In the blogs: Captain’s backlog

CTC scams already; inequitable ACA; pandemic’s effects on states remain unclear; and other highlights from our favorite tax bloggers.

Captain’s backlog

• The Tax Times (https://www.thetaxtimes.com): The Internal Revenue Service closed the most recent filing season with more than 35 million in unprocessed returns, as the agency’s backlog grew markedly amid a crush of challenges related to the pandemic and economic relief efforts, according to the National Taxpayer Advocate. This backlog represents a fourfold increase from 2019, the most recent year before the coronavirus pandemic.
• The Wandering Tax Pro (http://wanderingtaxpro.blogspot.com/): In reaction/response to the COVID-19 pandemic, the IRS totally closed down all operations and offices for many months in 2020. During this period, the IRS did not process tax returns — current and amended. The “correctness” of the extent and duration of the IRS closure is open to interpretation. But it happened and we must now deal with the consequences.
• John R. Dundon II EA (http://johnrdundon.com/): IRS communication efforts do seem to be improving.
• Taxable Talk (http://www.taxabletalk.com/): The Systemic Advocacy Management System group in the Taxpayer Advocate Office rides to the rescue in this harrowing tale of IRS backlog and responses to notices.
• Mauled Again (http://mauledagain.blogspot.com/): Should there soon be “A Space Tourism Tax, or Perhaps Fee?” (Maybe, and completely as an aside we can recommend many places where not to look for intelligent life.)

Broad reflections

• Tax Foundation (https://taxfoundation.org/blog): Initial data from a global survey shows that the overall level of tax complexity for multinationals substantially increased between 2018 and 2020 — much like it did between 2016 and 2018.
• TaxProf Blog (http://taxprof.typepad.com/taxprof_blog/): The G-7 countries’ June 5 accord to implement a global minimum corporate tax rate promises to set off frenzied negotiations among nations regarding coordinated international tax reform. Here are some broad reflections on how well aligned China’s recent international tax policy choices are with the G-7’s minimum tax proposal.
• Procedurally Taxing (https://procedurallytaxing.com): Last year the blogger addressed Gregory v. United States, part, it turns out, of a larger group of cases involving the same or similar issues. The Court of Federal Claims has recently addressed another case in the group and one that has a slightly different fact pattern, Mills v. United States. It’s another in the long line of cases caused by accountant and lawyer John Anthony Castro, who is doing contingency fee refund suits involving IRC 911 exclusions for numerous people overseas.
• Federal Tax Crimes (http://federaltaxcrimes.blogspot.com/): A look at a recent American Bar Association Tax Section recommendation to the IRS for priority guidance to disavow one application of the Wartime Suspension of Limitations Act.

States of unrest

• Tax Vox (https://www.taxpolicycenter.org/): What do state budget officials think about taxes in the COVID-19 era? Even at this advanced date in the pandemic, not much.
• Sagenext (https://www.thesagenext.com/blog): If you build it, they’ll try to rip it off: The IRS is warning about scams related to the Child Tax Credit, specifically helping with signup or fast-tracking payments.
• National Taxpayer Advocate (https://www.taxpayeradvocate.irs.gov/taxnews-information/blogs-nta/): The Affordable Care Act provides subsidies to low- and middle-income taxpayers to help them purchase health insurance. But a series of recent cases in the Tax Court have highlighted an inequitable provision of the ACA, surprising workers with huge tax bills when they withdraw money from retirement savings or become disabled.
• Avalara (https://www.avalara.com/us/en/blog.html): Sixteen states are providing 17 sales tax holidays during next month — and just like when we were kids, no two holidays are identical. A look at the special burden that’s on your e-commerce clients.
• Bloomberg Tax (https://pro.bloombergtax.com/news-insights/): An accounting error that came to light in the spring forced hundreds of blank-check companies to flag financial statement mistakes at levels not seen in more than a decade. More than 340 special purpose acquisition companies in the past three months issued corrections, or restatements, of prior financial statements, four times the number of restatements issued by all companies last year.

The secret sauce

• National Association of Tax Professionals (https://blog.natptax.com/): This week’s “You Make the Call” looks at Tom and Larry, a legally married same-sex couple attempting to have a child through an unrelated surrogacy. When they file their return, can they claim on Schedule A the medical expense deduction for costs they paid for egg retrieval, in vitro fertilization, the surrogate’s childbirth expenses and other expenses related to the surrogacy?
• Taxing Subjects (https://www.drakesoftware.com/blog): What to tell them about higher education credits.
• Canopy (https://www.canopytax.com/blog): What to know about the 2021 CPA Exam changes and updates.
• Turbotax (https://blog.turbotax.intuit.com): What to tell them about new homeownership and tax breaks.
• Sovos (https://sovos.com/blog/?region=united-states): As we pass the midpoint of the year, many companies are already looking toward year end, trying to ready themselves for various new reporting requirements. Among those is the expansion to statutory Schedule Y where newly adopted Part 3 will join the family and require disclosures on related-party insurer members of a holding company group.
• Tax Pro Center (https://proconnect.intuit.com/taxprocenter/): Have you ever wondered what business would look like without the internet? Still “stuck in an era of knowledge hoarders that were too afraid to share their secret sauce?” So how, in this era of the ultimate equalizer, can you become the go-to expert in your market?