The IRS warns states about one SALT workaround. The IRS issued a notice yesterday warning states against adopting a plan to partially protect residents from the Tax Cuts and Jobs Act’s $10,000 cap on the state and local (SALT) tax deduction. New York and other states have created programs that allow taxpayers to make tax deductible charitable gifts instead of paying taxes that are now subject to deduction limits. The IRS said its formal guidance will be informed by the principle that substance trumps form. In other words, if it looks like a tax, it is a tax, even if a state calls it a charitable gift.
Tax promises made, tax promises to be kept? While President Trump says he’ll propose new tax cuts before the November election, Congressional Democrats want to cancel tax cuts for the top 1 percent of households to fund education infrastructure. Should be an interesting summer of hard salesmanship.
Is uncertainty surrounding the TCJA delaying corporate investment decisions? The goal of the TCJA was to encourage corporations to make productivity-enhancing investments. But there is little evidence that firms are boosting their capital purchases. TPC’s Howard Gleckman wonders if the law is self-defeating. One reason: Risk-averse large corporations are so uncertain about the law and its ramifications that they are delaying investment decisions.
In Portland, Oregon, Mayor Ted Wheeler proposes new taxes on Airbnb and others. His office expects new taxes could raise between $1.2 million and $2.5 million, some of which Portland would use to encourage home ownership. The tax would be $4 per night per room, paid by companies that manage short-term bookings. A different 2-percent charge on hosts could raise $720,000 to $840,000 per year. That money would be used to promote tourism.
Michigan’s first local Airbnb tax. The online platform will have to collect a tourist tax from bookings made in Genesee County. Airbnb will start collecting the 5 percent Genesee Accommodations Tax on June 1. The online short-term rental outfit reached a similar agreement with the State of Michigan last June. Across the nation, Airbnb has agreed to collect similar taxes in 370 municipalities and other local governments.
Taxi-centered tax fraud in the Big Apple--or flipping a witness. New York's "Taxi King" Evgeny “Gene” Freidman has pleaded guilty to a single count of criminal tax fraud for evading $50,000 in taxes, even though he admitted failing to pay $5 million in MTA surcharge taxes between 2012 and 2015. Freidman is a business partner of President Trump’s personal attorney, Michael Cohen, and the plea deal is likely tied to Friedman’s agreeing to cooperate with law enforcement officials in their investigation of Cohen.
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