Brian Dake

IRS Sets January 23 as Official Start to 2023 Tax Filing Season

Yesterday, the Internal Revenue Service today announced Monday, January 23, 2023, as the beginning of the nation’s 2023 tax season when the agency will begin accepting and processing 2022 tax year returns.

More than 168 million individual tax returns are expected to be filed, with the vast majority of those coming before the April 18 tax deadline. People have three extra days to file this year due to the calendar.

The filing deadline to submit 2022 tax returns or an extension to file and pay tax owed is Tuesday, April 18, 2023, for most taxpayers. By law, Washington, D.C., holidays impact tax deadlines for everyone in the same way as federal holidays. The due date is April 18, instead of April 15, because of the weekend and the District of Columbia’s Emancipation Day holiday, which falls on Monday, April 17.

Taxpayers requesting an extension will have until Monday, October 16, 2023, to file.

Inflation Eases in December to 6.5%,

The Labor Department said Thursday that the consumer price index, a broad measure of the price for everyday goods including gasoline, groceries and rents, fell 0.1% in December from the previous month. Prices climbed 6.5% on an annual basis.

It marked the slowest annual inflation rate since October 2021 and the slowest monthly rate since April 2020, at the height of the COVID-19 lockdowns. Still, inflation remains about three times higher than the pre-pandemic average, underscoring the persistent financial burden placed on millions of U.S. households by high prices.

Core prices – which strip out the more volatile measurements of food and energy – climbed 0.3% in December from the previous month, up from 0.2% in November. From the same time last year, core prices jumped 5.7%. Those figures were also in line with economists’ expectations.

Rent costs jumped 0.8% over the month and 8.3% on an annual basis. Rising rents are a concerning development because higher housing costs most directly and acutely affect household budgets. Another data point that measures how much homeowners would pay in equivalent rent if they had not bought their home, climbed 0.8% from the previous month.

Republicans and Governor Evers want to End the Personal Property Tax

Gov. Tony Evers said Tuesday he’s confident his administration will find enough common ground with the Republican-controlled legislature this year to end one of the state’s oldest taxes.

Businesses across Wisconsin pay the personal property tax on equipment such as furniture, equipment and fixtures.

Republican lawmakers are circulating a bill at the Capitol that would eliminate the tax. Evers, who was visiting Watertown Tuesday, told reporters he also wanted to get rid of the tax and was optimistic the legislature will iron out the wrinkles that caused him to veto the bill in 2021.

“We should be able to get through that this session,” Evers said. “There was some minor things that were of concern. It’s my understanding they have been addressed, and so I would anticipate we will be in good shape there.”

Detractors of the tax say it’s unfair because businesses already pay a sales tax when purchasing the equipment. The Wisconsin Grocers Association is among the business groups lobbying for the tax to be eliminated.

“Those small, mom-and-pop retailers are gonna have to categorize, they’re gonna have to track each one of these assets, and then pay tax on it every single year,” Mike Semmann, the association’s vice president of government affairs said. “That’s something that we’re hoping goes away pretty quick.”

Powell: ‘Inappropriate’ for Federal Reserve Bank to Make Climate Policy

Federal Reserve Chair Jerome Powell said Tuesday it would be “inappropriate” for the central bank to plunge itself into the fight against climate change.

“Without explicit congressional legislation, it would be inappropriate for us to use our monetary policy or supervisory tools to promote a greener economy or to achieve other climate-based goals. We are not, and will not be, a ‘climate policymaker,’” Powell said Tuesday.

Powell argued that going beyond the Fed’s basic mandate of stable prices and maximum employment would “undermine the case” for the bank’s independence from Congress and the White House, which allows it to raise and cut interest rates without approval from elected officials.

“It is essential that we stick to our statutory goals and authorities, and that we resist the temptation to broaden our scope to address other important social issues of the day,” Powell said.

Report: Solving Wisconsin’s Workforce Challenges Could Exacerbate Housing Shortage

If state lawmakers succeed in their efforts to attract more residents to Wisconsin to address longstanding workforce shortage woes, doing so could further exacerbate the state’s growing need for sufficient housing offerings, according to a new report.

At the core of both issues is Wisconsin’s aging baby boomer population, which will continue to age out of the statewide labor pool over the next decade, yet is projected to increase its share of the state’s limited workforce housing offerings, according to a report released Monday by the Wisconsin Counties Association’s nonpartisan research arm Forward Analytics.

Wisconsin’s adult population is projected to grow by about 204,000 between 2020 and 2030, marking a smaller overall growth compared with the two previous decades, according to the report. At the same time, the number of Wisconsinites 65 or older is also expected to grow by more than 330,000 by 2030, while the population of those under 65 years old is projected to decline by about 130,000 based on migration patterns.

“The modest increase in the number of adults combined with the shift in the age structure of the adult population is what will drive the need for additional housing,” the report notes.

The report notes that Wisconsin will need to build roughly 140,000 new housing units by 2030 in order to compensate for the loss of workforce housing caused by the state’s aging population.

That need for housing will only increase if the state attracts more working age residents, something lawmakers hope to achieve to address the state’s longstanding workforce shortage challenges.

FTC Proposes Rule that would Ban Employee Non-Compete Clauses

The Federal Trade Commission proposed a rule Thursday that would ban U.S. employers from imposing noncompete clauses on workers, a sweeping measure that could make it easier for people to switch jobs and deepen competition for labor across a wide range of industries.

The proposed rule would prevent employers from imposing contract clauses that prohibit their employees from joining a competitor, typically for a period of time, after they leave the company.

Advocates of the new rule argue that noncompete agreements contribute to wage stagnation because one of the most effective ways to secure higher pay is switching companies. They argue that the clauses have become so commonplace that they have swept up even low-wage workers.

Opponents argue that by facilitating retention, noncompete clauses have encouraged companies to promote workers and invest in training, especially in a tight labor market. The public has 60 days to submit commentary on the rule before it takes effect.

The proposal is based on a preliminary finding that noncompete clauses quash competition in violation of Section 5 of the Federal Trade Commission Act. It would not generally apply to other types of employment restrictions, like non-disclosure agreements.

But Emily Dickens, chief of staff and head of public affairs for the Society of Human Resources Management, said the proposed FTC rule is overly broad and could potentially harm businesses that depend on them to thrive. She cited very small, emerging industries where crucial know-how cannot be safeguarded through non-disclosure agreements alone.

Dickens said SHRM, a group of more than 300,000 human resources professionals and executives around the world, will encourage its members to present specific situations that could justify noncompete clauses during the FTC’s commentary period.

Governor Evers Signs Executive Order Re-establishing Non-Statutory Committees

Yesterday, Governor Tony Evers signed Executive Order #182 recreating 28 non-statutory committees working to conduct studies and advise the governor on various issues of statewide interest and importance.

A full list of the re-created councils is available below:  

  • Bicycle Coordinating Council 
  • Birth to Three Early Intervention Interagency Coordinating Council  
  • Council on Autism 
  • Council on Veterans Employment 
  • Criminal Justice Coordinating Council 
  • Early Childhood Advisory Council 
  • Governor’s Advisory Council on Equity and Inclusion 
  • Governor’s Committee for People with Disabilities 
  • Governor’s Council on Financial Literacy and Capability 
  • Governor’s Council on Physical Health and Wellness 
  • Governor’s Council on Workforce Investment  
  • Governor’s Information Technology Executive Steering Committee 
  • Governor’s Judicial Selection Advisory Committee 
  • Governor’s Juvenile Justice Commission 
  • Governor’s Pardon Advisory Board 
  • Governor’s Task Force on Retirement Security  
  • Governor’s Task Force on Broadband Access 
  • Historical Records Advisory Board 
  • Homeland Security Council 
  • Humanities Council 
  • Independent Living Council of Wisconsin  
  • Joint Enforcement Task Force on Payroll Fraud and Worker Misclassification  
  • PFAS Coordinating Council 
  • State Rehabilitation Council  
  • Telecommunications Relay Service Council  
  • Wisconsin Coastal Management Council  
  • Wisconsin Shared Services Executive Committee 
  • Wisconsin Technology Committee 

Individuals currently serving on the above committees will remain members until they resign or until they are removed or replaced by action of the governor. 

State Legislators Seek to Make Retirement Tax-Free in Wisconsin

State Representative David Steffen (R – Howard) and Senator-elect Rachael Cabral-Guevara (R – Appleton) announced their goal to make retirement tax-free in Wisconsin.

The budget amendment, if taken up by the Joint Committee on Finance or the Governor, would exempt the first $100,000 of retirement income for each individual age 67 or older, and the first $200,000 for married-joint filers.

The Wisconsin Department of Revenue estimates that less than 2% of all tax paying retirees in Wisconsin would still have an individual income tax liability on retirement income under this proposal.

The proposal has been developed in coordination with Representative Macco (R – Ledgeview) who has played a leadership role in reviewing and vetting tax-related polices as chair of the Assembly Committee on Ways and Means.

“Thanks to prudent fiscal leadership by the Republican legislature the past ten years, Wisconsin finds itself in an enviable position. Exempting retirement income is the first piece of a comprehensive tax reform package that we will introduce this session. I look forward to delivering fair, low, and simple tax reform for all Wisconsinites,” said Rep. Macco (R-Ledgeview).

Governor Evers Calls for Hope, Bipartisan Unity in Inaugural Address

Governor Tony Evers plans to outline a largely liberal agenda in his second inaugural address Tuesday, while calling for working together on issues that have long divided Republicans and Democrats — including protecting abortion rights, expanding Medicaid, legalizing marijuana and fighting water pollution.

While short on details, his speech serves as a guidepost for the issues he will prioritize during a second term. In February, Evers will release his two-year state budget plan, which will include details about the state’s projected $6.6 billion surplus.

On Tuesday, Evers doesn’t plan to mention the surplus specifically — instead he’ll highlight key priorities such as cutting taxes for the middle class and not just wealthy residents. Evers opposes a Republican plan to move toward a flat income tax rate, which would lower taxes more dramatically for those at the highest tax rate.

Evers is also calling for “generational, transformative improvements as to how we invest in our local communities and keep them safe.” He has called for increased funding to local governments, while Republican legislative leaders are discussing a plan that would give counties, cities, towns and villages a portion of the state sales tax revenue.

In addition to Evers, others being sworn in Tuesday included Lt. Gov. Sara Rodriguez; Attorney General Josh Kaul; Secretary of State Doug La Follette; state Treasurer John Leiber; 17 members of the state Senate and all 99 members of the Assembly.

 

IRS Issues Standard Mileage Rates for 2023

The Internal Revenue Service today issued the 2023 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on January 1, 2023, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 65.5 cents per mile driven for business use, up 3 cents from the midyear increase setting the rate for the second half of 2022.
  • 22 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, consistent with the increased midyear rate set for the second half of 2022.
  • 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2022.

The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

It is important to note that under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station. For more details see Moving Expenses for Members of the Armed Forces.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Taxpayers can use the standard mileage rate but generally must opt to use it in the first year the car is available for business use. Then, in later years, they can choose either the standard mileage rate or actual expenses. Leased vehicles must use the standard mileage rate method for the entire lease period (including renewals) if the standard mileage rate is chosen.

Notice 2023-03 contains the optional 2023 standard mileage rates, as well as the maximum automobile cost used to calculate the allowance under a fixed and variable rate (FAVR) plan. In addition, the notice provides the maximum fair market value of employer-provided automobiles first made available to employees for personal use in calendar year 2023 for which employers may use the fleet-average valuation rule in or the vehicle cents-per-mile valuation rule.