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24th September 2021
Dems agree to narrow Biden plan on IRS bank data
Democrats have reached a deal to narrow President Joe Biden’s plan to require financial institutions to report account flows to the IRS in a bid to improve tax compliance. House Ways and Means Chairman Richard Neal (D-MA) said he and other Democratic leaders are planning to set a threshold higher than the $600 proposed by the Biden administration that would trigger a bank to report total account inflows and outflows to the tax collection agency. A Democratic aide said the discussions currently are focused on raising the threshold to $10,000, but cautioned that is still tentative and could change. The idea is one of dozens of tax proposals that Democrats are currently considering to fund a $3.5tn bill to invest in climate programs, child care and education.
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Bipartisan bill proposes tax credit for family caregivers
U.S. Senator Jacky Rosen (D-NV), founder and co-chair of the Senate Comprehensive Care Caucus and a member of both the Senate Committee on Health, Education, Labor and Pensions (HELP) and the Senate Special Committee on Aging, has announced her co-sponsorship of the Credit for Caring Act. This bipartisan legislation would provide working family caregivers with a tax credit of up to $5,000 to assist with out-of-pocket expenses related to caregiving. According to studies by AARP, approximately 48 million individuals provide unpaid care to an adult family member or friend, nearly eight in 10 caregivers report routine out-of-pocket expenses related to looking after their loved ones, and on average, family caregivers spend approximately 26% of their income on caregiving activities.
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Defense Bill inclusion offers finance facilities for legal marijuana businesses
Legislation allowing banks to offer credit cards, checking accounts and other financial services to legal marijuana businesses has been added to a bill setting defense policy for the next 12 months. The action increases the chance of the Secure and Fair Enforcement, or SAFE, Banking Act, becoming law because the defense legislation, known as the National Defense Authorization Act, is passed every year in order to shape federal defense policy. While New Jersey and 17 other states have legalized cannabis for both medical and recreational use, companies producing or selling weed still must conduct their businesses largely in cash as federally regulated banks worry that they could run afoul of federal law banning marijuana if they provide financial services. “Forcing legitimate, well-regulated cannabis businesses to conduct most of their business in cash is anachronistic and a clear threat to public safety,” said Steven Hawkins, chief executive of the U.S. Cannabis Council.
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New IRS site gives insight into Joint Committee cases
The IRS has developed a new webpage to help clients whose large refunds are subject to review by the Joint Committee on Taxation. When taxpayers claim a federal tax refund or credit of more than $2m (or $5m for a C corporation), the IRS must review the refund or credit and provide a report to the JCT, a non-partisan congressional committee. These refunds are known as “Joint Committee Refund Cases.” The webpage covers the definition of a Joint Committee Refund Case and how the IRS handles one and what involved taxpayers need to do.
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FASB calls for increased disclosure on supply chain finance programs
The FASB has proposed a rule that would require companies to disclose key terms and the size of their supply chain financing, a move aimed at helping investors better understand the short-term borrowing mechanism. Supply chain finance, often provided by banks, pays a company’s suppliers earlier than they would normally be paid, at a slight discount. The company pays the bank the full amount later, allowing the business to hold on to its cash for longer. Until now, U.S. companies haven’t been required to disclose supply chain financing arrangements in their financial statements, and often classify them as accounts payable. Wednesday’s proposal would force companies to release key terms of their financing programs, and disclose publicly the value of invoices eligible for early payment by the finance provider. Investors could then gauge the size of supply chain programs by comparing them to companies’ total payables. The FASB plans to issue a formal proposal in the coming months and ask the public for feedback then. It estimates it will issue a new rule in the second half of next year. 
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Weekly jobless claims total 315,000
Jobless claims climbed slightly last week but remained near pandemic lows, as demand for workers keeps a lid on layoffs. The Labor Department said that initial unemployment claims in the seven days to September 18th rose by 16,000 to a seasonally-adjusted 351,000 from a revised 335,000 the prior week, reaching their highest since the week ended August 21st. The median estimate in a Bloomberg survey of economists called for a decrease to 320,000 new applications. Continuing claims for state benefits increased to 2.8m in the week ended September 11th. California saw claims rise by 24,221, and Virginia saw an increase of 12,879, by far the biggest increases last week. Louisiana saw the biggest decrease, as the state recovers from Hurricane Ida. “What we’re seeing is a labor market that continues to get better but we’re still dealing with high levels of unemployment,” said Gus Faucher, chief economist at Pennsylvania-based PNC Financial Services Group. He projects that at the current pace of job growth and labor market recovery, unemployment claims will reach pre-pandemic levels some time in mid-2022.
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Circuit City trustee seeks review of bankruptcy fee hikes
Alfred Siegel, the trustee who oversaw the Circuit City liquidation process, has asked the U.S. Supreme Court to weigh in on a dispute over fee hikes imposed by the U.S. Department of Justice’s bankruptcy watchdog, the U.S. Trustee. Mr Siegel is arguing that a 2017 law that increased the U.S. Trustee fees for Chapter 11 debtors in most states failed to do the same for two states that use a different governmental entity, known as the Bankruptcy Administrator program, to perform similar duties in overseeing large corporate bankruptcies; the alleged disparity forced the Circuit City liquidating trust to pay substantially higher U.S. Trustee fees than it had in prior years, while Chapter 11 debtors in North Carolina and Alabama, the two states with the alternative program, went several months without being subject to the same fee increases. Though Circuit City filed for bankruptcy in Virginia in 2008 and closed its stores in 2009, the trust set up under its liquidation plan spent more than a decade to administer the defunct electronic retailer’s remaining assets to creditors.
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Ex-Warburg senior manager is next to face cum-ex trial in Germany
Detlef M., a former managing director of Warburg Invest, the investment arm of M.M. Warburg & Co., has appeared in a court in Germany accused of participating in a so-called cum-ex scheme that lost the country €157m ($184m). Investors in cum-ex deals use short sales to earn duplicate tax refunds on dividend payments on German shares. Germany's top criminal court in a landmark case earlier this year said that such deals were illegal and criminal, and called them a “ blatant money grab.” The practice ended in Germany in 2012 when rules were overhauled, but it is estimated that the schemes have cost German taxpayers more than €10bn. The Washington Post answers some FAQs about cum-ex trades, noting that the practice was named after the Latin terms cum/ex, meaning with/without, because the stock was sold with, but delivered without, a dividend payment.
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