Become more informed in minutes....

Donald Trump has pledged to eliminate taxes on Social Security payments for seniors if elected to the White House in November, a move that would cut levies for some elderly Americans but further strain benefits for those who have yet to retire. "Seniors should not pay taxes on Social Security and they won't," Mr. Trump said at a rally in Harrisburg, Pennsylvania. Trump's pledge to cut taxes for elderly Americans comes as he tries to recalibrate his campaign to focus on Vice President Kamala Harris.

 

Bloomberg Tax

The IRS and its Security Summit partners are reminding tax professionals and taxpayers about the IRS Identity Protection PIN program and the IRS online accounts that protect against tax-related identity theft. IRS Commissioner Danny Werfel urges people to sign up for both IP PINs and the Online Account to protect their valuable information and avoid tax problems. The IRS, state tax agencies, and the tax industry are working together to let clients know that these tools are available. The Electronic Tax Administration Advisory Committee highlights the importance of IP PINs in protecting against tax refund fraud. Taxpayers and tax professionals should be careful and protect their IP PINs from identity thieves. The IP PIN is a six-digit number known only to the taxpayer and the IRS. Taxpayers can obtain an IP PIN through the IRS website or by filing Form 15227. The IRS recommends taxpayers validate their identities through ID.me before obtaining an IP PIN.

 

Tax Notes

The Vermont Department of Taxes has issued a revised publication on land use gain tax. The publication provides guidelines on the state's Land Gains Tax, including exemptions, filing requirements, and three distinct filing options for taxpayers dealing with the sale or exchange of subdivided land held for fewer than six years. This update aims to clarify the tax regulations and help taxpayers navigate the process more easily. The revised guidelines will ensure that taxpayers are aware of their obligations and can make informed decisions regarding their land transactions.

 

Bloomberg Tax

Do You Know Your Firm's Ideal Client?

Specialization allows accountants to offer tailored solutions that meet the unique needs of targeted clientele. This strategic move improves client satisfaction, creates a stronger professional reputation, and increases profitability by identifying your ideal clients for growth.

Get the Guide.

 

AICPA has provided recommendations to the Department of the Treasury and the IRS on interim guidance in Notice 2023-38 as updated by Notice 2024-41. The guidance describes certain rules that Treasury and the IRS intend to include in proposed regulations regarding the domestic content bonus credit (DCBC) requirements and related recordkeeping and certification requirements. AICPA's recommendations include two approaches to provide a better calculation related to the Adjusted Percentage Rule, a safe harbor for classifications of certain applicable project components, clarification on retrofitted projects, and certification requirements. AICPA suggests allowing taxpayers to provide support for the domestic direct costs incurred to produce a manufactured product in the U.S. and including those amounts in the numerator regardless of whether there is a non-domestic manufactured product component. They also propose assuming that the direct costs attributable to producing a manufactured product are incurred proportionately to the components' costs.

 

CPA Practice Advisor

Tax Notes

Federal Reserve Chair Jerome Powell said officials could cut interest rates at their meeting in September, moving closer to a new phase that seeks to avoid weakness in the labor market in the midst of signs inflation is heading lower. “The broad sense of the committee is that the economy is moving closer to the point at which it will be appropriate to reduce our policy rate,” he said at a news conference on Wednesday. “A reduction in the policy rate could be on the table as soon as the next meeting in September.” While Wednesday’s decision to leave rates in a range between 5.25% and 5.5%, a two-decade high, was unanimous, Mr. Powell suggested that at least one official had argued in favor of lowering rates at this week’s meeting. He added that inflation has come down notably in recent months, adding, "It's just a question of seeing more good data."

 

USA Today

CNBC

Washington Post

Wall Street Journal

The wages and benefits that companies pay their workers rose less than 1% for the second time in the past three quarters, reflecting the waning demand for labor in a slower-growing economy. The Labor Department's employment cost index, which measures wages and benefits, rose 9% in the second quarter to the end of June, just a little under the 1% expected by economists polled by the Wall Street Journal. The figure matches last year's fourth-quarter reading as the slowest in about two and a half years. Compared with the same quarter a year earlier, compensation growth was 4.1%, a slight drop from 4.2% in the first quarter. Slower pay growth could go some way to reassuring Federal Reserve officials that inflation is steadily falling back to their 2% target. A separate report issued Wednesday, by payrolls processing firm ADP, found that companies added just 122,000 jobs in July, their slowest pace since January and below the upwardly revised 155,000 in June. ADP also reported that wages for those who stayed in their jobs increased 4.8% from a year ago, the smallest increase since July 2021 and down 0.1 percentage point from June.

 

ABC News

BNN Bloomberg

CNBC

Market Watch

The Chicago Business Barometer, also known as the Chicago PMI, fell 2.1 points to 45.3 in July, according to a new report from MNI. The latest reading is better than the 44.8 forecast but keeps the index below the 50-mark in contraction territory for an eighth straight month. The index is one of the last of the regional manufacturing indices before the national ISM data for June is released later today. Other regional Fed manufacturing surveys for July have pointed to a weaker ISM index in June, economists said.

 

Advisor Perspectives

Market Watch

A Citigroup document from December viewed by Reuters indicates the bank breached a U.S. Federal Reserve rule to limit intercompany transactions, leading to errors in its internal liquidity reporting. The Regulation W rule requires banks to restrict transactions such as loans to the affiliates they control. It is meant to protect depositors whose money is insured up to $250,000 by the government. Reuters notes that the rule breach comes as Citi seeks to remedy separate problems in its risk management and internal controls. Authorities described the company’s risk practices as "unsafe and unsound" in 2020, and criticized the bank for how it measured counterparty risks in 2023. This year, regulators have been critical of Citi’s resolution planning, and the bank was most recently punished with $136m in penalties for insufficient progress on compliance.

 

Reuters

Tax-free spin-off transactions under Section 355 of the tax code have historically been difficult for the IRS to regulate. The Office of Management and Budget's spring 2024 regulatory agenda includes four proposals for Treasury Department guidance in this area. However, after the June U.S. Supreme Court decision overturning Chevron deference, more stringent interpretations of statutory law by the IRS could increase the lack of clarity. Without Chevron deference, the Treasury and IRS will have less flexibility to address changing circumstances. Regulations published under Section 355 have had to constantly evolve, making them vulnerable to judicial challenge. The spring regulatory agenda includes reiterations of proposed regulations from 2007 and 2016, as well as new proposals. The focus on Section 355 in the agenda and the notice and revenue procedure might represent a new direction in the IRS's perspective on spinoff matters. The Treasury's proposed guidance represents an opportunity to add clarity to the tax code. However, it could also limit reasonable interpretations of Section 355 rules.

 

Bloomberg Tax

The IRS has issued a new revenue procedure outlining the process for defined benefit plan sponsors to request approval for the use of plan-specific substitute mortality tables. The procedure updates and supersedes a previous revenue procedure and reflects recent amendments to the regulations governing substitute mortality tables. The request for approval must be submitted at least seven months before the first day of the plan year for which the substitute mortality tables are to apply. The request must include various information and demonstrations, including credible mortality information, population stability, and comparisons of funding targets. The revenue procedure is effective for requests for approval with a plan year beginning on or after January 1st 2025.

 

Tax Notes

The Federal Deposit Insurance Corporation (FDIC) is considering a stricter framework for how large asset managers can prove they are not influencing banks where they hold large stakes. The FDIC voted to advance a proposal that would see the agency exert more influence over whether asset managers or other firms building large stakes in banks should receive stricter regulation and oversight. The proposal would remove an existing exemption in which the agency does not review new large investments in banks, so long as the Federal Reserve signed off on that approach.

 

Reuters

Two racehorse owners at Polk County's Prairie Meadows Racetrack and Casino are suing the Horseracing Integrity and Safety Authority (HISA) over taxes and fees. HISA, a nonprofit corporation, was given the power to assess taxes and fees on trainers, owners, breeders, and others in the thoroughbred horseracing industry. The lawsuit claims that HISA's takeover of the industry is unconstitutional and that its funding mechanisms are unlawful. The owners argue that HISA is passing its legal costs onto the very people who filed lawsuits against it. They are seeking to have the law declared unconstitutional and to permanently stop HISA from enforcing it. The case is currently under consideration in the Eighth Circuit Court of Appeals.

 

Des Moines Register

Argentina's tax authority has launched a campaign to encourage non-compliant taxpayers to declare their foreign assets through a tax amnesty program. The campaign will focus on cases currently under audit for non-payment of wealth tax, issuance of false invoices, or undeclared foreign holdings. The authority estimates that these cases could be worth a total of 400bn Argentine pesos ($430m). The tax amnesty program is part of a set of regulations aimed at improving tax compliance.

 

Bloomberg Tax

Thailand will reduce the personal income tax rate by 50% for overseas professionals willing to return home and work in industries such as electronics, automobiles, robotics, and aviation. Qualified Thais returning home will pay a personal income tax of only 17% for five years, compared to the maximum 35% rate for residents earning over five million baht annually. The government expects at least 500 professionals to take up the offer, potentially resulting in a tax revenue loss of about 120 million baht over five years. “We want to bring them back to help develop [the] Thai economy and select industries,” Deputy Finance Minister Paopoom Rojanasakul told reporters. “The move will also help generate more tax revenue we haven't got before” with the development of key industries, he said.

 

Business Times SG