Forbes - Meta Faces €900 Million Euro VAT Bill in Italy Over User Profiles
The podcast covers several tax-related topics, starting with the impact of NIL (Name, Image, Likeness) income for college athletes, highlighting Arch Manning's $6.5 million valuation and its tax implications. It also discusses Italy's VAT case against big tech companies, arguing that personal data exchange should be taxed. In the US, changes in tax reporting requirements are noted, such as the removal of the beneficial ownership information requirement for most entities, potentially reducing compliance burdens. Additionally, the podcast addresses changes in Social Security Administration services, including the shift to digital payments and the allowance of phone services for certain beneficiaries. The episode concludes with tax filing statistics, showing a decrease in filings compared to the previous year, and a discussion on the impact of electric vehicles on state tax revenues.
Key Points:
- NIL income for college athletes like Arch Manning has significant tax implications, with states optimizing tax laws for public universities.
- Italy's VAT case against big tech could set a precedent for taxing personal data exchanges across the EU.
- US businesses benefit from reduced tax reporting requirements due to changes in the Corporate Transparency Act.
- Social Security Administration is moving towards digital payments, reducing paper check usage to cut costs and improve efficiency.
- Tax filing statistics show a decrease in filings, with a notable balance between professional and self-prepared e-filed returns.
Details:
1. 🎙️ Introduction & Host Background
- The host, Kelly Phillips, is a senior writer for Forbes.
- Kelly is known online as 'tax girl'.
- She is a tax attorney.
- Kelly works with tax professionals and taxpayers.
2. ⚾ Baseball Memories & Personal Stories
2.1. Opening Day Experience
2.2. Influence of Grandfather
3. 🏈 NIL Income & Tax Implications
- College athletes are now able to earn substantial income through NIL (name, image, and likeness) deals, impacting their financial and tax situation significantly.
- The NIL income involves complex tax implications, with states optimizing tax laws to benefit public universities and athletes.
- Arch Manning, a prominent college athlete, has an NIL valuation of $6.5 million per season at the University of Texas, showcasing the potential earnings involved.
- Tax considerations are a strategic factor in Manning's choice of university, indicating how fiscal policies influence college sports decisions.
- Social media presence can significantly boost an athlete's income, as seen in Manning's expected popularity and earning potential.
- Athletes must navigate various tax strategies to optimize their NIL income, such as understanding state tax differences and leveraging deductions effectively.
4. 🇮🇹 Italian VAT Case Against Big Tech
- Italian tax authorities are pursuing a landmark VAT case against big tech companies, viewing the exchange of personal data for services on social media platforms as taxable transactions.
- The Italian tax authorities argue that users receive valuable services in exchange for personal data, which constitutes consideration similar to monetary transactions and should therefore be subject to VAT.
- Italy has issued a 900 million euro tax bill to Meta and has smaller claims against the parent companies of X and LinkedIn, highlighting the financial impact on these companies.
- As VAT is harmonized across the European Union, this case could have broader implications beyond Italy, potentially affecting how digital services are taxed across Europe.
- The legal arguments hinge on interpreting the exchange of data as a form of barter, which if accepted, could redefine digital transactions.
- Companies involved have not released detailed public statements, but the case is expected to see significant legal defense, potentially setting precedents in European tax law.
- The outcome of this case could lead to new regulatory frameworks for digital services, affecting not only taxation but also data privacy norms.
5. 🇺🇸 US Tax Reporting and CTA Changes
- The Corporate Transparency Act (CTA) initially required US businesses to report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN) to combat money laundering.
- The Trump administration issued an interim final rule that removes this requirement, exempting over 99% of entities from reporting.
- This change could affect financial transparency and regulation, raising concerns about potential loopholes for illegal activities.
- Businesses now face less administrative burden but may need to consider the long-term impact on compliance and transparency standards.
6. 🛡️ Social Security Administration Changes
- The Trump administration, while reducing corporate reporting requirements, proposed rule changes and personnel cuts at the Social Security Administration (SSA) that could increase administrative burdens for individuals.
- Frank Benignano, President Trump's nominee to lead the SSA, faced scrutiny during his confirmation hearing about these changes affecting a $1.6 trillion annual payout to 72 million beneficiaries, including retirees, the disabled, and children of covered workers.
- A proposal from the Department of Government Efficiency, led by Elon Musk, aimed to limit Social Security phone services, requiring Americans to handle benefits-related tasks online or in-person, rather than via phone.
- After Benignano's confirmation hearing, the SSA reversed course, allowing certain beneficiaries to complete claims by telephone starting April 14, 2025, including those applying for SSDI, Medicare, or SSI who cannot use online accounts.
- Applicants for regular retirement or survivor benefits must still complete the process online or in-person at SSA offices.
- President Trump signed an executive order mandating the cessation of federal paper checks by September 30, 2025.
7. 📉 Tax Filing Season Statistics
- Department of the Treasury checks are 16 times more likely to be reported lost, stolen, undeliverable, or altered compared to electronic funds transfers, highlighting the increased risk associated with using checks.
- In 2015, the Federal Reserve announced it would no longer accept checks exceeding $99,999,999, addressing concerns over fraud and processing complexities associated with very large checks.
- Retroactive bonuses must be reported in the year they are paid, not the year the work was performed. For instance, a bonus for 2024 work issued in 2025 should appear on the 2025 tax return, ensuring compliance with IRS reporting rules.
- This same reporting rule applies to corrected wages and social security benefits received as a lump sum, emphasizing the need for consistency in reporting income.
- IRS data from the seventh week of the tax filing season (ending March 14, 2025) shows a decline in tax filings and processing of individual tax returns, indicating potential challenges in taxpayer compliance or processing efficiency.
8. 💰 Taxpayer Questions & Bonus Taxation
- As of March 14, 2025, the IRS received 70,370,000 individual tax returns, a decrease of over 1 million compared to 2024's 71,587,000 returns.
- E-filing is evenly split between professional-prepared (34,467,000) and self-prepared (34,880,000) returns, aligning with the IRS's prediction of half of the returns being professionally filed.
- There is an increase in both the number and dollar value of tax refunds issued.
- The average tax refund in 2025 stands at $3,271, with direct deposit refunds higher at $3,330.
9. 🧾 Social Security Trivia & History
- Ernest Arian became Social Security's first beneficiary in 1937. A nickel was withheld from his wages for one day, resulting in a one-time lumpsum retirement payment of 17 cents.
- Fred Hap designed the original social security card in 1936 and was paid $60 for his work.
- Grace Dorothy Owen applied for her social security number on November 24th, 1936, receiving the lowest social security number 001-01-0001. This was due to New Hampshire being assigned the lowest area numbers.
- John David Sweeney received the first social security number, 055-09-0001, on December 1st, 1936. He passed away in 1974 without receiving benefits, but his widow did.
10. 📊 IRS Changes & Quick Tax News
- The IRS has not yet received its Reduction in Force (RAIF) plan from the Treasury, leading to ongoing discussions about the scope and number of employee cuts.
- There is uncertainty about whether the RAIF numbers will include 7,000 probationary employees who were terminated and reinstated, currently on paid administrative leave.
- Concerns exist about the impact of these cuts on service and collections, especially since terminations have disproportionately affected enforcement personnel like revenue agents and officers.
- Billy Long has been nominated as the next IRS Commissioner, but the Senate has not yet scheduled a hearing for his confirmation.
- Security concerns arise as the Doge team reportedly wants to use IRS data to investigate SNAP fraud, but differences in data administration may limit its utility.
- Former IRS Commissioner Danny Warfl noted that access to taxpayer data is highly restricted, even for high-level officials, emphasizing data security.
- The Earned Income Tax Credit (EITC) celebrated its 50th anniversary, with approximately 23 million workers and families receiving around $64 billion as of December 2024.
- Oregon registered over 100,000 electric cars, leading to decreased tax revenues as electric vehicles, making up 5% of registrations, are not subject to gas tax, prompting state officials to consider new tax strategies.