Misdirected Payments, Flattening the (Employment) Curve

Taxes

GAO: One million deceased people received $1.4 billion in economic impact payments. The Government Accountability Office reports that 1.1 million payments were made to dead individuals. The problem: While the IRS has access to the Social Security Administration death records, the Treasury Department’s Bureau of the Fiscal Service (which sent the payments) did not. In 2008, the IRS had a process to  prevent such improper payments but Treasury bypassed that control this year in the interest of speed. Technically, families are supposed to return the payments. Separately, GAO found that about 450,000 children who should have received payments did not.

Are unemployment claims plateauing?  Nearly 1.5 million US workers filed new applications for unemployment benefits last week—roughly the same as during the prior two weeks. That’s down sharply from late March peak of 7 million. Still, it means “there are still more people claiming unemployment each week than there were net job gains all last year,” said labor economist Julia Pollak. About 20.5 million people received jobless benefits last week.

Overturning the ACA would create a tax windfall for high-income households. The Center on Budget and Policy Priorities reports that the highest income 0.1 percent of households would get an average tax cut of nearly $200,000 if the Supreme Court throws out the Affordable Care Act. The Trump Administration filed a brief yesterday asking the High Court to overturn the law, which includes several taxes on high-income households.

IRS offers investors a one-time deal on conservation easements. The agency has been cracking down on the transactions that initially were aimed at preserving land but have turned into lucrative tax shelters. The offer would require all partners in a deal to settle, disallow any tax deductions and require the partnership to pay the full amount of tax, penalties, and interest before settlement. Investors could deduct their cost of acquiring their partnership interests and pay a reduced penalty. But the partners who structured the deals must pay the maximum penalties with no deduction for costs.   

Lobstermen will get a bailout. President Trump has ordered the Agriculture Department to extend a $30 billion farm bailout program to Maine’s commercial lobster industry. The bailout program originally went to corn, soybean, pig, and other farmers who had been hard hit by Trump’s trade war with China. Maine’s congressional delegation has urged the help for years. “Better late than never,” Sen. Angus King (I-Maine) tweeted. It may have helped that Maine’s other senator, Republican Susan Collins, faces a tough reelection battle.

Next week on the Hill. The Senate Finance Committee will hold a hearing Tuesday, June 30, on the 2020 tax filing season and IRS COVID-19 recovery. IRS Commissioner Charles Rettig will testify.

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