Federal Tax News
Company president is assessed a penalty. If an employer withholds taxes from employees but doesn’t pay them over to the IRS, the employer may face a harsh penalty. The Trust Fund Recovery Penalty (TFRP) equals 100% of the unpaid tax and can be assessed personally against responsible parties.
In one case, a U.S. District court entered a judgment against a company president of more than $307,000 in assessed and unpaid penalties for not paying over withholding taxes to the IRS. On appeal, he made a number of arguments that the court found meritless. He signed a bankruptcy petition listing the IRS as a creditor, signed employment tax returns and wrote company checks for payroll and other items rather than taxes. And the president conceded that he was a “responsible person,” acknowledging that he had “significant control over the enterprise’s finances.” (Rowe, CA2, 5/28/21)
The Biden administration’s tax proposals are explained in a recent document. The U.S. Department of the Treasury has issued detailed information about the tax proposals for fiscal year 2022 under the American Jobs Plan and the American Families Plan. Traditionally, the tax community has referred to this annual publication as the “Green Book.”
The proposed provisions detailed in the Green Book include: increasing income tax rates for those with the highest incomes; taxing the capital gains of high-income people (over $1 million) at ordinary income rates; eliminating the carried interest preference and the like-kind real estate preference for high-income earners; and extending the increased and expanded Child Tax Credit through 2025. Biden is also proposing to eliminate a tax break for certain inherited assets with some exceptions. Of course, in order to be enacted, these proposals would have to pass in Congress. Read the Green Book here: https://bit.ly/34yNLSK
Do you pay for care for a child under age 13 or other individual incapable of self-care? You may qualify for a larger child and dependent care tax credit for 2021. The American Rescue Plan Act increased the credit amount and the percentage of employment-related expenses for care considered in calculating it. The credit phase-out for higher earners was also modified and the credit is refundable for eligible taxpayers.
For 2021, eligible taxpayers can claim employment-related expenses up to: $8,000 for one qualifying individual (up from $3,000) or $16,000 for two or more (up from $6,000). The maximum 2021 credit is $4,000 for one qualifying individual, or $8,000 for two or more.
The IRS has released more details about advance Child Tax Credit (CTC) payments. The American Rescue Plan Act expanded the CTC, which is payable in advance for 2021 to eligible families. The IRS has started sending letters to more than 36 million families who, based on either their 2019 or 2020 federal income tax returns, may be eligible to receive monthly CTC payments. Advance payments will be made by direct deposit or check.
Payments will be up to $300 per month for each qualifying child under age six and up to $250 per month for each qualifying child ages six to 17. The IRS will issue advance CTC payments on July 15, Aug. 13, Sept. 15, Oct. 15, Nov. 15 and Dec. 15.
The IRS wants more tools to regulate cryptocurrency. The Biden administration’s fiscal 2022 revenue proposals include a new requirement that cryptocurrency transfers of $10,000 or more be reported to the IRS in much the same way that banks report cash transfers of that amount and brokers report securities transactions. The proposed change would start in 2023.
In testimony before the Senate Finance Committee, IRS Commissioner Charles Rettig covered a number of topics, including the need for Congress to pass legislation to provide the IRS with tools to regulate cryptocurrency. “I think we need congressional authority,” Rettig said.
