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TaxBuzz Top 5 - CA Deficit Rises to $68 Billion, IRS Updates Leadership Structure & More

TaxBuzz Top 5 - CA Deficit Rises to $68 Billion, IRS Updates Leadership Structure & More

Each Friday, TaxBuzz brings you the top five tax and accounting headlines you need to know from the workweek. We know life can get busy and you don't always have time to scroll through your news feed to stay informed.

1. California Budget Deficit Rises to $68 Billion

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Credit: DustyPixel/Getty Images

After months of lower-than-projected tax revenues, California's budget deficit has risen to an astounding $68 billion, according to the nonpartisan Legislative Analyst’s Office

A recent Politico report notes that:

“ The shortfall, which is the highest in dollar terms but not as a percentage of overall spending, threatens to upend the upcoming legislative year by forcing Gov. Gavin Newsom and lawmakers to make spending cuts on a scale few term-limited elected officials in Sacramento have faced. ”

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In August 2023, reports surfaced that California has lost more tax income than all other U.S. states combined over the past three years. This is largely due to a pandemic-era exodus of high-income earners who relocated to more tax-friendly states like Florida and Texas.

2. Over 700K Michigan Households to Receive Tax Refund Checks

Michigan government officials have confirmed that over 700,000 households in the state will receive tax refund checks beginning in February 2024.

Click on Detroit shared details about the checks, which are the result of a $1 billion tax cut package signed into law earlier in 2023. Governor Gretchen Whitmer (D) stated that eligible families will receive an average of $550. Whitmer went on to say, “This directly benefits half the children in Michigan, and moms and dads can use this extra money at tax time to pay the bills, put food on the table, and buy school supplies."

The amount that Michiganders will get from Working Families Tax Credit will be the difference between the 6% tax credit received on 2022 state tax returns and the 30% that is owed under the new law.

To learn more about eligibility for the new Michigan tax credit, click here.

3. IRS Updates Leadership Structure For the First Time In 20 Years

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Credit: Zach Gibson/Getty Images

For the first time in two decades, the Internal Revenue Service (IRS) has announced that it will update its leadership structure.

IRS Commissioner Danny Werfel announced the change on Wednesday, December 13. He confirmed the updated structure is designed to "reflect new transformation goals" as the tax agency modernizes. 

Per an official release, the new organizational structure will feature a single deputy IRS Commissioner, rather than the current two. Additionally, four new IRS chief positions will oversee taxpayer service, tax compliance, information technology, and operations. This is intended to "streamline operational efficiencies and align with major transformation work underway at the agency through the Inflation Reduction Act funding."

The new IRS organizational chart will take effect in early 2024.

4. AirBnb Agrees to Pay $621 Million to Settle Tax Dispute In Italy

Vacation rental company AirBnb has settled a tax dispute in Italy by agreeing to pay USD$621 million. 

The Seattle Times shared a syndicated Associated Press report about the situation. In November 2023, Italian prosecutors said AirBnb owed approximately 779 million euros (USD$840 million) in unpaid short-term rental taxes on behalf of Italian landlords who used the hosting platform between the years of 2017 and 2021.

The $621 million payment will settle the company's Italian tax debt.

 San Francisco-based AirBnb issued a statement that said, in part:

“ The vast majority of hosts on Airbnb in Italy are ordinary families that are using the platform for supplemental income. We hope the agreement with the Italian Revenue Agency and recent legislative changes will provide these families with certainty about the rules around hosting for years to come. ”

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Additionally, AirBnb shared that the company is "committed to working with Italian authorities to make the [Italian tax] rules a success."

5. Biden Administration Announces Billions In Tax Credits to Cut Jet Emissions

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Credit: Tom Sowerby/Getty Images

The Biden Administration this week announced billions of dollars in new tax credits and incentives in a bid to cut jet emissions, all in hopes of making air travel more climate-friendly.

The Washington Post shared details about the plan, which calls for giving subsidies to support the development of "sustainable aviation fuels", which could theoretically power jets using agricultural products. These fuel options include biofuels engineered out of soybeans, diesel made from animal fat, and standard ethanol.

Senior White House authorities said the proposal is meant to create a greener airline industry while bringing prosperity to rural America.

However, environmental groups and some scientists are concerned because certain subsidies would be awarded "based on a scientific model that has previously been used to justify incentives for corn-based ethanol. Studies have found the gasoline additive is exacerbating climate change."

It is clear that the debate over these new federal airline tax credits is just beginning.

Which headline this week is most interesting to you?

Feature Image Credit: Zach Gibson/Stringer/Getty Images

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Rebekah Barton

Rebekah Barton

Rebekah's search engine optimization career began completely by accident as a college student. Over the course of her career so far, she has "grown up" with the SEO industry, from writing content while juggling classes to managing her own teams of writers and overseeing SEO strategy in subsequent roles. She is excited to bring her passion for high-quality content to CountingWorks, Inc.

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