Ways and Means OK’s IRS bill. The panel unanimously approved a bill to increase taxpayers’ protections in disputes with the IRS. It also calls on the agency to recommend structural reforms to Congress. Separately, the House Budget Committee is expected to vote today on a fiscal plan that would lift budget caps and boost spending for IRS enforcement.
And it approved a retirement savings bill. Ways & Means also sent to the House floor a bipartisan measure that makes relatively minor changes in tax-advantage savings accounts. The Senate Finance Committee has released its own draft version, which is similar though not identical.
Sen. Ron Wyden wants to tax unrealized capital gains. The Senate Finance Committee’s top Democrat would tax unrealized capital gains annually at ordinary income rates. His plan would raise taxes on wealthier households that hold the largest share of assets. TPC estimates that households in the top 0.1 percent of the income distribution will receive half of their income from investments this year. Currently, investors are taxed only on gains when they sell an asset.
Parents in the college admissions scandal may soon face tax trouble. Parents who used a consultant to cheat in their children’s admissions process may also face criminal tax charges if they deducted their donations to a sham nonprofit organization, the Key Worldwide Foundation. Mark Matthews, a former deputy commissioner of the IRS, said the agency has “been known to follow the money… very carefully.”
Where are you most likely to face an IRS audit? ProPublica reports on a new TaxNotes study by Kim Bloomquist, who found that the five counties with the highest audit rates are all predominantly rural, low-income, in the Deep South, and with a higher share of African American households. States with the lowest audit rates are New Hampshire, Wisconsin, and Minnesota—home to middle-income, largely white populations. Bloomquist mapped the geographic distribution of audits and found that more than a third are of EITC recipients, thus the number of audits tracks the share of residents who claim the credit.
Another presidential candidate releases her tax returns. Minnesota Sen. Amy Klobuchar released her tax returns from 2006 to 2017 this week. Klobuchar joins fellow candidates Kirsten Gillibrand, Elizabeth Warren, and Jay Inslee.
Illinois House bills would levy a “Netflix tax.” Under the Video Service Tax Modernization Act and Entertainment Tax Fairness Act, Illinois subscribers of streaming entertainment would pay a tax equal to 1 percent of their subscription fee.
For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. Email Renu Zaretsky at firstname.lastname@example.org.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
- © Urban Institute, Brookings Institution, and individual authors, 2016.