The IRS is using AI to check for tax evasion by large partnerships. IRS Commissioner Danny Werfel announced the agency will begin examining 75 of the nation’s biggest partnerships, which have an average of $10 billion in assets. These partnerships, identified with the help of artificial intelligence (AI), include hedge funds, real estate investment partnerships, law firms, and publicly traded partnerships. Commissioner Werfel said that AI could help identify “compliance threats” and reduce unnecessary audits.
IRS guidance on Inflation Reduction Act’s clean energy tax credits coming soon. Assistant Secretary for Tax Policy Lily Batchelder told reporters the agency plans to soon issue guidance for the energy-efficient home credit and sustainable aviation fuel credit. Before the end of the year, the IRS plans to issue guidance on the investment tax credit and production tax credit for clean energy, as well as the electric vehicle credit provision for “foreign entities of concern.”
Under the House GOP tax plan, fewer would worry about SALT. TPC’s Howard Gleckman unpacks the latest TPC analysis of the House Ways & Means Committee bill. Under the GOP plan, the standard deduction—currently $13,850 for singles and $27,700 for joint filers—would be temporarily increased by $2,000 for single filers and $4,000 for joint filers. Because more filers would claim it, the 9.3 percent of households affected by the federal $10,000 cap on state and local tax deductions (SALT) would drop to 7.3 percent. The SALT deduction would continue to benefit a small group of mostly high-income households.
“The rich are very different” in how they earn money and pay taxes. TPC’s Bill Gale and Semra Vignaux outline those differences and highlight four ways to effectively raise taxes on the wealthiest Americans. Those at the very top of the income scale—the top 0.01 percent and 0.001 percent—receive over 80 percent of their income from investments and businesses, which often face a lower statutory tax rate than wages. Gale and Vignaux suggest fixes: capital gains reform, taxation of intergenerational wealth transfers, elimination of the Section 199A deduction for qualified business incomes, or a value-added tax paired with a rebate or universal basic income.
California legislature passes new guns and ammo tax to pay for school improvements. The tax legislation, which now heads to Gov. Gavin Newsom (D) for his signature, would levy an 11 percent tax on guns and ammunition, the same as the federal tax on guns. It would not apply to businesses with sales of less than $5,000 over a three-month period. It could generate $159 million annually. Newsom has until Oct. 14 to sign the bill into law.
State rainy day fund balances reached all-time highs last year. TPC’s Aravind Boddupalli reviews the latest data from the National Association of State Budget Officers. State rainy day funds reached $164 billion in fiscal year 2022, in part due to the speed of the economic recovery.
A European vacation and tax appreciation. TPC’s Tax Hound Renu Zaretsky took a family vacation through three European cities. Unlike many cities in the US, those streets were made for walking, not driving—thanks in part to taxes.
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