Regulation
IRS Makes Changes to Cryptocurrency Tax Returns and Reporting Standards
The Internal Revenue Service has been hard at work in recent weeks on issues ranging from streamlining reporting requirements for renewable energy tax credits to finalizing rules for stock buyback and cryptocurrency transaction taxes. But accountants and tax professionals are keeping a close eye on the next elections to anticipate broader regulatory changes on the horizon.
THE The Republican Party Platform covers a wide range of industry topics, such as increased engagement with cryptocurrencies, unfettered AI innovation, and more, with additional promises to extend and make permanent provisions of former U.S. President Donald Trump’s Tax Cuts of Jobs Act of 2017.
Jonathan Traub, Washington national tax chief and managing director at Deloitte Tax LLP, told Accounting Today this month that both the TCJA and outside provisions like the New Markets Tax Credit and premium credits for Affordable Care Act beneficiaries be “on the front line” next year.
“It has to be this way,” Traub said. “It will start with a debate on the debt ceiling, which will set the tone for thinking about whether the new Congress, whoever is president, will tolerate more deficit spending or deficit-financed tax cuts, or whether they will tolerate them at all.”
To know more: Project 2025 goals would transform the wealth management landscape
The Democratic Party platform is expected to be released during the convention in August. In the meantime, experts are looking back at US Vice President Kamala Harris‘precedents to see what the legislative priorities of the likely candidate might be.
Harris has historically focused on providing tax breaks to those in the under-$100,000 a year income bracket, as seen through the LIFT (Livable Income for Families Today) The Middle Class Act bill she proposed in 2018. The legislation would have provided up to $3,000 in tax credits for those filing as individuals and $6,000 for those filing as joint taxpayers, as long as their income was less than $100,000.
Other measures included a bill known as Rent Relief Actagain for those earning less than $100,000 a year, which would establish a refundable tax credit for those who pay more than 30 percent of their gross income for rent and utilities. The legislation drew sharp criticism from those who argued that it would benefit landlords more than renters.
“Ultimately, Senator Harris’ rent relief bill would fail to address the root causes of high housing costs. … Instead, it would benefit landlords, fail to meaningfully improve renters’ lives, and come at a high price,” experts from the non-partisan Fiscal Foundation stated in a 2018 blog post.
To know more: How Kamala Harris Could Change the Crucial Tax Debate in This Year’s Election
For now, accountants and tax experts are adjusting to new IRS reporting requirements for industries like renewable energy, cryptocurrency, corporate stock buybacks, and more.
Learn more about the agency’s recent changes and how different modules will change over the coming months.
Construction workers unload a turbine blade at the Avangrid Renewables La Joya wind farm in Encino, New Mexico.
Cate Dingley/Bloomberg
IRS Introduces Condensed Reporting for Renewable Energy Tax Credits
To expedite the process of reporting renewable energy and electricity tax credits, the Internal Revenue Service’s Large Business and International Division is changing its filing standards for Forms 3468 and 8835.
If a taxpayer has more than 200 Form 3468 Investment Credits or Form 8835 Renewable Energy Production Credits, the taxpayer may instead submit a single application for each form with the aggregate credit count. The application must have an attached PDF file that records all the required information for each reported structure or property.
This change is effective for fiscal year 2023.
To know more: IRS Offers Relief on Renewable Energy Tax Credit Reporting
by Andrew Harrer/Bloomberg
Share buyback tax legislation reaches finish line
The IRS, in cooperation with the Department of the Treasury, has published a final rule June 28, which outlines reporting and payment requirements for corporate stock buybacks under the Inflation Reduction Act.
Accounting Today Michael Cohn writes that under the law, which took effect in 2022, share repurchases are subject to an excise tax equal to 1% of the aggregate fair market value of the shares repurchased by certain companies during the taxable year, subject to adjustment. Eligible transactions begin after December 31, 2022.
The IRS final rule requires that taxes be filed on Form 720“Quarterly Federal Excise Tax Return”, which must be filed with the Form 7208“Consumption Tax on Repurchase of Corporate Shares”. Filing is mandatory for the first full calendar quarter following the end of the company’s fiscal year.
To know more: IRS Finalizes Stock Repurchase Tax Regulations
Samuel Corum/Bloomberg
Rules on the sale and exchange of cryptocurrencies have been finalized by the IRS
Brokers who manage the holding of digital assets for their clients in specific sales or exchange transactions will see changes in reporting requirements under new definitive regulation from the Treasury and the IRS.
Form 1099-DA, which the IRS previewed a draft this year, requires brokers to report gross proceeds from transactions, adjusted basis for certain transactions, fair market value of assets, and other transaction details.
Eligible entities include providers of digital asset custodial trading platforms and digital asset kiosks, as well as certain hosted e-wallet providers and digital asset payment processors.
“Thanks to the bipartisan Infrastructure Investment and Jobs Act, digital asset investors and the IRS will have better access to the documentation they need to easily file and review tax returns,” Aviva Aron-Dine, assistant secretary of the Treasury for tax policy, said in a statement. “By implementing the law’s reporting requirements, these final regulations will help taxpayers more easily pay the taxes they owe under existing law, while reducing tax evasion by wealthy investors.”
to know more: IRS Finalizes Rules for Cryptocurrency Sales and Exchanges
IRS Provides Guidance on Emergency Retirement Plan Withdrawals
Victims of domestic abuse or others with urgent personal expenses can now opt out of eligible retirement plans, according to new IRS guidelines.
Notice 2024-55 provides taxpayers with detailed information on the exceptions added based on SAFE 2.0 that went into effect this year, such as properly defining an emergency personal expense distribution, identifying eligible retirement plans, defining distribution limitations, and more.
Distributions may be received within a one-year period beginning on the date a taxpayer was subjected to an incident of domestic violence.
To know more: New guidance on emergency distributions from pension plans
Al Drago/Bloomberg
IRS Previews Revised Finder Credit Form
Theirs filed a draft version of an updated Form 6765“Credit for increased research activity,” on June 21 following a wave of feedback on an earlier instance of the documentation.
The agency has been working to curb fraudulent claims for research and development tax credits by increasing documentation requirements for about three years, but has been It met with rejection from users and tax experts deploring the standards as too burdensome. To address these concerns, the IRS relaxed some of the necessary standards.
In the preview of the revised draft of Form 6765, questions have been moved, new questions have been added, and a new Business Component Detail section has been created to account for the quantitative and qualitative details of each component. Qualified small business taxpayers, as well as those with total qualified research expenses of $1.5 million or less and gross revenues of $50 million or less, may waive the above section.
The IRS said the final version of Form 6765 would be released at a later date, but did not provide more specific information on when it expected to release it.
To know more: IRS issues revised form for research credit