Tax News Daily
The latest tax news from around the world, summarised and tagged for tax professionals. Updated twice daily.
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Late GST Return Filing: Karnataka High Court Rejects Judicial Waiver of Interest and Penalty
The Karnataka High Court has rejected petitions seeking judicial waiver of interest and penalties for late GST return filing. The court ruled that it lacks the authority to override statutory provisions under the GST framework, affirming that interest and penalties for delayed filings are mandatory and cannot be waived by judicial intervention. This decision reinforces compliance obligations for taxpayers in India, emphasizing that late filing consequences are non-negotiable under the law. Businesses and tax practitioners must ensure timely GST return submissions to avoid accumulating interest charges and penalties, as courts will not provide relief from these statutory obligations.
IRS adds online option, details for Kwong-related refund claims
The IRS has introduced an online filing option and additional procedural details for taxpayers seeking refund claims related to the Kwong case. This development provides taxpayers and practitioners with a more accessible method to submit claims, streamlining the process for those affected by the relevant court ruling. The Kwong decision has implications for specific tax refund eligibility, and the IRS guidance clarifies the steps claimants must follow, including documentation requirements and deadlines. The new online option reduces administrative burden and improves efficiency for affected filers navigating the refund claim process.
IRS adds online option, details for Kwong-related refund claims
The IRS has introduced an online option and additional procedural details for taxpayers filing refund claims related to the Kwong case. This development streamlines the process for affected individuals seeking to recover taxes, providing clearer guidance on eligibility and submission requirements. The Kwong case involves specific tax refund entitlements, and the IRS update aims to reduce administrative burden by enabling digital filing. Taxpayers and practitioners can now access the online portal to submit claims more efficiently, reflecting the IRS's broader effort to modernize taxpayer services and improve accessibility for controversy-related refund procedures.
IRS Shares Data with More Than 1,000 Organizations, Some of Which It Can’t Identify
A report by the Treasury Inspector General for Tax Administration (TIGTA) reveals that the IRS has data-sharing agreements with over 1,120 organizations, and alarmingly cannot identify some of them. The findings raise serious concerns about taxpayer data privacy, security controls, and oversight within the IRS's data governance framework. TIGTA flagged the lack of adequate tracking and accountability for these agreements. The article is directly relevant to tax administration and compliance, touching on how sensitive taxpayer information is managed, shared, and potentially exposed, with implications for IRS reform and Congressional oversight of the agency's data practices.
NY Tax on Remote Work Again Withstands Professor’s Challenge
A New York court has again upheld the state's 'convenience of the employer' rule, rejecting a professor's challenge to New York's taxation of remote work income. Under this rule, New York taxes income earned by nonresidents working remotely for New York employers unless the remote arrangement is necessitated by the employer. The ruling reinforces New York's aggressive stance on taxing out-of-state remote workers, a contentious issue that has grown significantly post-pandemic and continues to raise questions about the constitutionality of such tax regimes.
Communications Audits: Is a 5% Sample Still a Reasonable Program?
This article examines whether a 5% sample rate remains adequate for communications audits, which review telephone, internet, and related utility invoices to identify billing errors, unused services, and tax overcharges. Communications audits have a direct tax angle as telecom invoices often include sales tax, excise tax, and regulatory fee errors that businesses can recover through refunds or credits. The piece questions if modern billing complexity — driven by cloud services, hybrid work, and bundled contracts — demands higher sample rates to catch tax and fee discrepancies that a 5% review might miss.
Kalshi Sues Illinois to Nullify New Prediction Market Tax Law
Prediction market platform Kalshi has filed a lawsuit against Illinois seeking to nullify a newly enacted state tax law targeting prediction markets. The legal challenge contests the validity of Illinois's tax on prediction market transactions, raising constitutional and regulatory arguments. The case highlights growing legislative scrutiny of prediction markets as they expand into regulated financial products. The outcome could have significant implications for how states tax emerging financial instruments and whether such targeted tax laws can withstand legal challenges.
TIGTA Made 91 Surprise Visits to IRS Taxpayer Assistance Centers. Here’s What Happened
The Treasury Inspector General for Tax Administration (TIGTA) conducted 91 unannounced inspections of IRS Taxpayer Assistance Centers (TACs) to evaluate service quality and compliance. The visits assessed whether centers were properly staffed, accessible to taxpayers, and meeting service standards. Findings highlighted operational issues and areas needing improvement in how the IRS delivers in-person taxpayer support. The report underscores ongoing scrutiny of IRS administrative performance and accountability, with implications for how the agency allocates resources and serves individuals seeking face-to-face assistance with tax matters.
Senate Democrat Demands Records on DOJ, IRS Settlement Planning
A Senate Democrat has formally demanded records related to settlement planning discussions between the Department of Justice and the IRS. The inquiry raises concerns about potential political interference in tax enforcement and settlement decisions, touching on the independence of tax administration. The demand for records signals congressional oversight scrutiny over how the IRS and DOJ coordinate on resolving high-profile tax disputes and settlements, with broader implications for the integrity of federal tax controversy processes and enforcement priorities.
Surat ITAT: Delay in Filing Form 10B Not a Valid Ground to Deny Section 11/12 Exemption
The Surat Income Tax Appellate Tribunal (ITAT) ruled that a delay in filing Form 10B cannot be used as a valid ground to deny tax exemptions under Sections 11 and 12 of the Income Tax Act, which relate to exemptions for charitable and religious trusts in India. The tribunal emphasized that procedural delays in submitting audit reports should not override substantive eligibility for exemptions, providing relief to qualifying entities. This decision reinforces a taxpayer-friendly interpretation of compliance requirements, distinguishing between procedural lapses and substantive non-compliance in the context of charitable organization tax benefits.
FTO vows to tackle tax maladministration
Pakistan's Federal Tax Ombudsman (FTO) has pledged to address tax maladministration, signaling a renewed commitment to resolving taxpayer grievances and improving the integrity of the country's tax administration. The FTO's mandate focuses on identifying systemic issues within tax authorities, ensuring fair treatment of taxpayers, and reducing instances of corruption or procedural failures. This initiative is part of broader efforts to strengthen Pakistan's tax governance framework and improve compliance by building taxpayer trust in the Federal Board of Revenue and related institutions.
Swedish Anti-VAT Fraud Legislation Now in Force
Sweden has enacted new anti-VAT fraud legislation that has now come into force. The legislation aims to combat VAT fraud through strengthened legal measures targeting fraudulent schemes within the Swedish VAT system. This represents a significant enforcement development for businesses operating in Sweden, tightening compliance requirements and increasing penalties or investigative powers related to VAT fraud. Companies doing business in Sweden should review their VAT compliance frameworks to ensure alignment with the updated legal framework and understand the implications for their VAT reporting and recovery processes.
Madras HC Grants 30 Days to Reply in GST Sec. 74 Case Over Missing Job Work Return Records
The Madras High Court has granted a 30-day period for a taxpayer to respond in a GST case under Section 74, which deals with tax not paid or short paid due to fraud or wilful misstatement. The dispute centres on missing job work return records, a common compliance requirement under India's GST framework where goods sent for job work must be tracked and returns filed. The court's intervention provides temporary relief, allowing the taxpayer time to compile documentation and present their case before tax authorities proceed further with the demand and penalty proceedings.
Balance on the Special VAT Account — Functioning of the Belgian VAT Recovery and Enforcement Mechanism
This article explains the functioning of Belgium's special VAT account, a mechanism used by tax authorities to manage VAT credits, refunds, and enforcement actions against taxpayers. It details how balances on the account are maintained, how excess credits can be recovered or offset against outstanding liabilities, and the procedural rules governing disputes. The piece highlights the enforcement powers available to Belgian tax authorities when taxpayers have negative balances, as well as taxpayer rights in challenging account adjustments, providing practical guidance for businesses operating in Belgium.
Kerala HC Grants Relief to Taxpayer, Overturns GST Assessment Order on Wrong ITC Availment
The Kerala High Court has granted relief to a taxpayer by overturning a GST assessment order related to wrongful Input Tax Credit (ITC) availment. The court intervened in the assessment proceedings, providing judicial relief against what was deemed an erroneous GST order. This case highlights the ongoing tax controversy surrounding ITC claims under India's GST framework, where taxpayers continue to challenge assessment orders through the courts. The ruling underscores the importance of judicial oversight in GST administration and offers precedent for taxpayers facing similar ITC-related disputes with tax authorities.
Roadtrip through ECJ Cases – Focus on the Exemption for Intra-Community supplies of goods (Art. 138)
This article examines European Court of Justice (ECJ) case law focusing on Article 138 of the VAT Directive, which governs the VAT exemption for intra-Community supplies of goods. The piece navigates through key ECJ rulings that have shaped how EU member states apply this exemption, including conditions that must be met by suppliers, evidentiary requirements, and the consequences of fraud or abuse in the supply chain. It serves as a practical guide for VAT practitioners dealing with cross-border B2B transactions within the EU, highlighting how judicial interpretation continues to refine compliance obligations around zero-rated intra-Community trade.
ECJ VAT Cases – Link to the relevant article in the EU VAT Directive 2006/112/EC
This article maps European Court of Justice (ECJ) VAT cases to their relevant provisions in the EU VAT Directive 2006/112/EC. It serves as a reference resource for practitioners navigating ECJ case law by linking judicial decisions to specific directive articles. The project appears to be an ongoing guide through key VAT concepts as interpreted by the ECJ, helping tax professionals understand how EU VAT law is applied and interpreted at the highest judicial level across member states.
Portugal Tax Enforcement Rises 10% as VAT Debt Takes Greater Weight
Portugal's tax enforcement activity has risen 10%, with VAT debt accounting for an increasing share of total tax liabilities pursued by authorities. The trend reflects heightened scrutiny of indirect tax compliance by Portuguese tax authorities. The growing weight of VAT debt in enforcement actions signals tougher collection measures and greater risk for non-compliant businesses. This development is significant for companies operating in Portugal, underscoring the need for robust VAT compliance processes to avoid penalties and enforcement proceedings.
WSJ: Why a Couple Lost a $200,000 Tax Battle Over Their Horses
A couple lost a $200,000 tax battle involving their horses, highlighting IRS scrutiny of hobby loss deductions. The case likely turned on whether the horse-related activity constituted a legitimate business or a hobby under IRC Section 183, which disallows deductions for activities not engaged in for profit. Courts apply a multi-factor test examining profit motive, time devoted, expertise, and history of income or losses. Such cases are a recurring area of tax controversy, as taxpayers frequently attempt to deduct losses from equestrian, farming, or similar pursuits against other income, drawing IRS challenges and litigation.
Late VAT Return Penalties in the Netherlands: Compliance Risks and Enforcement Rules
This article examines the compliance risks and enforcement rules surrounding late VAT return penalties in the Netherlands. It covers the Dutch tax authority's penalty framework for businesses that fail to file VAT returns on time, including the specific penalty amounts, escalation rules, and circumstances under which penalties may be reduced or waived. The piece highlights key compliance obligations for Dutch VAT-registered businesses and the practical risks of missing filing deadlines, making it essential reading for companies operating in or trading with the Netherlands.
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