There may be errors in spelling, grammar, and accuracy in this machine-generated transcript.
Roger Harris: Hello again everyone! It's time for another federal update update podcast. I can learn how to talk. It'll work better doing a podcast. And Annie Schwab with Roger Harris. Annie. Welcome back.
Annie Schwab: Hey, Roger. How are you doing today?
Roger Harris: I'm doing well. We're wrapping up 2024 and rolling into 2025. And [00:00:30] we're going to talk about some things that are kind of tax related up in the air. A lot of craziness going on here as we're wrapping up the end of the year. I will say one thing and then I'll let Annie kick it off. We are. It's important that you know that we're recording this on December the 9th. So depending on when this airs and when you're listening, there could be some things that we touch on that while we say we don't know what's going to happen or here's what we're saying today. Uh, my [00:01:00] sense is some of this is going to change from the time we record this till the time you listen to it. So be careful on and we'll make it clear when we're in those topics that you don't just assume what you're hearing, particularly if you listen to it next year, because it might be too late. But depending on when you listen to it, there's some of these things. And we'll try to point out when we're into an area where the date is important, that you might want to check and make sure that you're getting the most current information. So with that one, Andy, why don't you kick us off, tell us what we're talking about, [00:01:30] and let's do the easy stuff first.
Annie Schwab: Let's do for sure. So 2024 is nearly over. And so we're looking at you know, where do we sit. Where do we stand as we close out 2024 and start working in 2025. As far as tax season goes. So um, usually so we don't have the exact start date of the 2025 tax season. Um, it's likely to be in late January. That tends to be, you know, when when the this previous years, um, [00:02:00] you know, have started. Um, the tax deadline falls on a Tuesday this year. So April 15th of 2025. And as always, the fastest and quickest way to get your tax return processed and your refund to you or your clients is is by e-filing. We have seen the IRS stick to that 21 days. Um, most refunds are issued within the 21 days. I don't expect it to get any faster in all honesty, but for three weeks is three weeks. Um, so we'll [00:02:30] just stick with that.
Roger Harris: Yeah. And they'll announce the start date. What they actually do. I don't know if everybody knows this. They they take some of the bigger individual tax providers, the H&R block, Jackson Hewitt's. They allow them to put some files into the queue and test their system before they open it up to everybody. So once they know those dates, we'll know they don't get ahead of you for refunds. Don't complain that H&R block clients will get their refunds before yours. That won't happen. It's basically the moving back and forth of data, but they get processed at [00:03:00] the same time everybody else does. So hopefully we'll know in a few weeks when that start date is. And I'm sure your tax software companies will update you as well.
Annie Schwab: Right, right. And sometimes it does depend on especially at the state level. You know the federal usually the tax softwares get that out pretty quickly. But sometimes you can be waiting several weeks for for the states to finalize forms, um, do updates, those kinds of things. So yeah.
Roger Harris: And if you're in a state that has some what is it? Massachusetts [00:03:30] has Patriots Day or something. So you may have a different deadline or in some states. So and some states have statutory deadlines. So when we say April 15th we're talking federal.
Annie Schwab: And in all honesty that's true. And in all honesty there have been so many, um, 20, 23 filings that have been extended due to natural disasters. I wouldn't be surprised if you if you're in one of those states, you may have multiple returns coming due really quick after each [00:04:00] other. So keep an eye on, keep an eye on that. Hopefully we are done with storms and natural disasters and we won't see any additional.
Roger Harris: Let's hope I know, let's hope, um, tax rates change a little bit every year. Yeah. They're indexed. Um, I mean.
Annie Schwab: 10% is the lowest that you can, you know, get um, 37% is going to be our highest rate for singles. That's about 610,000. Married filing [00:04:30] joint is about 730,000 or more. So, um, you know, somewhere in there between 10 and 37. Um, I feel like we had brackets of only, like 3 or 4 different levels, and now we're up to seven. So, um, seven brackets.
Roger Harris: And this is all based on the Tax Cuts and Jobs Act, which is we've got another year unless Congress acts sooner. So um, and that's why there's not a lot of real new law this year. There's some things we'll [00:05:00] talk about, but get ready for next year. Yeah.
Annie Schwab: Same thing. Capital gains rates. The three brackets. You've got your zero. You've got your 15 and your 20. Um not not much change. Um, most of most of the time we are looking at, you know, our standard deductions just being indexed for inflation. We do have that standard deduction for 2020 for single is going to be a 14.6 married filing joint 29 two had a household 21 nine. Um and as a reminder [00:05:30] we no longer have that personal exemption. So that personal exemption for 2024 remains at zero. And that was part of the Tax Cuts and Jobs Act. Um, that eliminated that as well.
Roger Harris: And, you know, more and more people are taking the standard deduction now instead of itemizing. Um, when you have the salt cap and people, as they get older and their houses doesn't have a bunch of interest on it unless you donate a lot of money. So standard deduction was coming more and more relevant [00:06:00] to to more and more taxpayers.
Annie Schwab: Absolutely. And that Salt deduction is definitely something that is up in the air as we move forward in future years. Um, a lot of lot of talk about that. So yeah.
Roger Harris: I would expect that to change there. In fact, there has been some lawmakers that flat said they won't they won't participate in any type of tax discussion unless the Salt deduction changes. And guess what states those people live in.
Annie Schwab: The high the high state tax states. I can I can guess that one. Yeah. [00:06:30] Um, and you know, we've always got the earned income tax credit, child tax credit, those those are basically just in um adjusted for inflation. I don't really see much change there. Again. And also like for gifts, um, for 2020 for the first 18,000 can be excluded. Um, it was 17,000 last year. So minor adjustments, Nothing new, so to say. Nothing. Um. You know. Well, I shouldn't say nothing new. We're going to go over a couple [00:07:00] of new things. But as far as the earned income credit, child tax credit, pretty much the same.
Roger Harris: Yeah, a lot of the basic stuff is the same. There's been some tinkering on the edges of certain things, but because of the whole law set to expire, no one has really been able to get any serious activity on changing anything because they're going to have to turn right around and take the whole thing back on, uh, soon after the January 20th.
Annie Schwab: Yeah, just a [00:07:30] heads up, I guess. Um, it's all I hope everyone's using tax organizers to collect data from their clients. Um, we encourage, you know, all those types of questions like, you know, common as well as unforeseen life events, marriage, kids, unemployment, changing jobs, moving states, all of those types of things. Maybe. Maybe starting your own business from being a W-2 employee. All of those will affect tax withholdings, estimated [00:08:00] tax payments. So having that questionnaire just to kind of ballpark, um, what has changed from year to year with your clients is always really helpful as you get through tax season. And then also look at, you know, tax planning for them for the years ahead. Yeah.
Roger Harris: One big thing with withholdings, this happens almost every year with some client we have. They start their own business for the first time. And they've spent their entire life working for someone and having taxes [00:08:30] withheld. And all of a sudden they're switching over to a scenario. Sometimes it can be an influencer and the type of entity. Do they want to continue to draw W-2 and does that influence their entity? But you really need to take time with people who start the business for the first time, because just how they pay their taxes is radically different to them. Because think about it. If you've worked 20 years getting a W2 and your taxes was withheld and all of a sudden you go start your own business and nothing's being withheld, it [00:09:00] can be quite a shock. So it's withholding seems pretty basic. But for that first time business owner, it's tricky. It's a dramatic change in, you know, from estimated taxes to whether they are going to draw a salary and have a combination of estimated taxes and withholdings. Uh, don't miss the opportunity to have a good opportunity for a good, serious discussion about just how their taxes get paid, if this is their first business venture. And and we're seeing more and more people, uh, in this economy. And I [00:09:30] hopeful we'll see even more going forward of people going out and starting their own business. And if you've ever dealt with a first time business owner, you realize how shocking it is. It's not as simple as they think.
Annie Schwab: No, it's it ranges all the way from record keeping to what can be deducted to when you have to make estimated tax payments. You know, one of the questions we always get is, oh my gosh, all these years, you know, I got these big refunds. I was getting all this money back. I didn't have to worry about it. And when you change the structure, [00:10:00] um, a lot of times that's not going to be the case.
Roger Harris: So particularly when it comes to Social Security versus self-employment tax. Yeah, right. You know, they really have you know, it's shocking to tell somebody that, you know, depending on your income level the between Social Security. Well self-employment tax to say it correctly. Federal withholding and state withholding. They may have to put 40 to $0.50 of every dollar aside of profit, uh, because they're catching up on paying both the employer and employee side plus federal [00:10:30] and state. That's that can be shocking and depressing at the same time for some people.
Annie Schwab: Yeah. For sure. Absolutely. Um, but, you know, here we are when you're listening to this 2025 and let's just say we've had an interesting previous year as far as election Action goes, um, up. I mean, up until the last minute. Unknown. Who was going to take over? How what that was going to mean? Um, Roger, you spend more time than [00:11:00] than most, um, in DC. What was what was your feeling towards, you know, approaching the election post-election post year end? Um, how are you feeling?
Roger Harris: Uh, I think I'm like everybody in DC. I think they were surprised at the magnitude of how the election turned out. I think most people felt like it could go either way. Yeah, but I'm not sure anyone thought that one party would would sweep it all, which the Republicans did. Right now they're they're [00:11:30] eating into their majority as they as the president, president elect begins to take members out of the House and put them in his cabinet. So, uh, it'd be interesting to see where that majority sits until they can get either appointed or runoffs or whatever they have to do. But either way, it's going to be slim in the House, whereas the Senate looks like it's going to be 5347, but Republicans are going to have significant control. That's going to change a lot of [00:12:00] the policies, a lot of the directions, particularly when it comes to tax. We'll talk about it when we talk about boy in a minute, you know, and things such as that. But it certainly speaks better to those of you that are fans of the Tax Cuts and Jobs Act. Yeah. Given that this was a President Trump, uh, initial program and kind of with odd things happening, he's back around when it expires, which was ten years after it was passed. But [00:12:30] as we mentioned earlier, there are people who are saying while they're supportive of the Tax Cuts and Jobs Act, they're not supportive of the $10,000, uh, Salt deduction.
Annie Schwab: Yeah. We if you watched any part of the election, you could definitely get the sense that, um, you know, if if Republicans are all supportive of the Tax Cuts and Jobs Act, but they have other ideas too. I mean, yeah, during the campaign, we heard, uh, you know, no tax on tips. [00:13:00] Um, now, I don't know how many people that would actually affect how many, you know, tipped workers are actually paying a lot of federal income tax. But that was, you know, something that was introduced during the campaign. Uh, I can't predict whether that will, you know, come to fruition or not. But, you know, there was also no tax on overtime. And overtime has been something that, um, did see some attention over the last couple of years. Um, so we'll maybe it's going to get more attention again. I don't know. [00:13:30] Um, social Security benefits. I remember hearing, you know, ending taxes on Social Security. Um, I don't know. We'll see. We'll see.
Roger Harris: And we won't know. One of the the challenges that Republicans particularly have had, that all of this has got to be put through the prism of Obviously, we all know our government's running huge deficits. We're spending a whole lot more than we're collecting. And yet all of these things raising the Salt deduction, not taxing tips, not taxing overtime, [00:14:00] not taxing Social Security cost a lot of money. There's a lot of tax revenue that will not be coming in. And there doesn't seem to be an appetite for allowing the deficit to just continue to grow and grow and grow. So if we get some of these things, what do we give back to help pay for it? Quite honestly, I've learned in my many, many years on this planet to not trust a lot of what I hear in a campaign from a promise standpoint. [00:14:30] Uh, I can't imagine we're going to not tax tips and overtime and Social Security because they're very expensive. And I'm old enough to remember when Social Security wasn't taxed. And then President Clinton is the one that actually introduced the bill to tax it. So it's going to be interesting to follow. But I can tell you this, if you get those things something else is going to.
Annie Schwab: You got to give.
Roger Harris: Something's got to give. And probably the only one that seems to have just a huge and we've already talked about it. Huge [00:15:00] constituency from both sides of the aisle is the salt tax. So but you'd be surprised how much money that cost just to take it from I don't think we'll go back to you can deduct it all. Maybe we'll see it go from 10 to.
Annie Schwab: 20 like a different cap. Yeah.
Roger Harris: A different cap or something like that. But you know, hey it's politics. Who knows.
Annie Schwab: Yeah. But like you said, now that the Republicans do have the control, I do think we'll see movement and things are going to get through. Um, because [00:15:30] because now they can. Yeah.
Roger Harris: I think there's a lot better chance that the Tax Cuts and Jobs Act framework sticks. Again, I.
Annie Schwab: Can see that the.
Roger Harris: Question is whether we're serious about deficit reduction. And part of that means raising revenue to help pay. You know, who knows. But again, we'll talk about Washington in a different light in a few minutes with some other things that's going on. But, um, it's going to be an interesting year. Uh, you could you should go ahead and start planning to schedule [00:16:00] your tax conferences for the end of the year, because we're going to be learning some, some new things for 2025 or 2026.
Annie Schwab: Yeah, a couple of little highlights. And then we'll kind of get to the to the fun stuff I guess. Um, as always, the IRS does shut down e-filing. They shut it down November 30th. And um, which impacts the 1040 filings. Business returns are not not impacted. Um, that will be lifted in January [00:16:30] right when tax season when kicks off tax season. So just keep a heads up for that. Especially if you're trying to file some late returns. Or maybe you're filing returns that were in disaster areas. Um, another thing that was announced just a few weeks ago, actually, um, it's the IRS is making it easier for taxpayers to protect their information and avoid refund delays. And one of the changes is that they will allow, um, duplicate [00:17:00] IP pins. So let's say, you know, think of dependance. For example, if one parent claims the child, the other one, whoever falls first, basically the second return had to be filed on paper and then you had to go back and forth. Um, so that's just, you know, one one particular, uh, change that they're making, they're encouraging everyone to go get an IP pin for security purposes. Um, it's not required, but encouraged. I mean, if you've been a victim of identity theft, then it is required, but otherwise [00:17:30] it's an optional, um, pin that does protect your identity. And they're saying now they will accept duplicate IP pins for dependents. So just a heads up.
Roger Harris: Select duplicate claims that. So if you haven't.
Annie Schwab: Right I guess claims not. Yeah.
Roger Harris: The two people claim the same dependent. If the primary taxpayer has an IP pin, they will go ahead and send them the money for the refund and then they'll hash it out. [00:18:00] Right. But if you don't, if that primary taxpayer doesn't have the IP pin, you're you're back in the old.
Annie Schwab: Way file by paper.
Roger Harris: And I mean this is good for taxpayers because they'll get the money. I'm not sure how good this is for the IRS, I guess. So to send the money out and then figure it out. But, uh, yeah. And it's also a way to encourage everyone because of all the problems of theft and scams and everything, for more people to have IP pins to, uh, for other reasons [00:18:30] than this.
Annie Schwab: But and in all honesty, it's very easy to get it does not take long. It's free. Um, so, you know, if your clients, if you have, you know, client base that is generally not having IP pens. I would definitely include it in your year end letter or with your organizer, or because it's there's no harm in doing it. There's no cost associated. There's no. But then as a tax practitioner, you got to make sure you get it so that you can file well.
Roger Harris: And there's one nice thing there if you this is where kind [00:19:00] of things tie together. You know, the IRS has put a big, big pitch out for people to have online accounts, right. If a taxpayer has an online account, they can go into that account and get their IP pin number if they don't. In fact, I don't even think those folks get a letter. They just put it in their account and you go there and you grab it. But so it's a way because I know the big problem was somebody has an IP pin, they forget about it or they throw the letter away. They don't know what it is. You try to file a return, it tells you you got to have an IP pin. [00:19:30] You go back to the taxpayer and they go, I don't know, I don't know where I got it. Now you can just go into your online account and get that number. So again this IP pin Pen benefit works really well, particularly if you have an online account. So more and more reasons to for people to have an online account.
Annie Schwab: Good point. Good point. Well Roger, we're back to 1099 reporting. Yeah I think we've talked about that for, I don't know, three years now. Every year.
Roger Harris: Well, it looks like we're going to talk about it for a while longer because [00:20:00] the IRS is kind of doing their own thing here. What was it, 5000 last year?
Annie Schwab: It was 5000 last year. And we're back in 2024. They're going to keep the 5000 threshold, although it was supposed to go to 600.
Roger Harris: So I think they didn't. They just come out I think they just came out maybe yesterday and said 2500 for this year.
Annie Schwab: 2025 is going to be 2500.
Roger Harris: 2525. Okay. Yeah. I knew they were coming. And then we go back to the law said 600. [00:20:30] So right there they're using their phase in to get it back to 600, in hopes that Congress will do something, Do.
Annie Schwab: Something about it. So 2024 is the 20. Is the 5000 2025. You moved down to the 2500, and then 2026 is slated to be the 600 threshold. So we're still going to have those 1099 being reported. Um, I, we did a podcast, um, about the 1099 K [00:21:00] in great detail last year. The FAQs for the 1099 KS are very specific. Actually, kudos to the IRS on on those. Um, they have specific examples with line items on the tax return. Um, helping people understand, you know, when they need to report, you know what, they sold something on marketplace or they got Venmo this for that. Um, so if if you're still kind of teetering around what to do with this, take a look at the FAQs. They're they're pretty [00:21:30] pretty informative.
Roger Harris: And just because the thresholds 5000 2500, whatever it is, companies can still issue 1099 KS. And some people may have already set up to do it. So that doesn't mean your client can't receive a 1099 K. They just may not have to. So if you don't remember how we're supposed to report it, you know, depending on what it is, whether it's a household good, whether they've lost money. The IRS was very good in talking about how to report it and then offset it. So, yeah. Um, it's still worth asking [00:22:00] people because I know a lot of the companies because of the unknown. When are we going to be told what the threshold is? When are we going to be told? They may just go ahead and send them out anyhow. So yeah, it's possible some of your clients will get a 1099 K. That doesn't mean you can ignore it. No.
Annie Schwab: And that needs to be something that you either include on your organizer or you communicate. Um, because, you know, this is not going to be a form that some people have always received for tax season. So you don't want them to throw it away or ignore [00:22:30] it or think it was, you know, a scam or something like that. Um, for sure. For certain. Encourage your clients to make sure they retain those and get them to you.
Roger Harris: These items that are being reported have always been in air quotes taxable based on the law. It just now there's a form to document the amount. So in theory if you sold concert tickets for $5,000 last [00:23:00] year, this year you're supposed to report that anyhow. So don't confuse the 1099 reporting with the taxability of it now. Exactly. I don't think many people told you about it before there were 1099 KS, but that's why you say you got to watch for it, because this doesn't make it taxable or nontaxable. The getting the form only means the IRS knows about it.
Annie Schwab: And that it's reportable.
Roger Harris: Right? Yeah.
Annie Schwab: Or it could be reportable.
Roger Harris: Right.
Annie Schwab: All right. 1099 [00:23:30] K we're done with that one.
Roger Harris: Done with that.
Annie Schwab: Done with that. I did say there wasn't much new this year, but there is the clean vehicle credit. I believe we spoke about it on a previous podcast as well, but there is a form 8936, which is where you go to report using the time of sale, that document that you get from the dealership and you will report on the 89, 36 the transaction. So remember [00:24:00] there were you can either reduce the the sales price of the vehicle at the time of purchase, or you can take the credit on your tax return, assuming you fall into these thresholds of qualifying. So that I think is going to be something again, very organizer. Um, worthy. You know, did you purchase a clean vehicle this year? Did you get a reduction in the the purchase price? Do you have the time of sale report that was [00:24:30] supposed to be furnished to you by the dealership? Um, and sort of asking those questions and starting to train the clients on, you know, what does this mean? What do I need from you? How does this reporting go? Um. Anything more? I'm trying to.
Roger Harris: Think. The only thing that you want to be careful of when it comes to, you know, communicating with clients, uh, you may have a client say, well, I leased a vehicle and got the credit.
Annie Schwab: Oh, yeah.
Roger Harris: No, no. They didn't. Well, they may have gotten their payment reduced [00:25:00] by the amount of the credit, but that credit stayed at the dealership. So, uh, if you're not familiar with this credit and how leased vehicles play in, it's something that you might want to pay attention to. It's a planning activity for people who either have too much income or whatever the case may be, and wouldn't qualify for it. If the dealer is willing to pass it on, they can lease that car, get it in the form of reduced lease [00:25:30] payments to offset the fact that the dealer got the credit. So tell your client to go in and negotiate with the dealer to give them the credit, just like they would have gotten had they bought it if they were eligible, but do it in the form of lease payments. But the credit will stay at the dealer. So someone who tries to tell you they leased a car and they probably got the payment reduced by the credit, but that doesn't mean they get the credit. They didn't. They just got to reduce the lease payments. So there's actually some [00:26:00] what this is how Washington and taxes work. Uh, the reason that loophole is there is because it was it wasn't an accident. Sometimes things show up as loopholes by accident. Nobody thought about it. It just doesn't. Somebody wakes up and goes, well, how did we let that go? This one was lobbied for by guess who? The Automobile Dealers Association. So this is a way for them to be able to lease expensive cars to high income people. And they get the reduction, they get the credit, the government [00:26:30] to pay them, and then they lower the lease payments to the customer and everybody wins. And that's why we have deficits.
Annie Schwab: Well, and keep in mind there the credit, the amount of the credit could depend on also when the vehicle was placed in a service. So the max credit is 7500. There's a partial credit for 3750. So you know, if as you're talking to your clients, make sure that you get sort of the understanding of what happened when you purchased this. You know, is it a lease? Is it a true purchase? [00:27:00] Did you qualify. And you can qualify based on the current year or the year before? For AGI purposes. And so there's a there's a couple of sticky little things just to keep in mind. So like I said great question on an organizer as a red flag. So that you if your client checks. Yes I did this. So you can kind of dive into it and make sure nothing they're not missing the credit obviously. Right. But also exactly.
Roger Harris: And tell them if they really want this credit, they better move quickly because the new administration has said they're taking [00:27:30] it away. So now whether that will happen or not, I don't know.
Annie Schwab: But maybe it's.
Roger Harris: Possible that this credit may may go away, may go away again. That would provide revenue for something else. Because in the budget, this credit is there as an expenditure that increases the deficit. So this is something that the Republicans could say, well, we'll take this back and increase. I don't know how much the dollars are compared to salt cap or something like that, but. [00:28:00]
Annie Schwab: But it's negotiable.
Roger Harris: And if it goes away, it produces some revenue to allow some other deduction or credit to stay or get increased. So you have to take those comments with a little seriousness though. Who knows.
Annie Schwab: You never know.
Roger Harris: You never know.
Annie Schwab: All right Roger, it wouldn't be a podcast. It wouldn't be one of our podcasts, let's say if we didn't mention irk the employee retention or employee retention credit. [00:28:30] Um, kind of kind of feel like I should just be calling this the never ending saga or, I don't know, it's like it's like a bad soap opera that just keeps coming up.
Roger Harris: Um, and just keeps it just keeps getting stranger and stranger and stranger and. Andy, why don't you. We had, uh, John Mceleney, who is the IRS executive in charge of IRC, come speak to our great group at our tax conference. Really great guy, smart guy. And, [00:29:00] um, why don't you talk a little bit about what he said, and then I'll. I'll talk about, like I said, some of this stuff you can't make up, but, uh, yeah. Something impacting the IRS commissioner and IRC.
Annie Schwab: Yeah. This is kind of. This is good. Um, so the the IRC, they're still processing claims. Um, they're not going too fast. They're going faster than they used to be, so to say, um, we saw for a while they were processing claims that were pretty clear [00:29:30] cut sending out, sending out money. Then they were sort of identifying the ones that were blatantly fraudulent. You know, you weren't in business or you didn't have employees or something like that. So then they've been trying to work this middle ground. So there was a pause in processing, which is now they're back processing. There was a voluntary disclosure program that we spoke about. That program has has ended. We are seeing these kind of letters go out. They're called 105 [00:30:00] C letters. Basically it's a disallowance letter. But in it it says, you know, based on what we have, we think that this your IRC should be disallowed. But if you want to respond back and explain to us with supporting documentation why we should process this claim, you can do so. And on the IRS website, there's a list of kind of tips ways suggestions to respond to the letters to hopefully get [00:30:30] what you need to the IRS so that they can reevaluate. Unfortunately, we don't know how long the reevaluation plan will be. Um, we know we're still waiting on guidance as it relates to the statute of limitations. Uh, I know we were we've talked about protective claims. We've encouraged some of our offices to do that. So it's not we still don't have all the answers, which is quite aggravating and discouraging. And, um, if you think about it, there are taxpayers who are still waiting [00:31:00] for their money years later. Um, so I don't know. Roger, what else do you have on that?
Roger Harris: A couple of things before I kind of deviate off of this to talk about something else that's related to it. Number one, pay very. Go to the website and pay very close attention to the 105 C part of the pages. Because if you for example, if they said we don't think you qualify due to gross receipts, don't just write them back and said yes, I do. It's very where it's going to tell you exactly what you need to submit. [00:31:30] And and if you submit the proper documentation, that claim can still be paid. So make sure you pay attention to how to respond to that. Um, again, the whole issue of statute of limitations. John Mceleney was at our tax conference who was the executive in charge? And in some ways, I felt sorry for him because he knew everyone wanted to know about what to do about amending returns and the statute of limitations issues. And, and, [00:32:00] and he had hoped and thought he would have those answers by the time he came. But it's out of his hands. This is this is chief counsel's the legal arm of the IRS, and they have yet to issue guidance. So I think most people are sitting around not amending. This is, again amending the individual tax return to reduce the wage expense, you know, uh, for the amount paid and statutes have run out and so should [00:32:30] you amend and make them pay, even though technically the statute has run out. He keeps saying he's hoping to get some guidance on that. You know, in the near future. But as of the recording of this, and I'll remind you, we're recording this on December the 9th. So, so as of today, there has been nothing out of chief counsel on how they're going to resolve and what guidance they're going to give us on amending returns. So that's that's an outstanding issue that we all need [00:33:00] answers for. Again, they are processing claims. Most of the I mean, you can still withdraw a claim, but it's too late for any of the voluntary programs to to get the benefit of either the 20 or 15% discount.
Annie Schwab: And in that in our tax conference when John was up there, I mean, we had many, many of our office owners asking questions and really trying to push him to see if they could get some answers, you know, anywhere from, you know, the letter said, you know, I got the money, but it's not the amount [00:33:30] that I thought I was getting. It was more or less. Or I wrote a response letter for a client whose claim was disallowed. And we've heard nothing. Like, when am I going to hear something? When should I be worried that they didn't get it or something like that? So he he tried really hard to answer the best he could, but I do feel bad for him. I think his hands are tied. Just kind of waiting on the IRS to provide some.
Roger Harris: Yeah, he's waiting on chief counsel. But again, if you get one of those 105 C letters and you believe [00:34:00] your client was eligible for the claim, go to that part of the IRS website. It'll tell you exactly what to do and how to respond to it. He couldn't tell us. A nanny mentioned it. He can't tell us how quickly they'll process your response and get you paid if you're right. But at least if you follow the rules on that page, um, you should get your money. Yeah.
Annie Schwab: If you go to the IRS website in the top right corner, there's like a button where you can search. If you type in 100 and 5-C, [00:34:30] as in Cat, it'll, it'll bring you to that page and it and it has suggestions for what to attach. You know, if you got a pptp loan or any of those kinds of things. So the what they're saying is the more detail, the more support, the better off you are at getting it turned around quickly and approved.
Roger Harris: Right now, most of you well, maybe you don't know this. I shouldn't assume you do. But, uh, since Commissioner Werfel has been in office, [00:35:00] the IRC program has haunted the IRS forever. Um, and he has worked with people like John and other executives at IRS to try and find ways to to mitigate the damage to the government and be fair to small business owners. I think he's done an excellent job. I think he's a great commissioner, However, despite having a five year term as IRS commissioner that I believe runs [00:35:30] until October, November of 27, I think is I think that's.
Annie Schwab: What he said when. Yeah.
Roger Harris: President elect Trump has nominated someone to take his place. Now, historically, first of all, the president has the authority to fire anybody. And he's done the same thing with the FBI director, who also has a term that has years. He's nominated someone to take the FBI director's place. The IRS commissioner serves a five year term. And [00:36:00] Trump's first term, he inherited a commissioner. He let that term expire. He nominated a gentleman by the name of Charles Reddick, who got approved by the Senate, finished up the Trump term, moved into the Biden term. He was allowed to serve out his five year term. And President Biden, then nominated in the Senate, approved Commissioner Werfel. So the first thing that we would have to assume is that if President Trump or President elect Trump has nominated [00:36:30] someone to replace Commissioner Werfel, that he intends to. If and when this gentleman gets confirmed, get rid of Commissioner Werfel and replace him with his nominee, even though his.
Annie Schwab: Terms not out.
Roger Harris: Even though his terms not out. Right. All of which he has the right to do. Here's my concern. Let me explain. If you haven't heard, here is who has been nominated for the new commissioner. He is a ex-congressman from Missouri. Uh, Billy [00:37:00] Long, I believe. And correct me, I think that's. I got it right. Billy Long. Um, prior to serving in Congress, he was an auctioneer, and he ran an auctioneer company. He served in Congress for about 10 to 12 years. He never served on a committee that, uh, had anything to do with the IRS or taxes. Now, experience. He [00:37:30] co-sponsored and it can be thousands of co-sponsors. There wasn't because the bill didn't pass. He co-sponsored a bill to abolish the IRS while he was in Congress. And when he left conference, he went to work for a firm that promoted the employee retention credit. And some of the quotes were basically your CPA. If they're telling you you're not qualified, they don't know what they're doing, come [00:38:00] to us. So what we have now potentially is a a nominated new commissioner of the IRS, who has no formal training in tax law or accounting, never served on a committee that, uh, had anything to do with taxes or the IRS co-sponsored a bill to eliminate the IRS and work for a company that I don't know the company. I don't know that they're an IRC mill, but at least they [00:38:30] promoted the employee retention credit. So it seems like a very strange type of person to be nominated to replace a commissioner that I actually think has done a pretty good job.
Annie Schwab: Yeah, I do too.
Roger Harris: Does that mean he will be confirmed? Does that mean if he is, he will. I heard from someone in DC saying it's not a done deal, whatever that means. So but it's a very interesting it concerns me as a practitioner who believes [00:39:00] that while we have reasons to complain about the IRS, they are an organization that is necessary. We're going to have to have the police to catch people who don't pay their taxes. We need someone to help issue guidance when new laws gets passed. I mean, the idea that we can just eliminate the IRS would create a wild, wild West out there of nobody paying taxes because nobody can catch them. So I, I personally this is me speaking personally. I [00:39:30] hope that this does not come to fruition. I hope they allow Commissioner Werfel to serve out the remainder of his term. I think he's a good commissioner. I think he's got the IRS heading in the right direction. This does put in jeopardy some IRS funding. You know, we're still hearing about 84,000 armed agents that I think all of us realize that's not true, but it's concerning when you see someone like, uh, the congressman get nominated for a position [00:40:00] at the IRS whose only real IRS experience is to advocate for its abolishment or to participate in a program that has created huge headaches for the IRS.
Annie Schwab: It's kind of scary.
Roger Harris: That's my opinion. I'm not speaking for anybody other than myself, but it could have a dramatic impact on how we deal with the IRS going forward, because I do think we're probably going to see some attempt to, again, going back [00:40:30] to paying for things, taking some money from the IRS to pay for something else. And I'm sure every government agency wastes money. I'm not saying that they can't give up some money. Right. But do not, you know, one of the problems that got us into the mess we're in is they were strapped for money for so many years, and now they're trying to catch up. I'm not smart enough to know what's the right amount, but give them what they need to do their job because we need them to do their job. And as practitioners, we deal every [00:41:00] day with, uh, the, the results of, uh, old technology and things such as that. So we'll see. So anyhow, we could have a new commissioner, but it's a strange nomination.
Annie Schwab: Nominee?
Roger Harris: Yeah. It's, to say the least. I would have to agree.
Annie Schwab: Maybe we'll cover that a little bit morein a future podcast.
Roger Harris: Yes. I just I just keep hoping that something is going to change, but I [00:41:30] don't know. I don't know.
Annie Schwab: Speaking of change, um.
Roger Harris: Beneficial owner or beneficial owner?
Annie Schwab: What was it, the 3rd or 4th of December, I believe?
Roger Harris: Yes, again, let me remind you, we're recording this on December the 9th.
Annie Schwab: Right.
Roger Harris: When you listen to this, I hope, I hope that there is an update from what we're going to tell you, but a Texas court, uh, issued a preliminary [00:42:00] injunction banning the enforcement of the beneficial ownership reporting requirement, and it implied it covered the entire country. If you remember, if you've listened to our podcast, there was, I believe, an Alabama court case earlier. That was for a narrow group of very specific.
Annie Schwab: Yeah.
Roger Harris: And that did not apply to anyone other than the people that were party to that case. This court case applies to everyone. So [00:42:30] as we sit here today, there is no obligation to to report beneficial owners.
Annie Schwab: Which would have beenby January 1st
Roger Harris: January 1st. So again, 20 days from now, 21 days from now is the deadline. And right now a court has said, no, you don't have to do it now. Department of justice, Treasury, FinCEN, everybody has appealed the hearing or the ruling.
Annie Schwab: The ruling.
Roger Harris: Now, how [00:43:00] quickly will that be heard? Will it be a slam dunk? Will it be, uh, removed and if so.
Annie Schwab: Or just extended?
Roger Harris: Or it could be extended or you know, who knows. So we don't know today when and if this court ruling will go away. And we're rushing up to the deadline of December 31st. So I'll tell you what we have been telling our offices to do. And I believe [00:43:30] it's consistent with what AICPA suggested to their members, which is to continue to gather the information necessary to file the BOE form. But you're under no obligation today to file that form. Now, a client, you can voluntarily do it. You can voluntarily tell you to go ahead and do it, but you have no obligation. But we don't know how much time. If and when this injunction gets listed, we will have to actually file the form. So we don't need [00:44:00] to be running around trying to gather the information. We need to have that in our possession. So let's say and again I'm making these dates up. These are not anything. Let's say December 20th the court is overturned by the appeals court and the injunction is removed and FinCEN says, okay, you got ten days. Go catch up. That's going to be hard to do, particularly if you're out trying to gather information. I'm hoping that if they if this drags on much longer, [00:44:30] that FinCEN will come out and say, regardless of how this court ruling goes, we have to extend the statutory deadline to allow if and when we win in court, time to file these. But they haven't done that yet.
Annie Schwab: That's what I'm hoping for.
Roger Harris: They have not done this yet. There are two must pass bills in Congress that could carry from Congress's side an extension of the deadline. The first bill is a defense [00:45:00] bill, and it appears that it is not going to be passed. There was talk to attach an extension to that bill, but we got information today from our people in DC that it's not part of that bill. But there is discussion primarily on the Republican side, but not solely on the Republican side. There's one more bill they have to pass, which is to fund the government. And the people who tried to attach it to the defense bill are [00:45:30] trying to get a bipartisan bill. And if that were to happen, Congress could step in and delay it past December 31st, as far out as they want. I mean, they could theoretically repeal it. I don't think that would happen, but they could kick it down the road, which is what we have suggested, because we still have uncertainty as to guidance. We still have only about 25% of the businesses that have complied. And now we have a court case saying it's unconstitutional. It seems to me to make perfect sense at this point, to just pass the kick [00:46:00] the can down the road another 12 months, let the court cases settle, work on additional guidance and come back and revisit it. And if you already filed, you're good to go. So. But as of right now, it is not enforceable. So we just have to wait and see. Uh, how quickly during the holidays to an appeals court will hear the appeal and issue a ruling.
Annie Schwab: And we will be back.
Annie Schwab: With that information as soon as we hear it as soon as we hear.
Roger Harris: As soon as we hear [00:46:30] something. So remember December the 9th, Roger and Annie said, you don't have to do it right. We might have a different answer. Well, it could have changed while we're recording this podcast, but it could change tomorrow. It could change anytime in the future. We'll watch out for it. We'll let you know. You need to watch out for it. Because again, they could have the ruling overturned and keep the December 31st deadline. And we've got to be scrambling around to get it done.
Roger Harris: So we'll [00:47:00] see.
Annie Schwab: Tax practitioners put in a hard spot again.
Roger Harris: Yep yep.
Roger Harris: We're the ones that's, uh, stuck.
Annie Schwab: Exactly.
Roger Harris: Well that's the latest on that and some of that, we the stuff we got just before we started recording this podcast. So that is, as of this moment, the most current information there is.
Roger Harris: And we'll see what Happens
Roger Harris: So anything else we done.
Annie Schwab: I think I think we're done.
Annie Schwab: I think this is uh [00:47:30] I think this is good. I hope that everyone found it helpful. Um, like like we always say we will be back, um, in the next couple of weeks with additional information, and hopefully we'll have some answers to the questions that we didn't have today.
Roger Harris: Yeah.
Roger Harris: And Annie, I'll go back now to monitoring our phones and our emails for boy information, because you just never know when I think the the ruling came down at 530 or something one night and it's like, oh great. So we'll keep watching for it.
Annie Schwab: Absolutely. [00:48:00] Well thank you Roger.
Roger Harris: Thank you, Andy, as always, for putting this together. And I hope that this was helpful to all of our audience. Um, refers to your friends? Yeah. Tell them what's. What do they say every time. Podcast. We're available wherever podcasts are available.
Annie Schwab: So, yeah, listen to uswherever you get your podcast.
Roger Harris: Wherever you get your podcasts. So go tell them to go find the Federal Updates podcast and, uh, join us next time. We'll be back in a couple of weeks with another one. And let's, you know, we may do it sooner [00:48:30] if something with BOE breaks.
Annie Schwab: Yeah, true.
Roger Harris: And we need to do something. But otherwise any depending again depending on when you listen to this. Happy holidays to everybody. Hope you, you and your family have a wonderful holiday season and we hope the same for you.
Annie Schwab: Same to you, Roger.
Roger Harris: And uh, thanks to God for everybody for listening. And we'll be back soon with another federal tax update podcast. Bye, everyone.
