White House announces support for extender bill. Things seem to be falling into place for passage of the extender bill with an announcement of support from the White House.
The bill has to pass Congress first, but Tax Analysts reports ($link) that passage is eased by splitting the extender bill from the “omnibus” spending bill:
House Speaker Paul D. Ryan, R-Wis., said he expects the House to vote on the extenders package on December 17 and an omnibus spending bill, also introduced as an amendment to H.R. 2029, on December 18. GOP leaders apparently decided to split the bills into two separate amendments to generate enough support for passage in the House. The spending bill may lose votes from conservative Republicans while the tax bill may lose votes from House Democrats. Those concerns are not shared in the Senate, where Democrats like both bills.
Losing votes from House Democrats doesn’t threaten the extender bill, as there are so few of them. So House vote tomorrow.
Extender bill ends attempts to tax political donations as gifts. Before it was chastened by the Tea Party scandal, the IRS made moves to treat contributions to Sec. 501(c)(4) political organizations as taxable gifts. The legal justification for treating contributions to independent organizations was weak to begin with, but a provision in the extender bill (Sec. 408) settles the issue going forward by explicitly excluding such contributions from gift tax effective for gifts made after enactment.
What about old gifts?
Nothing in the amendment made by subsection (a) shall be construed to create any inference with respect to whether any transfer of property (whether made before, on, or after the date of the enactment of this Act) to an organization described in paragraph (4), (5), or (6) of section 501(c) of the Internal Revenue Code of 1986 is a transfer of property by gift for purposes of chapter 12 of such Code.
So the IRS could continue to assert its weak position that pre-enactment gifts are taxable. I don’t think they will.
Related: TaxProf, The IRS Scandal, Day 952. Today’s link goes to an op-ed complaining that the extender bill will make it too difficult for the IRS to restrict First Amendment rights by starting gift tax audits of political donors.
IRS addresses more HRA and ACA questions. Yesterday the IRS issued Notice 2015-87, a 31 page bag of buzzwords addressing ACA issues. Disappointingly, the Notice doesn’t back off the extreme position that reimbursement of individual medical insurance premiums paid by employees will normally trigger a $100 per-day, per-employee penalty.
The bill does clarify that “opt-out” payments are normally not subject to the penalty, though they are taken into account to determine the employee cost in calculating whether an employer’s coverage is “affordable” (Q&A 9 of the Notice).
Paul Neiffer, Looks Like $500,000 Section 179 is Now Permanent. “One of the key provisions for farmers is to make Section 179 permanent at the $500,000 level.”
Kay Bell, Tax extenders 2015 winners and losers. “It’s a Christmas miracle! Weeks are left in 2015 and Congress has reached a deal on the 50+ tax breaks known as extenders.”
Howard Gleckman, The Hidden Agenda Behind This Year’s Tax Extender Bill (TaxVox):
What is going on here? Why would House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell put so much effort into making permanent a package of tax breaks that could be back on the chopping block a year from now?
Like much of what happens in Congress, it’s all about budget accounting. And in this case, it turns out you can buy bigger tax rate cuts by repealing permanent tax breaks than by swapping out temporary versions of the same subsidies.
Jason Dinesen, Glossary: Casualty and Theft Loss. “A casualty and theft loss is a deduction allowed on tax returns for people who suffer property damage or theft.”
Andy Grewal, The Management Fee Waiver Regulations May Be Doomed (Procedurally Taxing). “Prop. Reg. 1.707-2(b)(i) may reflect a good policy (a debatable point), but it does not square with the law.”
Robert Wood, Michael ‘The Situation’ Sorrentino’s Accountant Admits Tax Fraud Conspiracy. All over America, millions who don’t watch television ask, “who is Michael Sorrentino?”
David Brunori, Some things worth pursuing in 2016 (Tax Analysts Blog). I don’t agrere with his support for the earned income tax credit, but he is correct on the importance of independent state tax tribunals, which Iowa lacks. And I think this is absolutely right:
Oppose tax incentives. I know — incentives are seemingly invulnerable in our political system. But the difficulty of the task should not deter the righteous. Tax incentives violate every principle of sound tax policy. They are unnecessary. They are unfair. Liberals should hate them because they waste money that could be used for schools and healthcare. Conservatives should hate them because they are the antithesis of a free market.
The cronies and insiders partnership of Central Iowa disagrees, which pretty much proves David correct.
I’m pretty sure the opposite wouldn’t help. Could Having a ‘Pro-CPA Culture’ Backfire on Accounting Firms Desperate for Talent? (Caleb Newquist, Going Concern).
Today is the big Star Wars release day. Blogger Syd Gernstein explains that WE HAVE TAXES TO THANK FOR STAR WARS:
To summarize briefly: This first episode of Star Wars started with a tax dispute. The “trade federation” did not like the fact that the republic had imposed a tax on its trade routes, and protested the tax by staging a blockade, and ultimately an invasion, of the peaceful planet of Naboo. Dissatisfied with the Republic’s inability to defend the planet, Naboo’s queen—at the urging of the planet’s then-Senator Palpatine—moved for a vote of no confidence in the Galactic Senate’s Chancellor. Palpatine then exploited the sense of sympathy for Naboo to get himself elected as Chancellor. Over the course of the next movies, Palpatine would then, essentially, transform the republic into a dictatorship, declare himself Emperor, convince Anakin Skywalker to become Darth Vader, build a couple Death Stars, and, evidently, abolish the galactic yellowpages, because it otherwise surely would have occurred to Darth Vader to streamline his epic quest to find his son, the “young Skywalker,” by looking under “S.”
It’s a plot line convoluted enough to be worthy of The Code.