Gasoline Excise Tax Outdated – What Will Come From Recent House Hearing On This?

Gasoline Excise Tax Outdated - What Will Come From Recent House Hearing On This?

The federal gasoline excise tax that helps fund road construction and maintenance has been 18 cents per gallon since 1993! The tax is not tied to the price of gasoline or adjusted for inflation. It requires an act of Congress to increase the tax.

For many years there have been federal and state government studies and ones by think tanks and academics on alternatives to the gasoline excise tax to fund roads, mainly driven by the fact that we drive more fuel efficient cars each year and today many cars run on electricity not gasoline. Since 2008, Congress periodically transfers money from the general fund to the Highway Trust Fund to help it out.

What’s the remedy?

While the gasoline excise tax could be increased, that imposes a higher burden on those driving gasoline powered vehicles to fund the roads that are used by others as well. But at least tying the amount to inflation seems to make sense.

Fuel efficient cars and electric cars could be charged an annual registration fee equal to what they would likely pay in excise taxes if instead they drove a typical gasoline burning vehicle.

A road usage fee could be charged, such as a vehicle miles traveled tax (VMT), that has been heavily studied in Oregon and California (and likely elsewhere as well). It is not difficult to track how many miles someone drives and there are ways it can be paid monthly or at least annually when the owner registers their car with their state (with the state sending the tax to the federal government).

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Solutions For Companies Hiring Tax Expertise – When The Company Says No Recruiters

Solutions For Companies Hiring Tax Expertise - When The Company Says No Recruiters

Having completed searches for more than one thousand management level tax executives over thirty years, our team knows the last quarter of every year is always the busiest. However, this year our clients are dealing with budget cuts that focus on eliminating recruiter fees and software implementations. Armed with the knowledge this is happening to so many of our long-term clients, I want to help you by providing valuable information or what we consider a Life Saver Secret for inhouse tax executives and CFOs needing a tax executive. We are sharing information so you save a lot of time  that would otherwise be wasted dealing with challenges we know are occurring within hundreds of corporate tax organizations today.

Challenges Acquiring Tax Talent Today: Know What The Tax Candidates Are Saying

For Corporate Tax And Financial Leaders who have made the decision to refrain from retaining an expert to conduct a tax search, I will share with you a glimpse of the conversations we are having with sophisticated corporate tax executives in the profession.  The reality is an inexperienced recruiter will cost you access to the best executives available in the market. If you want access to the best in the tax profession, start with someone who is experienced and trusted in the tax search profession.

Learn what many tax executives are telling us in private conversations:

“ I am surprised at the number of inexperienced recruiters calling me about tax roles that are poorly represented by a new generation of recruiters. There is no way I would trust a recruiter to represent me professionally to another company given the statements they made to me. Many recruiters who call me do not really understand what I do or they send an email to me that unprofessionally begins with…Hey!.  I feel like telling them… Hey is for horses:)”

“A recruiter called recently and all they were focused on was diversity, equity, and inclusion; and spent little to no time asking me about my professional goals, education, and technical skills. I found it to be a total turn-off; yet I do not know if it was the company or the recruiter who wanted the information from me. Either way, I was turned off completely to the company and the recruiter.”

“The recruiter could not understand why I was not interested in any tax role reporting to a Controller; and why I would only interview for a lead tax role reporting directly to the CFO. The Head of Tax wants to work hand in hand with the CFO before any transaction takes place. The recruiters lack of understanding and the stated reporting relationship scared me away from considering the company tax lead role.”

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New Speaker Of The House Of Representatives Michael Johnson – Where Does He Stand On Taxes?

Speaker Of The House Of Representatives - Michael Johnson

New Speaker Of The House Of Representatives Michael Johnson – Where Does He Stand On Taxes?

As the new Speaker Of The House of Representatives, people are asking where Michael Johnson (R) from the State of Louisiana stands on tax matters. Here is what we are able to find at this point.

According to Political, Though he’s rarely been involved in tax issues during his seven years in office, Johnson will now help decide whether there’s a year-end bipartisan tax deal and if lawmakers take another chunk out of the IRS’s budget.

His previous positions on tax legislation are mostly unsurprising. He’s opposed tax increases and has pushed to make Republican tax cuts permanent. At the same time, Johnson has been highly critical of Democrats’ Inflation Reduction Act, complaining it created “green energy slush funds” and pressing to rescind a one-time slug of money it provided the IRS.

Johnson’s inexperience with tax issues may benefit House Ways and Means Chair Jason Smith (R-Mo.) if the new speaker decides to cede power to committee chairs. In a speech Wednesday afternoon, Johnson told colleagues he intends to decentralize power in the chamber.

According to The Hill: Johnson was one of 57 Republicans to vote “no” on a $40 billion aid package to Ukraine.

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Introducing The Qualified Small Business Stock(QSBS) Guidebook For Family Offices And Private Equity Firms

Introducing The Qualified Small Business Stock(QSBS) Guidebook For Family Offices And Private Equity Firms

The combination of the 21% corporate income tax rate and the possibility of qualifying for Section 1202’s gain exclusion has made operating a business through a C corporation an attractive choice.[1] This blog post is a “heads up” that we have just issued the official Qualified Small Business Stock (QSBS) Guidebook for Family Offices and Private Equity Firms. In addition to the digital version, the QSBS Guidebook is available for download here.

The Guidebook’s purpose is to focus the attention of family offices and PE firms on the potential benefits of minority or majority investments in QSBS. The Guidebook provides an introduction to the benefits of selling QSBS and an introduction to the workings of Sections 1202 and 1045. From there, the Guidebook focuses on:

  • planning to maximize Section 1202’s gain exclusion (dealing with the cap);
  • best practices for family offices making minority investments in QSBS (i.e., best practices for maintaining QSBS status through the stock sale);
  • best practices for structuring the acquisition of a majority interest in a qualified small business (i.e., issuer of QSBS);
  • using Section 1045’s nonrecognition exchange of original QSBS for replacement QSBS as a tool for deferring taxes;
  • can a stock purchase be structured to hold QSBS;
  • how QSBS affects the compensation arrangements at family offices and PE firms;
  • whether holders of carried interests benefit when a partnership’s QSBS is sold;
  • whether it is possible for an issuer of QSBS to acquire a corporation’s stock that whose value exceeds $50 million;
  • dealing with target stockholders when QSBS is acquired; and
  • structuring rollover arrangements where QSBS is involved
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We Are Searching For An Independent ASC740 Tax Expert To Train In-House Corporate Client Located In Connecticut

We Are Searching For An Independent ASC740 Tax Expert To Train In-House Corporate Client Located In Connecticut

For the past several days, we have been searching for a tax professional to work with our CFO and Controller client in the Northeast to train them in ASC740 tax reporting rules. If you are a tax professional out on your own working and want to work educating this client on tax reporting, we would love to speak with you. We are surprised so many firms we have contacted regarding this request have turned us down for an introduction to a company with 50 Million in annual sales. We know there are tax professionals working out on their own recently downsized from these firms and we would love to meet you. This role is best suited for a tax professional who is in driving distance from Stamford, Connecticut. Please contact Kat@taxconnections.com to discuss an introduction as trainer for this client. Thank you in advance for helping me on this project. We frequently receive requests for tax professionals to work side by side with our corporate clients for training purposes. Please join us as a TaxConnections Member if you would like to be considered for projects in tax with corporate clients.

You can help us by referring this message to anyone you know who has ASC740 expertise looking to develop a solid working relationship with this company.

Call 858.999.0053 Office or email kat@taxconnections.com with your qualifications.

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Bonjour Part 2 – US Citizens Living In France Can Use French Tax As A Credit To Offset The Obamacare Surtax!

Bonjour Part 2 - US Citizens Living In France Can Use French Tax As A Credit To Offset The Obamacare Surtax!

“Congratulations to lawyers Stuart Horwich & James Lieber for their work and success in achieving this result for Americans abroad.”

A Quick Synopsis

Because of the specific provisions of the France/U.S. tax treaty, U.S. citizens who are resident in France are eligible to use French income tax paid as a tax credit against the 3.8% Obamacare surtax. Depending on the terms of the tax treaty in their country of residence, it is possible that U.S. citizens residing in other countries may be able to use taxes in their country of residence as a tax credit against the 3.8% Obamacare surtax.

As described below, I expect that to be able to use foreign taxes paid as a credit against the 3.8% Net Investment Income Tax, the “Double Taxation” article in the relevant tax treaty must include a specific provision for “U.S. citizens residing in the country of residence”. (Canada comes to mind. But, I will have to some more research …)

Note that it is very possible that this decision will be appealed. The US government will be unhappy with this decision.

For more detail and analysis, keep reading. This post in organized into the following parts:

Part A – Introduction – Background
Part B – Before moving to another country, pay special attention to the tax treaty between the US and that country!
Part C – MATTHEW AND KATHERINE KAESS CHRISTENSEN V. UNITED STATES – Why does the US/France tax treaty work for them?
Part D – Not all tax treaties are the same! What kind of tax treaty provision create the eligibility to use foreign tax credits to offset the Obamacare surtax?
Part E – It’s great that I am entitled to a foreign tax credit. But, how is the tax credit to be calculated?
Part F – The Question: I live in country X. May I use foreign tax credits to offset the Obamacare surtax?
Part G – Dang! Can I get a refund? It appears that refunds ARE available to those who improperly were charged the Obamacare surtax!
Appendix – ARTICLE 24 Of the 1994 France/US Tax Treaty with the later protocols taken into account

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Taxes And World Wars According To History

In 1917, the War Revenue Act was passed in the United States. What I find interesting is the information found on www.history.com:

“On October 3, 1917, six months after the United States declared war on Germany and began its participation in the First World War, the U.S. Congress passes the War Revenue Act, increasing income taxes to unprecedented levels in order to raise more money for the war effort.

The 16th Amendment, which gave Congress the power to levy an income tax, became part of the Constitution in 1913; in October of that year, a new income tax law introduced a graduated tax system, with rates starting at 1 percent and rising to 7 percent for taxpayers with income above $500,000. Though less than 1 percent of the population paid income tax at the time, the amendment marked an important shift, as before most citizens had carried on their economic affairs without government knowledge. In an attempt to assuage fears of excessive government intervention into private financial affairs, Congress added a clause in 1916 requiring that all information from tax returns be kept confidential.

By then, however, preparation for and entry into World War I had greatly increased the government’s need for revenue. Congress responded to this need by passing an initial Revenue Act in 1916, raising the lowest tax rate from 1 percent to 2 percent; those with incomes above $1.5 million were taxed at 15 percent. The act also imposed new taxes on estates and excess business profits.

By 1917, largely due to the new income tax rate, the annual federal budget was almost equal to the total budget for all the years between 1791 and 1916. Still more was required, however, and in October 1917 Congress passed the War Revenue Act, lowering the number of exemptions and greatly increasing tax rates. Under the 1917 act, a taxpayer with an income of only $40,000 was subject to a 16 percent tax rate, while one who earned $1.5 million faced a rate of 67 percent. While only five percent of the U.S. population was required to pay taxes, U.S. tax revenue increased from $809 million in 1917 to a whopping $3.6 billion the following year. By the time World War I ended in 1918, income tax revenue had funded a full one-third of the cost of the war effort.”

More tax increases may be coming from our House Of Representatives. What do you think?

Music to remind us of historical events.  Remember the song…  Bob Dylan’s Masters of War. Pray for all people and their safety.

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Texas Tax Roundup… Insurance, Data Processing, Video Games!

Texas Tax Roundup | September 2023 | Insurance, Data Processing, Video Games!

Hi folks! Welcome back to the Texas Tax Roundup, September 2023 edition. We got some insurance services, data processing services, and amusement services (a pretty sales tax heavy last month). Let’s see what went down!

Rules

Battery Sales Fee

34 Tex. Admin. Code § 3.711, 48 Tex. Reg. 5739 (Sept. 29, 2023)—The Comptroller adopted proposed amendments to Rule 3.711, relating to the battery sales fee, without change. These amendments implement S.B. 477, 87th R.S. (2021), which required marketplace providers to collect applicable fees related to the sale of lead-acid batteries.

Notable Additions to the State Tax Automated Research (“STAR”) System

Sales and Use Taxes

Insurance Services

STAR Accession No. 202308020L (Aug. 21, 2023)—In this private letter ruling, the Comptroller determined the taxability of various services provided by an employment benefit recordkeeping services provider, retirement plan third-party administrator, and government savings facilitator. The Comptroller found that the taxpayer’s flex spending account services (which involved the design, implementation, and administration of employee health reimbursement and flex spending accounts), Omnibus Budget Reconciliation Act (COBRA) administration services, and retire plan administration and 401(k) recordkeeping services were nontaxable services. The taxpayer’s Affordable Care Act (ACA) comprehensive and eligibility verification service (which involved evaluating employees’ eligibility or qualification for insurance coverage under the ACA) was a taxable insurance service.[1] The taxpayer’s ACA reporting service (which involved the automated generation, printing, distribution, and filing of IRS Forms 1094-C and 1095-C) was a taxable data processing service.[2]

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How Far Back Can The IRS Audit?

How Far Back Can The IRS Audit?

Navigating the labyrinthine world of U.S. taxes, including federal tax returns and individual tax returns, is challenging enough when you’re stateside. For U.S. expatriates, the complexity can multiply. One question that often looms large is, “How far back can the IRS audit?” Understanding the rules, statute of limitations, and exceptions surrounding IRS audits is crucial for maintaining compliance and peace of mind. Generally, the IRS has a three-year window to audit your tax returns, but as you’ll see, there are exceptions.

If you don’t file your tax returns, the statute of limitations never starts, allowing the IRS to audit the return at any time in the future. This is particularly important for U.S. expats who might assume they’re exempt from filing because they’re living abroad.

Related: Common Mistakes To Avoid When Claiming Foreign Earned Income Exclusion

What Is The Statue Of Limitations?

The term “statute of limitations” refers to the time frame within which the IRS is legally allowed to audit your tax returns for potential errors, omissions, or fraud. This period is generally three years from the date you filed your return or the due date of the return, whichever is later. After the statute of limitations expires, the IRS generally can’t question the information you’ve reported on your individual income tax return, or your filing history, or request additional documentation.

Taxpayers generally have three years from the date they filed their original tax return to claim a refund.

What Happens When You Don’t File Your Tax Returns?

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Senate Finance Committee Introduces Legislation To Relieve Double-Taxation Of Investments Between The U.S. And Taiwan

Senate Finance Committee Introduces Legislation To Relieve Double-Taxation Of Investments Between The U.S. And Taiwan
Introduction Represents Concrete Step Forward for Bill To Provide Double-Tax Relief, Strengthen U.S.-Taiwan Ties and Spur Economic Development

Washington, D.C.–Senate Finance Committee Ranking Member Mike Crapo (R-Idaho) and Chair Ron Wyden (D-Oregon), with House Ways and Means Chairman Jason Smith (R-Missouri) and Ranking Member Richard Neal (D-Massachusetts), formally introduced legislation to relieve double-taxation of investments between the U.S. and Taiwan.

“Without question, deepening ties with Taiwan and its vibrant democracy is in our nation’s best interests,” said Crapo.  “Building off of the Finance Committee’s unanimous support last month to strengthen those economic ties and encourage cross-border investment, today’s introduction in both the Senate and the House marks an important next step in unlocking opportunities to help workers and businesses of all sizes get ahead in both the U.S. and Taiwan.  In Idaho and throughout our country, our economic and strategic relationship with Taiwan is as important as ever, and I look forward to continuing our work to get this bill expeditiously passed into law.”

“It’s a no-brainer for U.S. jobs and for America’s national security to strengthen our economic partnership with Taiwan,” said Wyden.  “Today is another important step forward toward relieving double-taxation on activity between the U.S. and Taiwan, and supercharging chip manufacturing in America.  It’s not every day you see the bipartisan leaders of Finance and Ways and Means come together to introduce legislation.  I’m committed to continue working closely with Ranking Member Crapo, Chairman Smith and Ranking Member Neal to get our legislation over the finish line.”

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Texas Taxes For Sales Of Alcoholic Beverages

Texas Taxes For Sales Of Alcoholic Beverages

In Texas, sales of alcoholic beverages can give rise to two types of taxes: Mixed Beverage Gross Receipts Tax, and Mixed Beverage Sales Tax.  There are several complexities in how these are computed and how they interact with other state taxes, including the normal Sales and Use Tax.  Additionally, the Comptroller’s audit methodology for these taxes often creates problems for taxpayers.  Below is a brief summary of these taxes and some of the more prevalent issues they present.

Mixed Beverage Gross Receipts Tax

 Texas Tax Code § 183.021 provides that a 6.7% tax is imposed on “the gross receipts of a permittee received from the sale, preparation, or service of mixed beverages or from the sale, preparation, or service of ice or nonalcoholic beverages that are sold, prepared, or served for the purpose of being mixed with an alcoholic beverage and consumed on the premises of the permittee.” [1]

In turn, the term “mixed beverage” is defined to mean:

“One or more servings of a beverage composed in whole or part of an alcoholic beverage in a sealed or unsealed container of any legal size for consumption on the premises where served or sold by the holder of a mixed beverage permit, the holder of certain nonprofit entity temporary event permits, the holder of a private club registration permit, or the holder of certain retailer late hours certificates.” [2]

This generally includes three primary categories of drinks: liquor (including mixed drinks), beer, and wine.

As noted, the 6.7% tax applies to the “gross receipts” of a permittee.  This term is not defined by statute or by regulation, but the Comptroller’s regulations do provide some insight by stating “[t]he tax may not be separately charged to or paid for by the customer and cannot be considered included in the gross receipts amount.” [3] This language suggests the amount must be computed as 6.7% of the total amount charged to the customer, and must be paid separately by the permittee to the Comptroller.

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How To Successfully Submit Forms 2848 & 8821(Complimentary Webinar With IRS CE)

How To Successfully Submit Forms 2848 & 8821(Complimentary Webinar With IRS CE)

TaxConnections thanks CPE provider Tax Practice Pro for this complimentary On Demand webinar from TaxPracticePro.com with two IRS CE earned. This On Demand webinar is called “How To Successfully Submit Forms 2848 & 8821”. Tax Practice Pro is a nationwide provider of live and webinar based Continuing Education. We help tax professionals grow.

REGISTER HERE

100% no charge. We do 25-30 CE each month, all based on a theme for the month. Tax Practice Pro kicks off each month with a free program, mostly to give back to the industry.

This webinar teaches the most effective process of preparing and submitting form 8821 (Tax Information Authorization) and form 2848 (Power of Attorney) to the IRS CAF unit in order to successfully access your taxpayer’s IRS records.
(2 IRS CE)
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