The U.S. Treasury has no plans to delay the 2021 income tax filing season past the normal April 18 deadline after giving taxpayers more time to file returns during each of the two previous years due to the COVID-19 pandemic, Treasury officials said yesterday, Reuters reported. The Internal Revenue Service will begin accepting individual income tax returns on Jan. 24, the official said. This is three weeks earlier than last year, when the filing deadline was ultimately delayed until May 17. In 2020, the first year of the pandemic when lockdowns were widespread, the tax filing deadline was delayed to July 15, which contributed to an increased backlog of unprocessed returns. Treasury officials said the backlog, typically around 1 million returns, has grown to several million, largely due to COVID-19 related challenges, including fewer available personnel to process returns. The Treasury said, however, that most taxpayers should still be able to receive direct-deposit refunds within 21 days of filing electronically, barring any issues with processing of their returns.
The IRS announced inflation adjustments for 2022 pertaining to a host of features in the tax code, including the standard deduction and tax brackets, The Hill reported. The changes take into account the fact that inflation has increased this year. The inflation adjustments apply to the 2022 tax year, which households will file tax returns for in 2023. The standard deduction, which is claimed by the vast majority of taxpayers, will increase by $800 for married couples filing jointly, going from $25,100 for 2021 to $25,900 for 2022. For single filers, the standard deduction will rise by $400, from $12,550 to $12,950, the IRS said. The income thresholds for each tax bracket will also increase for 2022. The top individual income tax rate of 37 percent will apply for that year to income above $647,850 for married couples and to income above $539,900 for single filers. Those thresholds are up from $628,300 for married couples and $523,600 for single filers for 2021. The IRS releases inflation adjustments for tax provisions on an annual basis. The adjustments are based on average inflation for the 12-month period ending in August and are not directly related to the inflation data that the Labor Department releases. The IRS bases its adjustments on a slightly different measure of inflation than the one that is most commonly reported. Still, the IRS adjustments reflect the past year's higher inflation rate. For example, the $800 increase in the standard deduction for married couples from 2021 to 2022 was $500 higher than the increase from 2020 to 2021, which was $300.
Former President Donald Trump sued his estranged niece and The New York Times over a 2018 story about his family’s wealth and tax practices that was partly based on confidential documents she provided to the newspaper’s reporters, the Associated Press reported. Trump’s lawsuit accuses Mary Trump of breaching a settlement agreement by disclosing tax records she received in a dispute over family patriarch Fred Trump’s estate. The lawsuit accuses the Times and three of its investigative reporters of relentlessly seeking out Mary Trump as a source of information and convincing her to turn over documents. The suit claims the reporters were aware the settlement agreement barred her from disclosing the documents. The Times’ story challenged Trump’s claims of self-made wealth by documenting how his father, Fred, had given him at least $413 million over the decades, including through tax avoidance schemes. Mary Trump identified herself in a book published last year as the source of the documents provided to the Times. Trump’s lawsuit alleges Mary Trump, the Times and its reporters “were motivated by a personal vendetta” against him and a desire to push a political agenda. The defendants “engaged in an insidious plot to obtain confidential and highly-sensitive records which they exploited for their own benefit and utilized as a means of falsely legitimizing their publicized works,” the lawsuit said.
The Tenth Circuit will likely take sides on a split between the Ninth and Seventh Circuits on Section 544(b) state-law claims brought by a trustee in the shoes of an actual creditor.
Senate Finance Committee Chairman Ron Wyden (D-Ore.) released a bill that would overhaul a deduction for non-corporate business income that was created by Republicans’ 2017 tax law, The Hill reported. The proposal comes after key Senate Democrats last week reached an agreement on a $3.5 trillion budget plan, and it comes as Democrats are discussing how to pay for their spending priorities. The GOP tax law created a 20 percent deduction for income from non-corporate businesses known as “pass-throughs,” which pay taxes through the individual code on their owners’ returns. There are both large and small businesses organized as pass-throughs. Wyden raised several issues with the deduction. He highlighted a 2018 estimate from the Joint Committee on Taxation finding that much of the benefit of the deduction would go to high-income households. He also noted that the deduction is currently designed so that business owners in some industries can benefit more from the tax break than business owners in other fields. Owners of service businesses, such as law and accounting firms, face restrictions on the deduction that apply for 2021 to single filers with income of above $164,900 and married couples with income above $329,800. Wyden’s bill would phase out the deduction for households with income above $400,000 and would remove industry-related rules about eligibility. It would also streamline how the deduction amount is calculated.
In the pandemic shutdown last year, three-quarters of the nation’s small employers turned to the Small Business Administration for help. The portfolio that includes loans issued or guaranteed by the federal agency swelled more than five times to nearly $900 billion, the Wall Street Journal. The extraordinary demand has overwhelmed the SBA, best known for guaranteeing loans to small businesses, and left many entrepreneurs in limbo as they seek to recover. Business owners complain of unprocessed aid applications, waiting hours on the phone with questions that go unanswered and technological glitches. Its inspector general warned of signs of rampant fraud. At the heart of many of the problems is the Office of Disaster Assistance, a little-known unit that issued nearly a quarter of the agency’s pandemic loan volume. In normal times, the office provides loans after floods and other natural disasters. Since March 2020, the office has issued roughly $211 billion in pandemic-related Economic Injury Disaster Loans, three times as much aid as in the previous 68 years combined. In total, the office has provided roughly 9.8 million loans and grants totaling more than $230 billion, SBA data show. These pandemic responsibilities would have challenged even the best-run government agency. The office’s difficulties were compounded by the types of management and technological weaknesses identified over the years by government watchdog agencies. Small firms accounted for 47% of the private sector workforce in 2017, the most recent data available, and after being disproportionately hit by the pandemic, they are lagging behind bigger companies as the economy reopens. Nearly one-third of small employers say it will take them more than six months to recover from the pandemic, according to a Census Bureau survey. The SBA was responsible for administering the Paycheck Protection Program, which used private lenders to originate forgivable federal loans to pandemic-hit small businesses. The program, while hitting bumps, received bipartisan praise for issuing $800 billion in loans. One problem was that the Trump administration gave priority to the PPP, to the detriment of the disaster office, said Sen. Ben Cardin (D., Md.), chairman of the Senate Committee on Small Business and Entrepreneurship. The disaster loan programs, he said, “suffered in the implementation speed, as well as the amount of resources small businesses should have been entitled to that they did not receive.”
