The new tax reform changes went public earlier this morning. Here is the link that the House Ways & Means released. The tax reform bill is entitled, “Tax Cuts and Jobs Act.”
The New York Court of Appeals, its highest state court, approved in a 5-1 decision a search warrant that forces Facebook to turn over material on 381 accounts including account information, private photos, and conversations. This ruling is based significantly on New York law which the court interpreted to mean search warrants issued by judges cannot be appealed to a higher court and the proper venue for challenging search warrants is during a pretrial hearing when a party argues the search warrant is an illegal search.
Read more about this case in this New York Times article here. The underlying case deals with disability fraud and the Brennan Center provides a concise summary, along with its amicus brief, on its website available here.
One could argue that this opens the door to New York search warrants giving prosecutors access to users’ data on other social networking sites.
The full slip opinion is available here.
Five teenagers in Loudoun County were caught and pleaded guilty to vandalizing a historic schoolhouse in Ashburn, Virginia with racist graffiti. As punishment, the prosecutor compiled a list of books for the teenagers to read and write reports on. The Virginia judge condoned the sentence and probation agreed to enforce this alternative form of punishment. The New York Times published an article about this with further details about the sentence, reasons behind this arrangement, and the full list of books approved. The article is available here. In addition, Loudoun County’s Attorney’s Office released a press statement available here.
The first question that went through my mind when I saw in the news that there is a bill pending in Congress to terminate the Department of Education:
What will happen to my student loans?
Here is a link to the bill that was introduced by Representative Thomas Massie (R-Kentucky). The Congress.gov website does not have the text of the bill available yet. But, a local news outlet reported that this Republican sponsored bill proposes termination of the Department of Education on December 31, 2018. The article goes further to explain the past history of legislators trying to dismantle the Department of Education with little success.
I posted about this last year, but I think it bears repeating. Back in 2015, law professor Gregory Crespi coined the term “tax bomb” in reference to student loans. A “tax bomb” is oftentimes unexpected and seen when a taxpayer has surprise income that will be taxed. It can blow up a taxpayer’s taxes and result in money owed to the IRS. This concept of a “tax bomb” is also seen in retirement planning.
In the context of student loans, a “tax bomb” can be when a taxpayer has student loan debt that gets forgiven either through the Public Service Loan Forgiveness Program (PSLF) or Income Based Repayment (IBR). But, it becomes a bomb when the cancellation of student debt is viewed as income under 26 U.S.C. sec. 108(f) which results in a tax and requires payment to the federal government. However, in Professor John Brooks’ Tax Notes article, he confirmed that current interpretation allows an exception for PSLF, but not IBR. This means that if you have student loans forgiven under the PSLF program, then you will presumably not have to pay taxes. But, if you have student loans forgiven under IBR, then you may be stuck with a tax bill. The Treasury Department issued guidance on the issue in Rev. Proc. 2015-57. Brooks’ article does a great job explaining the nuances. Check it out here.
On a happier note, Senator Bob Menendez (D-NJ), Senator Elizabeth Warren (D-MA), Senator Ron Wyden (D-OR), Senator Debbie Stabenow (D-MI), and Senator Cory Booker (D-NJ) introduced the Student Loan Tax Relief Act which would exclude income created from the cancellation of student debt or student loan forgiveness. The bill is available here.
Hello, readers! My Tax Court internship has officially concluded, so I have returned to my blogging platform.
Two more disclaimers:
Thanks for reading!