domestic refiners and protecting our energy security, which is why it is supported by dozens of unions, business groups, and the National Wildlife Federation.”

The Safeguarding Domestic Energy Production & Independence Act will reduce the cost of the RFS compliance for independent refiners without adversely impacting ethanol consumption. Specifically, this bill would direct the U.S. Environmental Protection Agency (EPA) to issue and sell “conventional biofuel waiver credits” at a low, fixed price for refiners to use for RFS compliance if they are unable to obtain RINs cost effectively in the marketplace. The program would operate similarly to EPA’s waiver credit program for cellulosic biofuel.

Reach Bill O’Boyle at 570-991-6118 or on Twitter @TLBillOBoyle.

Originally Appeared Here

The IRS said about 6.8 million Americans could skip this penalty when filing their tax returns for the previous two years following a recent relief measure. It could be seen as a way of giving back to the people and businesses who might have been financially crippled during the pandemic years.

By itself, the IRS has instituted practice to waive failure-to-pay penalties on assessed taxes of less than $100,000 for these tax years, affecting nearly 5 million taxpayers and offering approximately $1 billion in penalty relief. This action was prompted by COVID-19 when most taxpayers could not receive the expected balance due to reminder notices due to disruptions in normal collection processes.

Automatic relief, documents required, and eligibility: Find out if you qualify for this huge Tax Break

To benefit from this form of automatic penalty relief, taxpayers must meet particular requirements. These are taxpayers who have filed Form 1040, 1041, 1120 series or Form 990-T tax returns for 2020 and 2021, received a balance due notice between February 5, 2022, and December 7, 2023, and have unpaid taxes amounting to less than $100,000. The relief covers individual, business, estate, trust, and tax-exempt taxpayers.

Most importantly, these eligible taxpayers automatically receive this relief without taking any additional action. If they already have made payments on their account or have a paid-in-full balance, they will still be able to be automatically given the failure-to-pay assessed tax penalty of less than $100,000 per year. The IRS then offsets any amount due for any other tax year or issues a refund where no amount is due for the year.

Judgments of varying limitations and other courses of action: Know what steps to take if you don’t qualify

However, this relief measure is comprehensive while it has its degree of constriction. It exempts taxpayers with an assessed tax of $100,000 or more from receiving automatic debt relief. These individuals and businesses are not left without options to help them in their green energy pursuits. They can request penalty abatement based on reasonable cause or a First-Time Abate program.

It is also essential to realize and acknowledge that while the failure-to-pay penalty is being removed, it comes with a condition that interest on the remaining balance is not. Interest will continue to accumulate until such a time that the principal sum of the outstanding balance is repaid. Particularly, for those taxpayers who do not qualify for the automatic relief or have other unique situations regarding the tax credit, the IRS suggests contacting them after March 31, 2024.

Overview of payment method and the penalties that follow non-payment: Here’s how you can set up a Payment Plan

For those with outstanding tax liabilities who cannot pay their taxes in one lump sum, the IRS has provided mechanisms to enable the former to meet their tax responsibilities. These are using the Online Payment Agreement tool to set up a payment plan for the tax debt, an Offer in Compromise through which one can agree to pay less than the amount owed to satisfy the debt or an installment agreement that means one can pay off the amount in installments or even get a temporary suspension of the collection process.

Another message that the IRS wants people to understand is that it is bad to delay their response to the IRS notices because tax bills have a way of getting worse with time, and this is because of accrued fees, penalties, and interest. Further consequences for not paying taxes are the loss of such privileges as federal tax liens and levies on property or bank accounts and the inability to travel internationally with passports for individuals with tax debts over $59,000.

IRS Penalty Relief Measure: What you need to know to take advantage of this opportunity

Indeed, this penalty relief by the IRS is one of the measures undertaken to help citizens who faced some difficulties during the pandemic years. In its capacity to offer millions of Americans a way out, the IRS has already removed or instantaneously excused millions of dollars in failure-to-pay penalties for tax debts from the 2020 and 2021 fiscal years. However, it is necessary to note that these filings did not eliminate the obligation to pay taxes for taxpayers ultimately.

However, interest will continue to accrue to unpaid balances, and those who were issued with enormous tax bills may need to seek other forms of relief. In light of the current recovery from the pandemic, the IRS is back to normal collection activities, and every taxpayer needs to evaluate their tax affairs, use the available methods to pay taxes, and handle unsettled tax matters to avoid other severe measures from the IRS in the future.

Originally Appeared Here