Meta Faces €900 Million Euro VAT Bill in Italy Over User Profiles

Key Concepts:

• NIL (Name, Image, Likeness) income for college athletes and its tax implications
• VAT (Value Added Tax) and its potential application to social media companies
• Beneficial Ownership Information (BOI) reporting requirements under the Corporate Transparency Act (CTA)
• Social Security Administration (SSA) proposed rule changes and service limitations
• Electronic Funds Transfer (EFT) and the move away from paper checks for federal payments
• Tax filing season statistics and trends
• Retroactive bonus taxation
• IRS budget cuts, personnel changes, and data security concerns
• Earned Income Tax Credit (EITC) and its 50th anniversary
• Impact of electric vehicles on state gas tax revenues

1. NIL Income and Tax Implications for College Athletes:

• College athletes can now earn significant income from NIL deals.
• States are using tax laws to maximize NIL's effectiveness for public universities.
• Example: Arch Manning, the presumptive starting quarterback for the University of Texas, has an NIL valuation of $6.5 million per season.
• Tax considerations may influence athletes' decisions when choosing universities.

2. VAT on Social Media Companies in Italy:

• Italian tax authorities are arguing that social media users provide valuable consideration (personal data) in exchange for services, making them subject to VAT.
• Meta has reportedly been issued a bill for 900 million euro.
• Similar claims have been lodged against the parent companies of X and LinkedIn.
• This could be a template for taxing tech giants across the European Union.
• VAT is similar to sales tax, but with key differences.

3. Corporate Transparency Act (CTA) and BOI Reporting:

• US businesses no longer have to comply with the beneficial ownership information (BOI) reporting requirements of the Corporate Transparency Act (CTA).
• An interim final rule issued by the Trump administration removes the requirement for US companies and US persons to report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN).
• The rule would exempt more than 99% of entities from the reporting requirement.
• The original intent of the CTA was to crack down on money laundering and other potential crimes.

4. Social Security Administration (SSA) Changes:

• Proposed rule changes and personnel cuts at the SSA could create more administrative burdens for individuals.
• Frank Benignano, President Trump's nominee to lead the SSA, faced questions about these issues during his confirmation hearing.
• The SSA is responsible for paying $1.6 trillion per year to 72 million beneficiaries.
• A proposal from the Department of Government Efficiency (Doge) would limit Social Security phone services.
• The SSA announced that as of April 14, 2025, those applying for SSDI, Medicare, or SSI who cannot use a personal online Social Security account can complete their claim entirely by telephone.
• Those applying for regular retirement or survivor benefits will have to do it online or go to a Social Security Administration office.

5. Shift Away from Paper Checks for Federal Payments:

• President Trump signed an executive order declaring that the federal government must stop issuing paper checks by September 30, 2025, in favor of direct deposit, prepaid cards, or other digital account options.
• This includes Social Security benefits and tax refunds.
• Paper checks are considered expensive and wasteful.
• Department of the Treasury checks are 16 times more likely to be reported lost or stolen, returned undeliverable, or altered compared to electronic funds transfers (EFT).
• In 2015, the Federal Reserve announced that it would no longer accept checks larger than $99,999,999.

6. Tax Filing Season Statistics:

• IRS data from the seventh week of the tax filing season (ending March 14, 2025) shows a dip in tax filing and processing of tax returns for individuals.
• The IRS received 70,370,000 individual income tax returns as of March 14, 2025, compared to 71,587,000 as of March 15, 2024.
• The number of e-filed returns prepared by professionals is nearly neck and neck with the number of self-prepared e-filed returns.
• Tax refund numbers are up, both in terms of the number of refunds issued and the dollar values involved.
• The average tax refund so far this year is $3,271, with direct deposit refunds averaging $3,330.

7. Taxation of Retroactive Bonuses:

• A reader asked if they needed to amend their 2024 tax return after receiving a retroactive bonus for that year.
• The answer is no; the bonus should be reported on the 2025 tax return, as employers must report payments in the year they are paid.
• This applies to bonuses, regular wages, and corrected wages.
• The same rule generally applies to other payments as well, including Social Security benefits that are received as a lumpsum payment.

8. Tax Trivia: First Social Security Beneficiary:

• The first Social Security beneficiary was Ernest Arian, a retired Cleveland motorman.
• In 1937, a nickel was withheld from his wages for the one day he worked under the new program.
• He received a one-time lumpsum retirement payment of 17 cents.
• Other notable figures in Social Security history include Fred Hap, Grace Dorothy Owen, and John David Sweeney.

9. IRS Changes and Concerns:

• Acting IRS Commissioner Melanie Krauss has told employees that the Treasury hasn't yet provided the agency with its reduction in force (RIF) plan.
• There are concerns about the effect that these cuts may have on service and collections, especially given that the terminations so far have disproportionately affected enforcement personnel.
• Former Missouri Representative Billy Long has been picked by President Trump to serve as the next IRS Commissioner.
• The Doge team reportedly wants to use IRS data to investigate potential fraud at the Supplemental Nutrition Assistance Program (SNAP).
• Former IRS Commissioner Danny Warfl explains that the IRS has over the years given some of its employees access to taxpayer data, but it was rare for anyone of the IRS to have access to all of the data.

10. Quick Tax and Accounting News:

• The 50th anniversary of the Earned Income Tax Credit (EITC) was Saturday, March 29, 2025.
• As of December 2024, approximately 23 million workers and families received about $64 billion from the EITC.
• Oregon recently celebrated registering more than 100,000 electric cars.
• The move towards fuel-efficient cars has resulted in a dip in tax revenues since electric vehicles aren't subject to the gas tax.

Synthesis/Conclusion:

This episode of Tax Breaks covers a wide range of timely tax-related topics, from the emerging tax implications of NIL deals for college athletes to potential changes in how social media companies are taxed. It also addresses important administrative changes at the Social Security Administration and the IRS, as well as trends in tax filing and refund processing. The episode highlights the ongoing shift towards digital payments and the challenges faced by state governments in adapting to the rise of electric vehicles. The information presented is relevant to both individuals and businesses, offering insights into current tax laws, potential future changes, and the overall landscape of taxation in the United States and abroad.