December 26, 2024
44 S Broadway, White Plains, New York, 10601
PERSONAL FINANCE TAX TIMES

IRS Cracks Down on Sneaky Tax Loophole – What You Need to Know!

IRS Cracks Down on Sneaky Tax Loophole – What You Need to Know!

Cracking Down on Tax Loopholes Could Yield Billions

The Treasury Department unveiled a new initiative aimed at eliminating intricate financial maneuvers that allow high-dollar business partnerships, such as hedge funds and real estate investors, to sidestep taxation. This strategy, known as basis shifting, involves transferring assets among entities without any real economic activity taking place, solely to minimize tax obligations. Deputy Treasury Secretary Wally Adeyemo emphasized that these transactions contribute nothing to the US economy. The termination of such practices could potentially boost tax revenues from partnerships by an estimated $5 billion annually over the next decade. However, Robert Kovacev, a lawyer with Miller & Chevalier, counters that businesses involved are not engaging in illegal activities and anticipates legal challenges against this new rule.

Tax-Free Tips: A Double-Edged Sword?

Howard Gleckman from the Tax Policy Center explored a proposal introduced by former President Donald Trump, suggesting the exemption of tips from federal taxes. While initially appealing, exempting tipped income from taxes may actually provide limited advantages to tipped workers and could trigger a host of complications.

Broad Tariffs: A Costly Proposal

Another concept from Trump’s playbook involves imposing a 10 percent tariff on all imports. Bloomberg has delved into this topic, citing studies from the Center for American Progress and the Peterson Institute for International Economics. Their findings indicate that such a tariff could burden the average middle-income household with additional annual costs ranging between $1500 and $1700.

Vermont Property Taxes on the Rise

In Vermont, the state legislature has successfully overridden Governor Phil Scott’s veto, enacting a law to enhance public school funding, which will result in an average property tax increase of 13.8 percent. This legislation ties into a $180 million surge in school spending, driven not only by rising inflation but also by the need to address health care costs, student mental health services, and deteriorating infrastructure, according to VTDigger.

Stay Updated with the Latest Tax News

For those keen on keeping up with the latest developments in tax policy, consider subscribing to the Tax Policy Center’s Daily Deduction. Delivered to your inbox on weekdays at 8:00 am (or Mondays only when Congress is in recess), this newsletter is a valuable resource. Sign up here and feel free to share tips on new research or other news with Renu Zaretsky.

Leave feedback about this

  • Quality
  • Price
  • Service

PROS

+
Add Field

CONS

+
Add Field
Choose Image
Choose Video