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23rd June 2022
Taxpayer advocate sees much larger backlog than IRS reported
National Taxpayer Advocate Erin Collins expressed concern Wednesday in a midyear report to Congress about continuing delays by the IRS in processing  tax returns filed on paper last year, pointing to far higher numbers than the IRS itself claimed just a day earlier. “When I released my Annual Report to Congress six months ago, I wrote that ‘Paper is the IRS’s Kryptonite, and the agency is still buried in it,’" Ms. Collins wrote. “Fast forward to this Objectives Report: It’s Groundhog Day.” She added: “At the end of May, the IRS had a larger backlog of paper tax returns than it did a year ago, and its pace of processing paper tax returns was slowing.” According to the report, at the end of May the agency had a backlog of 21.3m unprocessed paper tax returns, an increase of 1.3m over the same time last year. The agency fell short on its goal to bring on 5,473 new employees to process returns, with just 2,056 employees hired. Additionally, phone wait times increased to 29 minutes on average, compared with last year's 20-minute average wait time. . The IRS said Tuesday that it is set to finish processing unamended individual returns filed in 2021 this week—running about five months late. That means it is just about to start processing paper tax returns filed this year, a task that in a pre-pandemic year it would have started months ago. Ms. Collins said that to meet its goal, the IRS would need to process 500,000 returns a week, more than double what it has been doing. The report did also say that credit is due to agency leadership for the burden it carries with “an extraordinarily complicated tax code," antiquated technology, inadequate staffing and lingering challenges that have come from distributing COVID-19 related programs. “Despite these challenges, the tax system, as a whole, has held up well during the past two years," Ms. Collins wrote.
President Biden seeks pause in gas tax
President Joe Biden has called on Congress to suspend the federal gasoline tax until the end of September, framing the move as necessary to provide relief to American consumers. A three-month federal gas tax holiday would suspend a tax of 18.4 cents per gallon of gas and 24.4 cents for diesel that drivers pay when they fill their tanks. The White House billed the holiday as a way to provide some "breathing room" as it works to bring costs down over the long term. Biden's decision to call for a federal gas tax holiday, a move once derided as a gimmick by Barack Obama and viewed skeptically by leading economists, is unlikely to make it through Congress. Senate Majority Leader Chuck Schumer said Democrats in his chamber had already attempted a gas tax suspension “and the Republicans blocked it.” He said the most important way to lower gasoline prices was to “crack down on Big Oil manipulation of oil markets. The cost of getting the oil out of the ground has not increased.”
Manchin says EV tax credit bonus is gone from spending bill
Senate Democrats have scrapped a $4,500 bonus tax credit for electric vehicles made with domestic union labor that was opposed by Senator Joe Manchin (D-VA) as they seek to wrap up negotiations on a spending deal. The Build Back Better legislation passed last year in the House would have increased the $7,500 consumer tax credit to as much as $12,500, as part of a White House-backed effort to ensure that electric vehicles are “manufactured by workers with good jobs.” But the plan came under fire from Mr. Manchin, a West Virginia Democrat and swing vote in the evenly split Senate, who has described it as "ludicrous," adding it would subsidize a product for which there was a waiting list and that hydrogen vehicles should be incentivized instead. 
TIGTA announces leadership changes
TIGTA has announced that three employees with extensive experience at the watchdog have new roles on its senior leadership team. Heather M. Hill is the new Deputy Inspector General for Audit, Russell P. Martin is the new Deputy Inspector General for Inspections and Evaluations, and Trevor R. Nelson is the new Deputy Inspector General for Investigations. “All three individuals are long-time TIGTA employees who have demonstrated their commitment to protecting the integrity of the Nation’s tax administration system,” Inspector General J. Russell George commented.
KPMG leaps into the metaverse
KPMG is moving into the metaverse, with the launch of its first collaborative hub between its U.S. and Canadian units. The hub will allow the firm’s employees, clients and communities to connect, engage and explore opportunities for growth across industries and sectors, the consulting firm said in a statement. “The metaverse is a market opportunity, a way to re-engage talent and a path to connect people across the globe through a new collaborative experience,” said Laura Newinski, deputy chair and chief operating officer at KPMG in the U.S. KPMG’s metaverse launch comes after its Canadian arm said it bought bitcoin (BTC) and ether (ETH) on its balance sheet and purchased digital art from the World of Women (WoW) NFT collection. Meanwhile, both its U.S. and Canadian business units started leveraging Chain Fusion, a proprietary tool that helps provide audit services for financial services, fintech and crypto-native companies, according to the statement.
Fed Chair: 'Higher interest rates could cause recession'
Federal Reserve Chairman Jerome Powell said the central bank’s battle against inflation could lead it to raise interest rates high enough to cause a recession, offering his most explicit warning this year. The central bank is under growing pressure to combat inflation, which hit a four-decade high of 8.6% in May. “We’re not trying to provoke, and don’t think that we will need to provoke, a recession,” Mr. Powell said while testifying before the Senate Banking Committee on Wednesday. “But we do think it’s absolutely essential that we restore price stability, really for the benefit of the labor market, as much as anything else.” Mr. Powell and several colleagues have signaled that another increase of that magnitude could be warranted at the Fed’s next meeting, July 26th-27th. “We’re looking for . . . compelling evidence that inflation is coming down, and we don’t have that,” said Mr. Powell. “There are lots of stories out there about how this should happen, and some people think it’s very clear that it will. Until we actually do see it happen, we need to keep moving.”
SFC votes to advance bill that loosens 401(k) restrictions
Americans could wait longer to start emptying retirement accounts and face fewer restrictions on emergency withdrawals under a bill advanced unanimously Wednesday by the Senate Finance Committee. The bipartisan bill is broadly similar to a measure passed by the House on a 414-5 vote in March, though it contains larger retirement-savings subsidies for low-income and middle-income workers. The Senate’s move this week increases the chances that Congress will make changes to U.S. retirement law this year. The new legislation tries to balance the core tension in federal retirement tax incentives between encouraging long-term savings with rules that lock money up and the need to allow flexibility for emergencies and other financial goals.  One discrepancy between the House and Senate bills is over the timing of an increase in the age at which savers must start taking withdrawals from 401(k)-type accounts and traditional individual retirement accounts. The Senate bill raises the age from 72 today to 75 in 2032, while the House bill would increase it to 73 next year, 74 in 2030 and 75 in 2033. The Senate bill would allow withdrawals of up to $1,000 annually to cover emergency expenses without paying the 10% penalty that people under age 59 ½ typically owe, although the money must be repaid before the person could take another such distribution within three years. The House bill has no such provision.  The Senate bill also includes provisions for some penalty-free withdrawals for the terminally ill, victims of domestic abuse, those affected by federally declared disasters, and the payment of long-term-care insurance premiums—all measures that aren’t in the House version.
Thailand won’t tax foreign filmmakers for five years
Foreigners shooting films in Thailand will be exempted from paying tax for the next five years in a bid to attract industry talent. Income from foreign filmmakers has increasing significantly, from an average 3.5 billion baht per year during 2017-2020 to 5 billion baht in 2021, said deputy government spokesperson Ratchada Thanadirek. “The government already has a measure to promote movie shooting in Thailand by providing a cash rebate of 20 per cent of what filmmakers spend in Thailand, capped at 75 million baht,” she said, adding “However, in the past foreign actors have had to pay personal income tax from earnings in the country, on top of the tax they already have to pay in their country of origin. This could affect their decision to choose Thailand as a filming destination.”  The government expects the move will help Thailand earn an additional 17.5 billion baht in the next five years from filmmakers, but will forfeit 71.75 million baht from loss of income tax.

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