Week in Insights: The Weather Outside is Frightful

As I write this, the forecasters are calling for three to five inches of snow in southeastern Pennsylvania. The kids are predictably excited—as am I. A former southerner, I still haven’t grown weary of snow, even when it disrupts my day.

But there are limits for even the most enthusiastic snow fans.

A snowstorm blew through the D.C. area on Monday morning, wreaking havoc on roads and bringing down power lines. Motorists, including Virginia Senator Tim Kaine, were stranded Monday night into Tuesday.

Amtrak trains were also stopped when snow-heavy trees fell onto the tracks, and flights were delayed and canceled all along the east coast.



By the time the skies had cleared, up to 11 inches of snow had dumped on the area.

The U.S. Capitol in Washington, D.C., U.S., on Tuesday, Jan. 4, 2022.

Photographer: Stefani Reynolds/Bloomberg via Getty Images

Snow fell in other areas from Alabama to Pennsylvania, resulting in work stoppages and power outages. New Jersey Gov. Phil Murphy (D) called a state of emergency for several counties—with photos from friends showing snow-covered porches just one day after temps had climbed into the 60s.

Variations on the storm had been in the forecast for several days, but I don’t know of anyone who expected that particular outcome.

The reality is that we like certainty. It’s as true when it comes to the weather as in business and tax.

Unpredictability can be a liability on the roads and in the tax world. It’s essential to make sense of what could be on the way, and plan accordingly. Fortunately, this week, as always, our experts have the latest federal, state, and international tax analysis to help you stay on top of the latest developments—so that you don’t get stuck out in the cold.

The Exchange… It’s where great ideas intersect.

—Kelly Phillips Erb

Quick Numbers Trivia

Speaking of dicey weather, a Treasury Inspector General for Tax Administration—or TIGTA—review of Tax Year 2019 tax returns identified 34,699 tax returns that claimed a casualty and theft loss deduction. How many of those returns either had a FEMA number that did not match the FEMA number on the taxpayer’s tax account, had an invalid FEMA number, or were missing the FEMA number?
Answer at the bottom.

Our Roundup

This week, our experts touched on a wide range of topics, from new year tax updates to non-profits. For a look at what’s making news, here’s our (snow) packed roundup:

Change has been brisk in the U.K. following Brexit. In Brexit in 2022—What’s Next for VAT and Customs?, Robert Marchant of Crowe reviews the major changes in value-added tax and customs compliance obligations introduced over the past year in the U.K. due to Brexit and considers further changes that lie ahead in 2022.

The unpredictability of this week’s weather has been nothing compared to the pandemic. Covid has reshaped the world, including the ways that we shop. How we choose our goods and services may have tax consequences. In The Trends Shaping Sales Tax Compliance and Controversy in 2022, Liz Armbruester of Avalara shares a few of the top trends that will shape sales tax in 2022.

New tax measures are blowing in to Mexico in the new year. In Mexico’s 2022 Tax Reform, Jorge Correa and Diego Rico of Creel, García-Cuéllar, Aiza y Enríquez S.C. explain the recent tax reforms in Mexico—which include several provisions relating to corporate reorganization, transfer pricing requirements, and reporting obligations for companies—and they review the potential impact for taxpayers.

The great resignation has impacted law firms across the country, leaving many out in the cold. In Legal Hiring Lessons Learned During the Pandemic, Michelle Foster, founder and managing partner of the Foster Group, a boutique legal recruiting company, shares how her company and legal recruiters adapted to the changing legal industry and workplace over the last year.

A man walks past Puerta de Alcala amid a heavy snowfall in Madrid on Jan. 9, 2021.

Photographer: GABRIEL BOUYS/AFP via Getty Images

Theories about the timing and scope of the proposed global tax agreement have been swirling like snowflakes—and for good reason. On Dec. 20, 2021, the OECD issued Model Rules for the 15% global minimum tax on large multinational businesses. Two days later, the European Commission released a draft EU Directive incorporating the same rules. In Global Minimum Taxation for Large Multinationals, Jeff VanderWolk of Squire Patton Boggs discusses the rules and some of the many issues they raise.

Taxpayers don’t always plan ahead—leaving some tax practitioners to dig them out. That can be especially difficult in situations like expatriation, where timing is critical. In Timing Considerations for Expatriation, Tax Compliance and Form 8854, Virginia La Torre Jeker looks at challenges taxpayers face if they act first and ask questions later.

Revenue challenges have resulted in frosty relationships between some municipalities and non-profits. In many US cities, large non-profit hospitals, health centers, universities, and colleges—"meds and eds"—pay little, if any, property taxes. In “Non-Charitable” Non-Profit Hospital Ordered to Start Paying Property Taxes, Bill Kennedy and Jared Johnson of White and Williams, LLP, warn that litigation is now challenging their non-profit nature.

Opinion and Commentary

The IRS proposal to gain more access to banking information received an icy reception. In Should the IRS Be Trusted With Your Data?, Stephen L. Carter explains his worries about privacy following a scathing new report from the U.S. Treasury Department’s Inspector General for Tax Administration about the ability of the IRS to protect data.

A snow man is pictured in the Tuileries garden are pictured on Feb. 7, 2018 following heavy snowfall in Paris.

Photographer: THOMAS SAMSON/AFP via Getty Images

Columnists & Contributors

Remember how, when you were a kid, you’d spend a great deal of time suiting up to go outside and play in the snow, only to find out—once you were out the door—that it had already warmed up? And you needed to change again? The tax world can feel just like that sometimes—and we expect even more change in 2022.

Listen In

Labor shortages have snowballed since the pandemic, resulting in potential problems for accounting firms—issues that can’t necessarily be solved with higher salaries and bonuses. On this week’s episode of Talking Tax, Bloomberg Tax reporter Amanda Iacone speaks with three accountants about what they expect will be driving their profession in 2022. In addition to the ‘great resignation’, they also talk about complying with new ESG reporting rules and keeping their eye out for new regulations from the Financial Accounting Standards Board.

Sales tax winds can be fickle. On a recent episode of the Taxgirl podcast, I talked with Avalara’s Liz Armbruester about sales tax developments and challenges since the start of the pandemic and what that could mean for the future.

Spotlight

Our Spotlight series highlights the careers and lives of tax professionals across the globe. This week’s Spotlight is on Ian Comisky, a partner at the Philadelphia office of Fox Rothschild LLP. Comisky has over 35 years of experience representing corporations and individuals in civil and criminal tax litigation, white-collar criminal defense, and complex corporate and commercial disputes.

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:

• The Federal Communications Commission’s universal service contribution factor is an illegal delegation of congressional taxing authority to a private company, petitioners alleged in the Fifth Circuit.
• The U.S. Treasury Department stuck by its rule that states and cities can’t use pandemic relief aid to pay down debt.
• A minister in the U.K. government urged the Prime Minister Boris Johnson to ditch a 12-billion-pound ($16 billion) rise in national insurance amid concerns about the rising cost of living.

*Note: Your Bloomberg Tax login will be required to access Tax News.

Be Noticed

At Bloomberg Law, we’re proud of our continuing efforts to highlight the next generation of leaders in the legal profession.

We’re thrilled to announce our call for 2022 nominations for “They’ve Got Next: The 40 Under 40,” Bloomberg Law’s special report recognizing the accomplishments of sterling young lawyers nationwide.

Here are nomination criteria and submission instructions.

Quick Numbers Answer

TIGTA found that 12,075 of those returns—or 35%—either had a FEMA number that did not match the FEMA number on the taxpayer’s tax account, had an invalid FEMA number, or were missing the FEMA number. That corresponds to $309 million in deductions, or approximately $41.3 million in income tax underpayments.

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What Did You Think?

Your feedback and suggestions are important to us, so don’t hesitate to reach out on social or email me directly at kerb@bloombergindustry.com.