Talking Tax

Tax-advantaged land deals known as syndicated conservation easements are under increasingly heavy scrutiny from the IRS and Congress.

The transactions involve a tax break under tax code Section 170(h) that is designed to encourage property owners to give away the development rights for land or buildings for conservation purposes. Syndicated deals—which involve multiple parties who buy into a property, often based on promises of super-sized deductions worth several times more than their investment—are designated as tax schemes on the IRS's infamous Dirty Dozen list.

The IRS has been fighting some of these deals in court, while legislation targeting the practice has progressed on Capitol Hill, albeit slowly.

On the latest episode of Talking Tax, Tabetha Peavey, an attorney adviser for the Tax Law Center at New York University Law, and Rep. Mike Thompson (D-Calif.), who has introduced legislation targeting the deals, discuss syndicated easements. Peavey explains how the transactions work and what the IRS has done to stop what it considers to be abusive behavior. Then Thompson offers his thoughts on whether this is the year that a long-simmering proposal to restrict the deals makes it through Congress.

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The Biden administration and Democratic lawmakers are quickly running out of time to move a revamped tax, climate, and health care package before the midterm elections.

Biden's broad "Build Back Better" agenda stalled in December when Sen. Joe Manchin (D-W.Va.), a pivotal vote in the evenly split chamber, announced he wouldn't support it. Senate Majority Leader Chuck Schumer (D-N.Y.) has been negotiating with Manchin about a narrower bill focused on clean energy incentives, health care, and tax hikes on corporations and the wealthy.

There have been some recent signs of progress, with tentative agreements on prescription drugs and extending the solvency of Medicare. But there are still many issues to hash out and not much time to do it.

On the latest episode of Talking Tax, Capitol Hill reporters Kaustuv Basu and Zach C. Cohen break down the state of the negotiations. They cover what's in, what's out, and what obstacles remain.

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The electric vehicle market in the United States is reaching an inflection point as companies look to boost manufacturing at the same time that two more large automakers are on the verge of losing a critical consumer incentive.

The $7,500 electric vehicle tax credit begins phasing out at 200,000 vehicles sold per manufacturer, a threshold General Motors Co. and Tesla Inc. hit years ago. Ford Motor Co. and Toyota Motor Corp. are quickly approaching that sales milestone, which has automakers and EV advocates looking to Congress to step in.

Democrats remain interested in ways to expand the EV credit, but that effort is wrapped up in the Biden administration's stalled tax, climate, and social spending plan.

Ellen Hughes-Cromwick, a senior resident fellow for climate and energy at the think tank Third Way, is the guest on the latest episode of Talking Tax. Hughes-Cromwick—who previously worked at the Commerce Department and Ford—discusses growth in the electric vehicle sector, breaks down the argument for expanding the federal tax credit, and explains what it will take to create a market for used EVs.

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A sweeping cryptocurrency bill unveiled earlier this month addresses many of the biggest open questions for the young and volatile asset class, from sanctions compliance to stablecoin oversight.

When it comes to the taxation of digital assets, the proposal from Sens. Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) would give the industry much of what it has been asking for. The bill would establish that cryptocurrency rewards created through the processes known as "staking” and “mining" would be taxed when the rewards were sold, rather than when they were created. It also includes a de minimis tax exemption and a narrower definition of brokers for cryptocurrency reporting requirements established in last year's bipartisan infrastructure law.

On this episode of Talking Tax, we discuss the implications of the Lummis-Gillibrand bill with Seth Wilks, director of government relations at software company TaxBit, and Omri Marian, a law professor at the University of California, Irvine, School of Law. Wilks discusses the rationale behind the de minimis exemption and other tax proposals, as well as why some things might change as the bill works its way through Congress. Marian explains why he considers the bill's tax title to be "a complete and total surrender" to industry.

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More countries are turning to temporary windfall taxes targeting the huge profits being made by oil and gas companies as prices continue to climb.

The UK, Italy, and Argentina, among other countries, have taken different approaches in designing these new taxes. The UK and Italy want to impose a 25% tax on the profits of energy companies to help people facing a cost-of-living crisis, while Argentina wants to impose a 15% tax.

On this episode of Talking Tax, senior reporter Hamza Ali spoke with Rhiannon Kinghall Were, a partner and head of tax policy at law firm Macfarlanes.

They discuss the different approaches countries can take when applying windfall taxes, and possible long-term consequences of applying these temporary levies.

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One of the hottest issues in the corporate-tax world right now is about when multinational companies can use the taxes they pay in foreign countries to defray their US tax bills.

The Treasury Department has made that process tougher. Last December, it tightened US foreign tax credit rules, narrowing the range of taxes that qualify for it. But many companies have complained that Treasury went too far—rendering some taxes ineligible for the credit even though they’ve been eligible for years, and thus requiring companies to pay taxes twice on the same income. Earlier this month, the chief financial officers of 28 major companies urged Treasury Secretary Janet Yellen to modify the rules.

Treasury has acknowledged the companies’ complaints and says it plans steps to address some of them. But it has defended the basic thrust of the rules. Yellen told a Senate committee this week that “these regulations are very important to protect critical interests of the United States."

On this episode of Talking Tax, we discuss the dispute over the foreign tax credit rules with Rafic Barrage, a partner in the North America Tax Practice Group at Baker & McKenzie LLP in Washington.

Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

A 2015 law promised to streamline the Internal Revenue Service's method for auditing partnerships—a type of "pass-through" business where the partners report their share of the proceeds on their personal tax returns.

The Bipartisan Budget Act of 2015 included provisions intended to make it easier for the IRS to scrutinize partnerships. But the law created new concerns and unintended consequences for those navigating the audit process, according to Rochelle Hodes, principal of the Washington National Tax office at Crowe LLP.

"The simple has become complex," Hodes said on the latest episode of the Talking Tax podcast. She discusses the complexities of the BBA centralized partnership audit regime, who is eligible to opt out, and what partners undergoing an audit need to consider.

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With cash cushions plump with federal pandemic relief dollars and a surge in tax revenues, state legislatures across the country have cut taxes aggressively this year. But several states went further, converting their tiered income tax structures to flat-rate systems. Arizona, Georgia, Iowa, and Mississippi have committed to the flat tax in recent weeks, and Oklahoma is likely to join the group soon.

The shift away from graduated income tax structures, which tax higher incomes at higher rates, is a dramatic departure from decades of state tax policy. While the motivations in state capitols vary, flat tax proponents framed their proposals as efforts to limit outmigration and improve their state’s economic horsepower. But skeptics warned of long-term social and economic consequences.

On this episode of Talking Tax, we hear two perspectives on this shift. Katherine Loughead, a senior policy analyst with the Tax Foundation, contends flat taxes are more transparent and easier to administer, and boost a state’s competitiveness in a climate where labor and capital are increasingly mobile. Kamolika Das, a state tax policy analyst with the Institute on Taxation and Economic Policy, says flat systems place unfair burdens on low- and middle-income taxpayers, and damage states' capacities to raise revenue and create sensible budgets.

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Automation tools increasingly used by seasoned tax professionals are helping to take some of the pain and manual labor out of routine compliance work.

That futuristic tech goes beyond robotics process automation and can link together the many programs and platforms that accountants rely on everyday. Those building blocks can automate every step in the tax process from onboarding clients to tax return delivery, according to John McGowan, the CEO of Hubsync and former chief information officer for two Big Four tax practices.

On this episode of Talking Tax, McGowan talks to Bloomberg Tax's Amanda Iacone about the challenges that firms face in adopting new ways of working and how it can not only help get work done faster but could make CPA firms more attractive to job candidates and clients alike.

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Some or all of the interest paid on student loans can be deducted from your taxes. But despite the proliferation of these types of loans over the years, many taxpayers don't see a real benefit.

That's because, unlike with home mortgage interest, the student loan interest deduction has significant limitations and has changed numerous times over the years.

Bloomberg Tax columnist Kelly Phillips Erb says Congress needs to rethink how the tax code treats student loans—especially if President Biden forgives a huge swath of them, as he's discussed doing. Kelly also talks about the struggles of paying for higher education and about her family's decision whether to borrow money for her kids, even though she's still paying off her own student loans.

Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.