Shot. Chaser.

Shot: In 2020, Congress added a Corporate Transparency Act to that year’s defense spending bill. (In Washington, when lawmakers attach unrelated provisions to a big spending package, they call it “hanging Christmas tree ornaments” on the bill. Happy Holidays!) The law gives corporations, LLCs, and most other business entities 30 days to report beneficial ownership information on anyone who owns 25% or more of the entity or exercises substantial control over it. This includes each owner’s full legal name, birthdate, current legal address, and driver’s license or passport number and photo. The penalty for failing to report is $500 per day up to $10,000.

Chaser: The bill set January 1, 2024, as the date for the Treasury’s Financial Crimes Enforcement Center (FinCEN) to start collecting information. We’re less than 30 shopping days away from that date, and FinCEN appears completely unprepared to collect the information. No website. No paper forms. Zip, zilch, nada. FinCEN has proposed extending the deadline from 30 to 90 days, and Congress is considering a bipartisan bill to push the whole thing back an extra year.

Shot: In 2022, Washington passed an Inflation Reduction Act, including $80 billion in new funding for the desperately underfunded IRS. (In 2021, IRS phones rang 272 million times, but just 11% of those callers reached the holy grail of a living, breathing human.) Opponents immediately attacked the extra funding as a one-way trip to a socialist hellscape. One Senator, who should know better, tweeted it would mean “a shadow army of 87,000 new IRS agents to hunt you down and take your money.” Others shrieked that those agents would all be armed.

Chaser: Defenders point out that most of the money is dedicated to replacing bureaucrats who will be retiring over the next 10 years. But Congressional Republicans have nonetheless voted repeatedly to say, “Never mind.” This year’s Fiscal Responsibility Act (ha!) suspending the federal debt ceiling clawed back $1.4 billion of 2023 funding, with a “handshake agreement” (ha!) to repurpose $20 billion of the additional 2030 and 2031 appropriations for “other non-defense priorities.” Most recently, House Speaker Mike Johnson proposed repealing $14.5 billion of the IRS funding to pay for new aid to Israel.

Shot: Microsoft, like most global companies, apparently works a lot harder to minimize the tax bill on their $150 billion in profit than they do to make their software easy for you to use. One weird trick they use is to domicile intellectual property in countries with low tax rates. That, in turn, lets them shift income from high-tax countries, in the form of licensing fees for their own IP, to lower-tax countries. It’s a complicated sleight-of-hand that sometimes triggers the IRS’s gag reflex. Last month, the Empire struck back with a series of deficiency notices requesting $28.9 billion in extra tax from 2004-2013.

Chaser:? Microsoft argues that newer tax laws could shave $10 billion from the bill. They’ve promised to appeal the notices within the IRS itself, which should eat up years of bureaucratic gear-grinding. Then, they’ll “contest any unresolved issues through the courts” if necessary, which will eat up even more years. By the time the IRS actually collects anything, it’ll maybe be enough to pay for one of those flying cars we’ve been promised since we were kids.

Lots of lessons to digest here. The big one is no surprise: don’t believe everything you read, even about taxes! (That’s especially true on Twitter, or whatever Elon Musk is calling it today). Big, bold headlines grab everyone’s attention. But reality often lags those headlines. And it’s an important part of our job to cut through the hype. So don’t panic—call us! (562) 281-1040.