Treasury cedes authority to OMB on some tax rules. The Office of Management and Budget will review tax rules if they interfere with an action taken by another agency, raise new legal or policy issues, or have an economic cost of at least $100 million. The agreement between OMB and Treasury supersedes a 1983 memo that exempted most IRS rules from review by the OMB’s Office of Information and Regulatory Affairs.
Three things to know about all those post-TCJA stock buybacks. TPC’s Donald Marron clarifies confusion about record stock buybacks driven in part by corporate tax changes under the new tax law. In a nutshell: (1) Repatriated overseas profits, not corporate tax rate cuts, are the main way TCJA is boosting buybacks. (2) Buybacks do not mechanically increase stock prices. And (3) Today’s buyback furor reflects a much larger debate about shareholder capitalism. Remember, Donald concludes, it all “boils down to three basic questions. When do investors think money inside a company is less valuable than outside? How well do investors make that judgment? Should investors be the only ones with a claim on a company’s money?”
Speaking of what investors think: Are some footnotes meant to be muddy? A new paper in the Journal of the American Taxation Association suggests that investors may like their disclosure documents with hard-to-read tax footnotes. That’s because if tax footnotes are clear, they provide an easier roadmap for auditors. “Managers of firms with high levels of tax avoidance write less straightforward tax footnotes, and investors value these efforts to conceal tax planning from the tax authority.”
The House Ways & Means Committee’s staff director departs. David Stewart is leaving his post. There was no word on where he will go or who will replace him. Several staffers of both tax-writing committees are likely to leave following passage of the Tax Cuts and Jobs Act.
And speaking of muddy: Cryptocurrency tax filing mistakes could be costly. There are over 1,500 known virtual currencies, and with Tax Day around the corner, cryptocurrency traders could be in for a shock. CNBC explains that different taxes will apply, depending on how a trader received or disposed of Bitcoin and the like. “Worst case: Failure to report your transactions can result in fines up to $250,000 and prison.” Indeed: Some traders sold off much of their cryptocurrency in the past month in order to pay their tax bills.
Meanwhile in Kentucky: Oops. In its rush to pass a tax reform bill, the Kentucky legislature cut an important tax credit for Toyota, GE, and other big manufacturers. Governor Matt Bevin vetoed the tax package, but if the General Assembly overrides the veto, lawmakers plan to fix the mistake, which involves accidental repeal of the Kentucky Jobs Retention Act.
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