Probity Tax Recovery is a tax consulting firm specializing in tax credits and incentives for small to mid-sized businesses. We work with business owners and their CPAs to identify tax credits and incentives while saving you time and money. Schedule a free consultation with a member of our team here.

September 29: IRS consultant leaked tax returns on ‘nation’s wealthiest individuals,’ DOJ alleges

The Department of Justice (DOJ) has charged Charles Littlejohn, a 38-year-old IRS consultant from Washington, D.C., with disclosing tax return information of "thousands of the nation's wealthiest individuals" to a news organization. 

The DOJ's statement also mentioned that Littlejohn provided tax details linked to "a high-ranking government official" to another media outlet, though neither the media entities nor the government official were named. 

If convicted, Littlejohn could face up to five years in prison. The Treasury Inspector General for Tax Administration (TIGTA) will be leading the investigation into this matter. 

The IRS, while refraining from commenting on the ongoing legal matter, emphasized the importance of protecting taxpayer data and highlighted new measures to prevent unauthorized access and disclosure.

IRS Commissioner Danny Werfel, in a statement provided to The Hill, expressed that "any disclosure of taxpayer information is unacceptable." The IRS, bolstered by funding from the Inflation Reduction Act, has been proactive in enhancing the protection of taxpayer data and implementing safeguards against unauthorized disclosures. The agency's statement also emphasized its commitment to ensuring the security of sensitive taxpayer information.

September 28: Nearly 1,000 millionaires haven't filed tax returns

Close to 1,000 taxpayers with earnings exceeding $1 million annually have not filed their tax returns for several recent years, potentially resulting in $34 billion in unpaid taxes, as per data from the Internal Revenue Service. 

Senate Finance Committee chairman, Ron Wyden, D-Oregon, disclosed this information in a letter to IRS Commissioner Daniel Werfel, urging the IRS to intensify its enforcement actions against these affluent non-compliant taxpayers. 

Werfel had previously announced plans to focus more on high-income taxpayers, large partnerships, and big corporations. The IRS data indicates that the top 500 high-income individuals who haven't filed returns for the years 2017 to 2020 owe approximately $923 million. However, only two of these individuals were under active criminal investigation by the IRS, and a mere 58 faced financial penalties like liens or levies.

The data further revealed that over 1.4 million wealthy individuals failed to file their tax returns for the tax years 2017 to 2020, with the total potential unpaid taxes amounting to $65.7 billion. 

Wyden emphasized that many of these high-income non-filers are habitual offenders. For instance, nearly 1,000 taxpayers earning more than $1 million annually have consistently not filed their tax returns over the recent years. 

Due to limited resources and prosecutorial discretion, the majority of these cases never reach the Department of Justice for criminal prosecution. Wyden highlighted the pressing need to address this significant amount of unpaid taxes owed by a small subset of ultra-wealthy non-filers.

September 27: IRS extends relief to farmers and ranchers in 49 states, other areas impacted by drought; more time to replace livestock

The Internal Revenue Service (IRS) has extended relief to farmers and ranchers in 49 states, the District of Columbia, two U.S. Territories, and two independent nations affiliated with the U.S. through a Compact of Free Association, who were compelled to sell livestock due to drought conditions. 

As per the IRS's Notice 2023-67, these farmers and ranchers may have an extended timeframe to replace the livestock they sold and defer tax on any gains from these forced sales. 

The relief primarily applies to capital gains realized from the sales of livestock used for draft, dairy, or breeding. Sales due to reasons other than drought or sales of livestock raised for slaughter, sporting purposes, or poultry are not covered. Typically, the replacement of livestock must occur within a two-year period, but due to the drought, this has been extended to four years. 

If the drought persists, the IRS has the authority to extend this period further.

The recent one-year extension means that eligible farmers and ranchers now have until the end of their first tax year after the first drought-free year to replace the livestock they sold. This provision is detailed in Notice 2006-82. 

The extension applies to those who qualified for the four-year replacement period and are in regions listed as having exceptional, extreme, or severe drought conditions between September 1, 2022, and August 31, 2023, as determined by the National Drought Mitigation Center. Consequently, farmers and ranchers who had a drought-sale replacement period set to expire on December 31, 2023, will, in most cases, now have until the end of their subsequent tax year to replace the livestock. This primarily affects sales from 2019, but some sales before 2019 may also be impacted due to prior drought-related extensions.

October 2: Fed governor says further interest rate hikes likely needed to fight inflation

The Federal Reserve's governor has indicated that further increases in interest rates are likely necessary to combat inflation. 

The statement comes amidst growing concerns about the rising cost of living and its impact on the economy. The central bank's decision to adjust interest rates is seen as a tool to manage inflationary pressures, ensuring that the economy remains stable and sustainable. 

The announcement has drawn attention from various stakeholders, as the implications of rate hikes can influence borrowing costs, consumer spending, and overall economic growth.

The news from The Hill underscores the delicate balance central banks must maintain between promoting economic growth and controlling inflation. 

As inflation continues to be a significant concern, the Federal Reserve's stance on interest rates will be closely watched by investors, businesses, and consumers alike. The potential for further rate hikes signals the central bank's commitment to ensuring long-term economic stability, even if it means short-term adjustments that might impact sectors of the economy.

September 30: Government shutdown averted with little time to spare as Biden signs funding before midnight

The threat of a federal government shutdown was averted as President Joe Biden signed a temporary funding bill just before the deadline. This bipartisan deal was approved by Congress after days of intense negotiations. 

While the package omits aid to Ukraine, which was a priority for the White House but faced opposition from several GOP lawmakers, it does include an increase in federal disaster assistance by $16 billion, fulfilling Biden's request. The bill ensures that the government remains funded until November 17. 

Speaker Kevin McCarthy, after facing internal party pressures, decided to abandon demands for significant spending cuts and instead collaborated with Democrats to pass the bill, even though this decision might jeopardize his position. 

President Biden expressed relief over the prevention of the shutdown but criticized the House GOP for the "manufactured crisis." He emphasized the importance of uninterrupted American support for Ukraine and expressed hope that McCarthy would uphold his commitment to assist Ukraine during this crucial period. 

The rapid developments in Congress came after prolonged deliberations that almost led to a federal shutdown. Although the immediate threat of a shutdown has been eliminated, Congress will need to address funding again in the coming weeks, potentially leading to another crisis. 

The bill was passed in the House with a 335-91 vote and in the Senate with an 88-9 vote. However, the absence of aid for Ukraine was a significant concern for many lawmakers, especially after the recent visit of Ukrainian President Volodymyr Zelenskyy to Washington.

September 28: US consumer spending was much weaker in the second quarter than previously estimated

The Commerce Department's final revision of the second-quarter gross domestic product (GDP) indicated that the U.S. economic growth rate remained at an annualized rate of 2.1%. However, a significant revelation was the downward revision of consumer spending, which is a primary driver of the U.S. economy. 

The revised figures showed consumer spending growing at a 0.8% annualized rate, a decrease from the previously estimated 1.7%. This marks the weakest pace of consumer spending growth since the first quarter of 2022. 

The data suggests that Americans reduced their spending more than initially believed at the start of the year, particularly on services and nondurable goods such as clothing and cleaning supplies.

The report also highlighted that business investment was stronger in the second quarter than previously estimated, with a growth rate of 7.4% annualized, driven by spending on structures. 

Despite the challenges, economists do not anticipate a recession for the U.S. economy this year. However, there are concerns about potential headwinds, including the resumption of student loan payments, the threat of a government shutdown, strikes by auto union workers, and rising oil prices. 

Gregory Daco, chief economist at EY-Parthenon, noted that these factors, combined with elevated prices and interest rates, could significantly impact GDP in the upcoming quarters.

September 28: Vance unveils legislation eliminating EV tax credits

Sen. JD Vance (R-Ohio) has introduced a bill aiming to eliminate federal tax credits for electric vehicles (EVs), marking another move by Republicans against EV technology. 

The legislation, initially reported by The Daily Caller, seeks to reverse several EV credits that were either established or expanded under the Inflation Reduction Act (IRA) of 2022, a climate and infrastructure law. Additionally, Vance's proposal introduces a new $7,500 tax credit specifically for American-made gas-powered vehicles. 

Vance criticized the Biden administration's policy of subsidizing EVs manufactured overseas and emphasized supporting Ohio workers instead of "green energy daydreams" that shift jobs to China.

The Biden administration has been actively promoting EVs as part of its strategy to cut carbon emissions by half by the end of the decade. The IRA includes tax credits of up to $7,500 for eligible new EVs. 

However, EV technology has faced criticism from several Republicans, including former President Trump, who has spoken against electric cars, citing their limited range and high costs. Both Vance and Trump have argued that the rise of EVs could negatively impact members of the United Auto Workers (UAW) union. 

While the UAW has expressed concerns about the transition to EVs, UAW President Shawn Fain has praised President Biden for balancing environmental goals with job protection.

September 27: IRS offers guidance on energy efficient home tax credit

The Internal Revenue Service (IRS) and the Treasury Department have unveiled details regarding two energy-related tax incentives under the Inflation Reduction Act: the energy efficient home credit and the Low-Income Communities Bonus Credit. 

Notice 2023-65 offers guidance on the updated energy efficient home credit, permitting eligible contractors to receive a tax credit of up to $5,000 for each qualified new energy efficient home they build or significantly renovate. 

The credit amount is contingent on various factors, including the type of home, its energy efficiency, and for multifamily units, whether prevailing wage stipulations are satisfied. For homes acquired between 2023 and 2032, the credit can range from $500 to $5,000 based on the certification received and standards met.

Furthermore, the Treasury Department, IRS, and the U.S. Department of Energy announced the opening of applications for the Low-Income Communities Bonus Credit program on October 19, 2023. This initiative offers a 10 or 20-percentage point increase to the Investment Tax Credit for eligible solar or wind facilities in low-income areas. 

The program will allocate 1.8 gigawatts of capacity in 2023 across various categories of qualified solar or wind facilities. The IRS plans to distribute this capacity among facilities in low-income communities, those on Indian land, federally-subsidized residential buildings, and facilities that provide significant financial benefits to households with limited incomes. Applications for the 2023 program will be accepted until early next year, with any unclaimed capacity rolling over to the 2024 program.

September 28: Booker, experts highlight civil rights concerns in artificial intelligence

Sen. Cory Booker (D-N.J.) convened a panel of experts and advocates to discuss the impact of artificial intelligence (AI) on civil rights. During the discussion, Booker expressed his appreciation for technology and innovation but also highlighted the potential for technology to amplify discrimination. 

The panel shed light on various issues, such as mortgage lending algorithms that have shown bias against people of color, AI-driven recruitment tools that have discriminated against women and minority candidates, and automated systems in hospitals that have consistently underestimated the needs of Black patients. 

Furthermore, instances were pointed out where AI has modified people's appearances, including lightening skin tones, and some AI products that have propagated stereotypes or used derogatory language.

The discussion also touched upon the potential of AI to address these challenges. Suresh Venkatasubramanian, director of the Center for Technological Responsibility, Reimagination, and Redesign at Brown University, emphasized that humans are responsible for how AI systems are built and can choose to eliminate racial biases in their construction. He stressed the importance of testing AI systems to ensure they don't perpetuate harmful or discriminatory behaviors. 

Additionally, there were calls for legislative protections, especially concerning facial recognition software, which some deem as potentially dangerous. Advocates also pushed for the adoption of an AI Bill of Rights, and Congress is currently working on related legislation.

September 28: Origins of Parkinson’s may lie in the gut. Researchers hope to prove it.

Parkinson's disease, first described in 1817 by British physician James Parkinson, remains a medical enigma with no known cure. While the disease's origins have been traditionally associated with the brain, recent research over the past two decades suggests a potential link between Parkinson's and the gut. 

The "gut-first" hypothesis posits that Parkinson's may originate from misfolded proteins in the gastrointestinal tract's nerves. These misfolded proteins, found in abundance in the brains of Parkinson's and Alzheimer's patients, accumulate into toxic clumps that disrupt nerve function. 

The theory suggests that these proteins start in the gut and travel to the brain, leading to Parkinson's. Constipation, a common non-motor symptom of Parkinson's, and other gastrointestinal issues have been identified as risk factors, further strengthening the gut-Parkinson's connection.

German anatomist Heiko Braak, in 2003, proposed the gut-first hypothesis after discovering misfolded proteins, specifically alpha-synuclein, in the stomach walls of Parkinson's patients. 

Subsequent studies have confirmed Braak's findings, with one study revealing alpha-synuclein pathology in gut samples up to 20 years before a Parkinson's diagnosis. 

In 2019, experiments on mice demonstrated that misfolded alpha-synuclein could travel from the gut to the brain, leading to Parkinson's symptoms. The exact trigger for the formation of pathological alpha-synuclein in the gut remains uncertain, with theories ranging from pathogens like viruses to imbalances in the gut microbiome. Understanding the disease's origins could pave the way for early detection and more effective treatments.

Schedule a free consultation with a member of our team.