Congress passed a year-end spending bill. Finally. Congress finally approved the spending bill on Friday. It will keep the government open through Sept. 30 and expands a long list of retirement savings incentives. The big changes include delaying, yet again, Required Minimum Distributions—this time to age 73 and eventually to 75. The bill also changes the non-refundable Saver Credit to a direct cash payment. The measure also trims the IRS’s annual appropriation by $275 million, through it provides $12.3 billion to fund the agency for this year.
IRS retains the $20,000 tax reporting threshold for third-party payments. For now. The American Rescue Plan Act required the agency to lower the annual threshold from $20,000 to $600 for transactions businesses through platforms like Venmo, Uber, and the like. Form 1099-K reporting was supposed to be required beginning on Jan. 1 for 2022 transactions but the IRS responded to concerns about the timeline, including industry objections and fears about the agency’s own ability manage the influx of forms. Now, the IRS will require reporting for transactions that occurred starting in 2023 and treat 2022 as a “transition period.”
But attempts to permanently block the $600 threshold failed. Lawmakers, including Sen. Joe Manchin, tried to add an amendment to the year-end spending bill that would have blocked or increased the threshold They failed, but vow to try again in 2023.
North Carolina Supreme Court: Out-of-state printer must pay sales tax on shipped goods. The court cited the US Supreme Court’s Wayfair decision and reversed a lower court decision (paywall) that North Carolina violated the commerce clause by assessing a sales tax on a Wisconsin-based printing company. The firm sold $20 million in goods to North Carolina customers between 2009 and 2011. While the products were shipped from Wisconsin, the court determined the company’s North Carolina sales representative constituted physical presence there and ordered it to pay $3.2 million in back sales taxes.
Los Angeles is sued over its new “mansion” tax. Voters approved a measure to tax the sale of properties exceeding $5 million. Revenue, estimated to range between $600 million and $1.1 billion annually, would support programs aimed at reducing homelessness. A coalition of real estate and anti-tax groups sued, arguing the transfer tax slated to go into effect in April violates the California Constitution.
Is New York losing its millionaires? An analysis of IRS data by EJ McMahon of the Empire Center for Public Policy finds the number of New Yorkers with an adjusted gross annual income of more than $1 million dropped to 54,370 in 2020 from 55,100 one year earlier, for a decline of 1.3 percent. During that same period, the number of millionaire earners nationwide increased from 554,340 to 608,540, or nearly 10 percent.
The Daily Deduction will next publish on Tuesday, Jan. 3. It will resume its regular schedule when Congress returns. Happy New Year!
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