Tax Short Subjects, 7/24/18

Privacy, SALT Update, Fraud Update


“For good reason, not just anyone can obtain the tax information of another person or corporation,” said the U.S. District Court for the District of Columbia. A requester must submit to the IRS adequate proof of the right to the documents. Until that is done, the IRS isn’t obligated to process the request. In one case, the requester proved his right to some of the multiple records he requested about his father and grandfather. But the court held that he hadn’t shown he was the estate administrator, so therefore he couldn’t receive all of them. (Powell, 7/5/18)

SALT Update

Four states are fighting the U.S. government to void a new cap on state and local tax (SALT) deductions. NY, CT, MD and NJ have filed the suit to challenge the $10,000 deduction cap. SALT deductions had previously been unlimited. The cap, effective from 2018 through 2025, is part of the Tax Cuts and Jobs Act. The states argue the cap unconstitutionally intrudes on state sovereignty and will depress home prices, spending, job growth and economic expansion. They also say it will impede their ability to pay for key services, including schools, hospitals and police.




Taxpayers can generally deduct ordinary and necessary business expenses incurred as part of a business engaged in for profit. One officer of a limited liability company (LLC) was convicted of defrauding the government, related to his work for the LLC. He was ordered to pay $400,000 in fraud restitution, which he deducted as an unreimbursed employee business expense. The U.S. Tax Court ruled the amount wasn’t deductible. Note: For tax years 2018-2025, employee business expenses and miscellaneous itemized deductions aren’t deductible at all. (TC Memo 2018-110)



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