Today's Tax Talk with Attorney Steven Leahy

Monday April 2, 2022 - The IRS has an image problem.  They also have a messaging problem.  If only the IRS could let the citizens know how important they are to democracy, everything would be right as rain.   After all, $14 Billion Dollars only goes so far.

As we reported last week, the IRS is on a mission to get more funding, and they need the public to help.  Without public support their mission will fail.  To that end, IRS Commissioner Charles Rettig appeared before the members of the House Oversight and Reform Committee last Thursday..

So, while the phones go unanswered, refunds go unpaid, and returns go unprocessed, the IRS is focusing on fixing public perception of the agency.  Because that is where the real problem arises.

Attorney Steven A. Leahy focuses on the perception of the perception of the IRS on Today's Tax Talk.

https://www.journalofaccountancy.com/news/2022/apr/irs-funding-technology-assessed-house-hearing.html

https://www.washingtonpost.com/politics/2022/04/22/irs-underfunded-messaging-republicans-democrats/

https://news.bloomberglaw.com/daily-tax-report/trust-still-broken-at-irs-leaving-rettig-in-messaging-muddle

Thursday April 21, 2022 - The Biden Build Back Better Plan is still being pushed by some in Congress.  You can predict, right after Tax Day, 2 things:  First, the IRS will ask for more money to preform their duties (we covered that yesterday).  Second, we should give the IRS more power to make filing easier.  

One can find a plethora of stories detailing how cheap it is in other countries to prepare taxes.  "In Sweden, you get a text message,"  "In Croatia it takes five minutes."  The one element these stories leave out - is government control.  If the government controls every aspect of citizens lives and has these details readily available, the government can make these decisions for the citizens.

It may be cheaper - out of pocket for taxpayers - the real cost is much more.  There is an old saying - if you want to make something really expensive - make it FREE.  

Attorney Steven A. Leahy discusses these issues on Today's Tax Talk.

https://thehill.com/opinion/finance/3274430-the-irs-is-in-no-position-to-do-your-taxes/

https://techcrunch.com/2022/04/21/a16z-debuts-new-crypto-research-team-led-by-columbia-stanford-researchers/

https://www.bloomberg.com/news/articles/2022-04-21/crypto-billionaire-rankles-wall-street-with-futures-trading-plan

Wednesday April 20, 2022 - It is now common knowledge that the IRS is woefully understaffed and underfunded.  In fact, Natasha Sarin, the Treasury's counselor for tax policy and implementation asserted "chronic underfunding [] has starved the IRS of the tools it needs to serve the American people."

Is that right?  Has the IRS been starved of resources?  Should the American public agree to double the size of the agency, as President Biden has asked?  Would doubling the size of the IRS solve all of our budget problems?

Attorney Steven A. Leahy considers these questions, and more, on Today's Tax Talk.

https://www.npr.org/2022/04/18/1093380881/on-tax-day-the-treasury-department-urges-for-more-funding-to-the-irs

https://www.businessinsider.com/americans-get-do-taxes-quickly-for-free-irs-funded-treasury-2022-4

Monday April 18, 2022 - Well, it's here, Tax Day 2022.  Remember, Emancipation Day kicked the filing deadline from the normal April 15th date.

The IRS Commissioner, Charles P. Rettig, took the opportunity in an Opinion piece in NewsWeek to write "[o]n behalf of the employees of the Internal Revenue Service (IRS), I want to thank everyone for taking the time to file and pay their taxes.  So, taxpayers have that.

The IRS also took this solemn day to "Plea for More I.R.S. Funding, according the the New York Times.  They never miss an opportunity to ask for more money - hat in hand, the IRS needs more tax dollars  because the "I.R.S. remained bogged down by antiquated technology and thin resources."

Thin resources - $14 Billion budget last year - and the IRS could only manage to answer 1 in 9 phone calls.  $14 Billion doesn't go as far as it once did.  Inflation and all.  

The IRS ask is $80 Billion over 10 years - to hire 80,000 more employees - more than doubling the current number of  75,773.  but, not to worry - they will only target the ultra wealthy.  Right?

Attorney Steven A. Leahy wraps up Tax Day with these, and other, tax stories.

Thursday April 14, 2022 - Tax Season is coming to a close.  Your tax return must be filed (or postmarked) by April 18, 2022.  Every year, a large portion of taxpayers ask for an extension. 

Here are some things you should know about an IRS extension.  First, extensions are automatic, as long as you file a request with the IRS before the deadline.  Next, even you get an extension, the extension is only an extension of time to file the return - not to pay any tax that is due.  

That begs the question: how do I know how much to pay the IRS if my return hasn't been completed?  The answer is - you won't know.  But, you can estimate.  And you should estimate on the high side if you want to avoid any penalty.  If you overpay you will receive a refund - like most Americans.

Attorney Steven A. Leahy reviews tax return extensions AND what you should know about them.

https://www.cbsnews.com/news/tax-extension-file-how-to-2022-04-14/

Tuesday April 12, 2022 - Federal Regulators, from most every agency, are looking into regulating all things Crypto.  The Biden Administration recently issue an Executive Order - directing them to do do.  But, here is the thing about Federal Regulations - they take a VERY long time to implement.

The Crypto industry moves quickly.  They don't have time to wait for the Federal Government to, first educate themselves about the nuances of Crypto, then draft meaningful regulations, get those regulations passed, and finally to apply the regulations.

So, the Crypto industry is taking a State by State approach to get the laws they need enacted.

Attorney Steven A. Leahy reveals this strategy with you on Today's Tax Talk.

https://www.nytimes.com/2022/04/10/us/politics/crypto-industry-states-legislation.html

Monday April 11, 2022 - The Governor of  Minnesota, Tom Waltz, issues 3 Executive Orders imposing and modifying a moratorium on residential evictions in the state.  A property owner of rental units in Minnesota objected and filed an action in District Court, contending the Executive Orders violated their rights protected under the contract clause, the takings clause, the due process clauses, and the First Amendment to the U.S. Constitution as well as state law.

The District Court dismissed the case - on all three grounds and the property owner appealed to the Eighth Circuit Court. On April 5, a unanimous panel of the US Court of Appeals for the Eighth Circuit ruled that a Minnesota state eviction moratorium likely qualifies as a taking of private property requiring compensation under the Takings Clause of the Fifth Amendment.

Attorney Steven A. Leahy reviews this case for its important implications to private property rights.

https://reason.com/volokh/2022/04/09/eighth-circuit-rules-eviction-moratoria-are-likely-to-be-takings-requiring-compensation-under-the-fifth-amendment/

https://news.bloomberglaw.com/coronavirus/minnesota-landlord-gets-covid-eviction-moratorium-suit-revived

Thursday April 7, 2022 - Today, IRS Commissioner Charles Rettig said "The IRS could wipe out its massive backlog of returns by the end of the year."  To do that, the IRS has revealed a Surge plan and a new hiring plan that would ad another 10,000 employees.

The IRS Commissioner also revealed "“53% of the employees are in a full-time telework capacity. The rest of the employees either have a blended capacity or they are onsite.” 

The good news?  Rittig told the committee "We are currently running around 19 to 20 percent level of service.”  That's up from 1 in 9 calls being answered.  

Attorney Steven A. Leahy reviews Commissioner Rittig's testimony before the House Ways and Means committee.

https://www.cbsnews.com/news/charles-rettig-irs-resolve-backlog-2022/

https://www.atr.org/irs-picks-up-the-phone-only-19-to-20-percent-of-the-time/

https://www.atr.org/irs-chief-53-of-agents-work-from-home-full-time/

Wednesday April 6, 2022 - It's tax time and the battle is on! COVID created a whole class of employees who work in one state (where they live) for a company that has a head quarters in another state.  The employee never goes to the company's state - but the state, where they never go, wants to collect taxes from them.

This is a VERY common question.  I answered that question twice today.  The answer is much more complicated than you would expect.  In fact, New Hampshire brought a law suit against Massachusetts to stop Massachusetts from taxing New Hampshire residents.  Last summer, the United States Supreme Court refused the suit to move forward. 

So, where does that leave the employee?  Well, that depends on where you live - and where your employer is located.

Attorney Steven A. Leahy reviews the court battle and the implications of this problem to workers.

https://www.bostonherald.com/2020/12/25/14-states-side-with-new-hampshire-in-tax-suit-against-massachusetts/

https://www.dgccpa.com/perspectives/new-hampshire-v-massachusetts-taxation-of-remote-workers-case-will-not-be-heard-1425

https://boston.cbslocal.com/2021/06/28/massachusetts-new-hampshire-income-tax-remote-workers-supreme-court-lawsuit/

https://www.picnictax.com/blog/multi-state-taxes/

Wednesday March 30, 2022 - Did you know that the IRS will confiscate your tax refund if you don't file your tax return?  Actually, they will hold it for three years from the date the tax return was due.

This year the IRS reports almost 1.5 million taxpayers have not filed their 2018 tax returns - worth about $1.5 BILLION in unclaimed refunds. Half of the missing refunds from 2018 are more than $813.  

You must file be April 18, 2022 (April 19 if you live in Massachusetts or Maine) - unless you filed for an extension for that tax year.  Then the due date for your return was October 15, 2019 and you won't lose the refund until October 2022.

Attorney Steven A. Leahy explains the details of this little know tax quirk.

https://www.msn.com/en-us/money/taxes/taxes-time-is-running-out-to-claim-old-2018-tax-refunds/ar-AAVAHcH

https://nationalinterest.org/blog/politics/missing-tax-refund-2018-you-only-have-weeks-left-collect-201532

https://www.msn.com/en-us/money/taxes/dollar15-billion-in-refunds-attached-to-unfiled-2018-tax-returns-available-until-april-18/ar-AAVABUn

https://www.ky3.com/2022/03/25/irs-15b-available-tax-refunds-2018-window-closing-those-file/