The Latest in Tax News for 2019: August 5 - August 11 Edition

Textbook Tax presents its weekly tax news update. A quick read discussing various tax news, tax stories, and tax events trending in the United States during the week. The following tax topics cover the week of August 5, 2019 through August 11, 2019. The tax topics presented represent my favorites in tax news for the week. Please comment any tax news stories you found interesting for the recent week. Additionally, please provide your email for weekly tax news updates sent straight to you!

Related Posts -- Prior Weeks' Tax News
July 29 - August 4
July 22 - July 28

Tax News for August 2019

This week in tax news focuses on the Sec. 199A QBI deduction statistics, a proposed virtual currency tax bill, a proposed meat tax, and the latest tax scammers. 

Period: August 5 - August 11

Tax Topic: Tax study -- How many people claimed the new 20% QBI deduction

Why is it a Tax Story?

TCJA enacted Sec. 199A, which established the QBI deduction. The Sec. 199A QBI deduction allows certain owners of flow-through entities (sole-proprietors, partnerships, S-corporations) to deduct up to 20% of their qualified business income (QBI). Do you qualify for the QBI Deduction?

Tax Story Summary:

  • The IRS recently released statistics relating to the newly enacted deduction. The following statistics relate to the 2018 tax year: 
    • The IRS received 134 million tax return (as of May 23, 2019)
    • Of the 134 million tax returns, a little over 14 million claimed the QBI deduction
    • That is around 10% of filers so far
    • The IRS reports that filers claimed $74 billion in QBI deductions as of the date
  • The IRS and tax professionals believe the number of filers taking the QBI deduction will increase in the future
  • In fact, most believe many more filers will take the deduction on their extended tax returns come fall
  • It is a confusing deduction that requires some figuring out
Did you take the Sec. 199A QBI deduction on your 2018 tax return?

Tax Topic: Congressman Reintroduces Virtual Currency Tax Bill

Why is it a Tax Story?

Numerous tax-related stories surround the cryptocurrency market. Last month, the IRS released notice that it is cracking down on thousands of taxpayers' tax deficiencies relating to crypto. Governments and taxpayers are both figuring out the tax implications relating to cryptocurrency. Congressmen Ted Budd introduced Virtual Value Tax Fix Act of 2019. The bill focuses on cryptocurrency exchanges. If you own cryptocurreny, it is important to understand the current tax laws and potential future tax laws relating to the form of currency. 

Tax Story Summary:

  • As stated, the bill aims to change like-kind crypto-exchanges
  • Currently, like-kind exchanges (which defer gains & losses) are only available to exchanges of real property (land, buildings)
  • The bill hopes to allow exclusions of gains and losses on like-kind exchanges of virtual currency
  • Budd hopes to stop the double taxation of virtual currency holders
  • The House Committee on Ways and Means plans to further discuss and develop the bill
What are your thoughts on the taxation of virtual currency?

Tax Topic: Germany may implement a "meat tax"

Why is it a tax story?

The meat industry is under attack due to animal welfare and environmental concerns. Because of this, lawmakers aim to combat the controversial meat industry. One legislative approach includes placing a meat tax on meat products. Many countries have considered the measure, including Germany, where lawmakers are now strongly backing such proposals. The main goal of a meat tax is of course to persuade consumers not to purchase the product. The tax proposal is not an unrealistic measure.

Tax Story Summary:

  • The proposed meat tax hopes to raise the VAT on meat products to the standard rate of 19%
  • Food products, including meat, currently face a reduced 7% rate
  • The proposal suggests using the increase in tax revenue to support animal welfare and/or support livestock farmers
  • Overall, environmental tax laws will continue to increase in popularity as environmental related concerns increase

What are your thoughts on a "meat tax?" Could such a proposal pass in the United States?

Tax Topic: Scammers sending fake IRS letters to taxpayers

Why is it a tax story?

This story is pretty straight forward. Every year during tax filing season scammers attempt to rip off taxpayers by posing as the IRS. In the past, scammers have called and emailed taxpayers demanding money. Now, the scammers are sending letters demanding payment. The best defense to such scams is awareness. Know the signs and keep a skeptical mind.

Tax Story Summary:

  • Mail scam poses a dangerous threat because the IRS prefers to use snail mail as its form of communication
  • The scammers are posing as the Bureau of Tax Enforcement, which is non-existent group
  • When receiving a letter, confirm the following:
    • official IRS seal
    • a notice/letter number in the top right corner
    • a notice of your rights as a taxpayer
    • a phone number to contact the IRS directly
    • the letter requests payment only to the U.S. treasury
  • The two best ways to confirm the IRS letter include: calling the IRS directly (confirming the phone number online), and/or logging into the IRS online portal
It is important to never ignore a letter from the IRS, but always remain aware of scams and take precautions. Have you ever experienced an IRS scam? 

That is all for the most recent tax news, tax stories, and tax events.

Please share any and all comments below!