The IRS will clarify limitations on carried interest. In Notice 2018-18, the agency says it will issue regulations that specify that S corporations are indeed subject to an extended three-year holding period for applicable partnership interests. Taxpayers, therefore, will not be able to circumvent the three-year rule for carried-interest profits by using "S corporations."
Senate Finance Committee Chairman wants more money for the IRS. TaxNotes reports (paywall) that Senator Orrin Hatch in an event at the American Enterprise Institute said that “we have not been very good to the IRS” and the agency “does much better work than people give them credit for.” He also said that there is interest in increasing the IRS budget. “I want to help them down there,” he said.
IMF Managing Director warns US tax cuts could overheat economy. Christine Lagarde expects a near-term growth bump from the Tax Cuts and Jobs Act, but, she says, “Because of the stimulus impact that it will have on growth, and because the US economy is already growing at full capacity, it might very well have an overheating impact on the economy, which could in turn increase wages - good - increase inflation and entail a tightening of monetary policy, with interest rates rising.”
California’s tax collecting agency nixes a gas tax increase. The state’s Board of Equalization, recently gutted due to management problems, has used some of its remaining authority to prevent a 4-cent-per-gallon increase in fuel taxes. The board does not want to increase the tax at this time, due to a recent 12-cent-per-gallon increase that took effect in November. The state now needs to find another $617 million for its next budget.
Iowa’s Senate approved those tax cuts. The chamber advanced a tax bill that would cut state revenue by $1.2 billion a year when fully implemented. Republicans are happy, but Democrats call it a state budget “wrecking ball.”
Kentucky’s House Republicans want to raise taxes to reverse GOP governor’s proposed spending cuts. They propose three tax increases to raise $500 million over two years. The revenue would be used to reverse education spending cuts proposed by Governor Matt Bevin. The proposals include elimination of a $10 individual income tax credit, a cigarette tax increase of 50 cents per pack, and, in a first for the country, a 25-cent tax on prescription opioids levied at the points of sale between distributors and pharmacies.
Challenging a property tax increase, neighbors petition to leave a financially stressed school district. Residents on a neighborhood block in New Berlin, Wisconsin, are zoned and pay school taxes for the neighboring West-Allis-West Milwaukee school district. That school district has endured financial problems and just borrowed $15.8 million from the state. But for one woman, enough is enough. Her school property taxes jumped by 18.4 percent in one year, and nearly 30 percent over the past decade even though her property assessment has fallen. She and neighbors with similar complaints may soon file a "small territory petition" to leave the school district and take their tax dollars to New Berlin.
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