When tax season officially ends next week in the U.S.—with no extension from IRS this time, as compared to 2020 and 2021—it will have been 85 days since it began.
A lot has happened during that time.
As of April 1, taxpayers have filed 91,260,000 individual federal income tax returns. Most of those returns were filed electronically, with just over half of those prepared by tax professionals. And the IRS has issued 63,357,000 corresponding tax refunds totaling $204.45 billion, delivering an average tax refund of $3,226.
Those feel like ordinary numbers in what has been a most extraordinary year.
But there’s one particular number that stands out as not so ordinary. The IRS has reported 478,849,000 visits to its website, down more than 50% from the same time last year.
It’s tempting to look at the website statistics from previous years and call it a blip—suggesting that the 2021 tax year was smoother sailing for taxpayers. But that would be ignoring issues like the expanded child tax credit, stimulus checks, and cryptocurrency that have confounded taxpayers.
Despite those challenges, it appears that taxpayers aren’t headed to the IRS website as often as they did last year. It’s a curious development. Are taxpayers not checking out the website because they really don’t need more information (unlikely) or because they’re getting their information elsewhere?
Getting timely—and dependable—information is critical for taxpayers and tax professionals. That’s true all over the world.
Currently, I’m in the Bloomberg offices in London, and I had a chat with my colleagues here about the popularity of cryptocurrency. I joked that I knew it had gone mainstream once my father inquired about picking up bitcoin. And yet, there’s been little formal guidance from the IRS. Yes, we know from 2014 guidance that cryptocurrency is generally treated as property and subject to capital gains treatment in the U.S. But what about mining? Staking? FBAR reporting? There’s still so much that isn’t clear. The IRS website doesn’t offer comprehensive resources on those issues and, as a result, many taxpayers may feel like they’re winging it. But you don’t have to.
One of the things that we do at Bloomberg Tax—and we do it very well—is keep you up to date with the latest developments in tax. We’re fortunate to have a great community of tax professionals willing to offer their insights into pressing issues—from crypto to the OECD-led initiative on global taxation. And this week, as always, our experts will help you stay informed with great commentary and insightful analysis on federal, state, and international tax issues. Our coverage also includes valuable commentary and podcasts, as well as covering tax moves across the globe. It’s all part of our commitment to making sure you never have to wing it: We’ve got you covered.
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Quick Numbers Trivia
As of April 1, 2022, the IRS had received fewer tax returns than it had for the same period in 2021. What was the percentage decline?
Answer at the bottom.
Our Roundup
This week, our experts touched on a wide range of topics, from working abroad to escheat and cryptocurrency. For a look at what’s making news, here’s our roundup.
Global Economies
The news out of Ukraine has affected the entire world. And as countries respond with aid, it raises interesting questions about tax residency—including for U.S. military contractors and employees of such contractors who perform work abroad. In those cases, the status of forces agreement, or SOFA, will often be determinative, says Gunster, Yoakley & Stewart, P.A.'s Alan S. Lederman in U.S. Troop Buildup Calls Polish SOFA to Tax Practitioners’ Attention.
The ambitious schedule of the OECD-led Inclusive Framework on BEPS for implementing the two-pillar agreement from October 2021 is already slipping, leading some to question the viability of the overall project. In Implementation of GloBE Rules: A Sensible Safe Harbor Is Needed, Jeff VanderWolk of Squire Patton Boggs discusses the importance of a sensible and straightforward safe harbor for the Pillar Two regime.
Cross-border purchasing is here to stay, says Digital River’s Adam Coyle in Brands Must Leverage Partners to Tap Into Cross-Border Markets. Overcoming common challenges to cross-border e-commerce will help keep customer satisfaction high, tax burden simple, and international success achievable.
For multinational companies that will be affected by OECD’s BEPS framework, hockey legend Wayne Gretzky’s advice to “skate to where the puck is going to be” with respect to understanding the impacts of effective tax rates in various jurisdictions is pretty apt, says Valuation Research Corporation’s Tom Gottfried in Multinationals Should Skate Toward Release of BEPS Model Rules.
Issuing false invoices may occur to hide irregular purchases, money laundering operations, corruption in public tenders, payment of bribes, financial support for organized crime and terrorism—and tax evasion. In How Tax Administrations Worldwide Can Combat False Invoices, Alfredo Collosa discusses the problem of false invoicing, considers and evaluates the various solutions used by tax administrations worldwide to tackle this issue, and looks at potential solutions going forward.
Cryptocurrency
Last month, the overall market capitalization of cryptocurrency crossed the $2 trillion mark, making it clear that it’s here to stay. As the popularity of cryptocurrency rises, it has drastically outpaced the speed of state and federal agencies in studying and regulating it. In Looking at Unclaimed Property Issues in Cryptocurrency, Alston & Bird’s Michael Giovannini discusses recent and pending bills designed to subject cryptocurrency to state unclaimed property laws.
Countries worldwide are considering how to react to cryptocurrency, including how best to tax it. In World of Cryptocurrency Continues to Gather Global Momentum, Anshu Khanna of Nangia Andersen looks at recent developments in cryptocurrencies, including the law recently enacted in the United Arab Emirates suggests key areas that the proposed global framework for crypto assets should cover.
U.S. Tax Developments
Calendar-year taxpayers are faced with the reality that research and experimental, or R&E, expenditures, are no longer deductible but must be capitalized and amortized under IRC Section 174. While the House version of the Build Back Better Act would have delayed this development for four years, the bill has not received enough support in the Senate. In IRC Section 174: A Tax Department’s Experience and a Wish List, Maxar Technologies’ Betty Mak highlights some practical challenges taxpayers face in complying with Section 174 in early 2022.
President Joe Biden’s tax proposal to impose a minimum tax on super-high-net-worth individuals may seem simple, equitable, and popular with the public, writes EisnerAmper’s Richard J. Shapiro, but it’s complicated and fraught with difficulties. In Taxing the Wealthy: Is Biden’s Minimum Tax the Answer?, Shapiro looks at current law and how it would be impacted by the proposal.
Commentary
Decentralized finance, or DeFi, has gotten increasingly popular, but the lack of regulation has provided numerous opportunities for abuse. In With Decentralized Finance and Sanctions Come Crypto Regulation, MyChargeBack’s Michael B. Cohen looks at the challenges DeFi and cryptocurrency pose for the government.
A Closer Look
Changing settlement language sometimes doubles what a plaintiff keeps without any cost to defendants, and language can reduce taxable income, increase deductions, defer tax liability, and even secure a tax subsidy. But tax strategies can fail when defendants object. In the latest edition of “A Closer Look,” Lane Powell PC’s Jeremy Babener; Don Engels of Ringler Associates, Inc., and the Settlement Tax Group; and C&L Value Advisors’ Deborah Hresko share the importance of plaintiff tax strategies, defendants’ role in effecting those strategies, why defendants object, and how to overcome their objections.
Columnists
With just a few days until Tax Day, tensions are rising for some taxpayers. Deadlines are often intimidating, but external factors, including inflation and a potential uptick in pandemic numbers, are reminders that while tax season is officially back to “normal,” some families face challenges. Here are some tips to help you get through the day—and rest easy.
Listen In
The quick pace of consultations into complex new rules from the OECD is keeping tax practitioners busy. The Paris-based institution has already in 2022 launched four consultations into the “building blocks” of a new international tax system. Pillar One of the plan would reallocate a sliver of the profits of the largest and most profitable businesses to countries where they make sales. Pillar Two would establish a 15% global minimum tax. Tim Sarson Partner, U.K. head of tax policy at KPMG U.K., talks with Bloomberg Tax’s Hamza Ali about the emerging rules in the latest episode of Talking Tax.
Watch
Cryptocurrency and NFTs continue to rise in popularity in the U.S., but many people are still confused about how they are taxed. In this video, Lisa Zarlenga, a partner at Steptoe & Johnson who specializes in tax policy and cryptocurrency, lays out how different crypto transactions are taxed.
Student Writing Competition
Do you have an original take on current events and issues in tax practice and policy—but you’re not yet a tax professional? Our second annual tax writing competition is the perfect opportunity to show off your work: The competition is intended to highlight the very best of student writing. Our deadline is June 15, 2022.
Our Wish List
What’s on our Bloomberg Tax Insights wish list right now?
As April rolls on, we’re seeking cannabis pieces with a tax and accounting focus. We’re also looking for green initiatives/incentives, including sustainability reporting, renewable energy incentives, and carbon taxes.
For May, we’d love to see nonprofit pieces, including best practices for nonprofits and Form 990 updates. We’re also looking for smart takes on charitable giving incentives, donor-advised funds, donor privacy issues, and estate and gift planning techniques. And, of course, we’re interested in charity and government-related concepts like unrelated business income taxes (UBIT) and payments in lieu of tax (PILOT).
Our Insights articles—about 1,000 words—are written by tax professionals offering expert analysis on current issues in tax practice and policy, tax trends and topics, and tax and accounting firm practice and management.
If you have an interesting, never-published article for publication, we’d love to hear about it. You can contact our Insights team by email (TaxInsights@bloombergindustry.com).
Get Caught Up
It’s been a busy week in tax news from state capitals to D.C. Here are some of the stories you might have missed from our Bloomberg Tax news team:
- It isn’t clear when—or if—the Texas comptroller will align his office’s regulations on taxation of services with a recent, contradictory state Supreme Court ruling. But that shouldn’t stop taxpayers from following the court’s ruling, not the regulations, tax professionals said.
- A group of 13 House Republicans wants the IRS to waive failure-to-pay and failure-to-file penalties for taxpayers who make a good faith effort to comply with the July 1 re-implementation of the Superfund tax, an excise tax on chemicals directly tied to contamination at sites designated by the federal government as Superfund sites.
- Thousands of additional New York businesses may now be able to seize on a lucrative tax break after policymakers agreed to make a technical fix as part of a $220 billion budget deal signed into law by Gov. Kathy Hochul.
- Companies worldwide could collectively pay almost 14% more in corporate income taxes annually if a global tax accord is fully implemented, according to new estimates from the International Monetary Fund.
- The U.K. is still working on legislation aimed at making it simpler for companies to move their incorporation to the country.
*Note: Your Bloomberg Tax login will be required to access Tax News.
Spotlight
Our Spotlight series highlights the careers and lives of tax professionals across the globe. This week’s Spotlight is on Michael Wiener, a partner at Greenberg Glusker Fields Claman & Machtinger LLP in Los Angeles.
Career Moves
Kathleen Saunders Gregor has joined Skadden, Arps, Slate, Meagher & Flom LLP as a partner in the tax controversy and litigation group in Boston.
Lourenco Miranda has joined EisnerAmper as managing director of environmental, social, governance.
Hilary Lefko has joined Norton Rose Fulbright as a renewable energy tax partner in its Washington, D.C. office.
If you are changing jobs or being promoted, let us know. You can email your submission to TaxMoves@bloombergindustry.com for consideration.
Quick Numbers Answer
The IRS has received 91,260,000 individual federal income tax returns in 2022, compared to 93,202,000 returns over the same period in 2021, a 2.1% decline.
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