IRS Making Job Offers to Tackle Tax Return Backlog, Rettig Says – Naomi Jagoda, Bloomberg ($). “The IRS has made thousands of offers under an expedited process that it is using to hire workers to tackle a backlog of unprocessed tax returns, Commissioner Chuck Rettig told the Senate Finance Committee.”
‘Over 90 percent receive job offers on the spot from us,’ said Rettig. ‘We can bring them on board between 30 and 45 days, and we are doing so.’
The new employees will be tasked with helping process its backlog of tax returns, which first amassed early in the pandemic when public health restrictions forced processing centers to close. The agency has struggled to catch up, prompting the Office of Personnel Management to allow the IRS to use an expedited hiring process, known as direct-hire authority, in early March.
New Hiring Authority Paying Off for IRS, Rettig Says – Jonathan Curry, Tax Notes ($):
The IRS has already managed to snag 2,200 new hires during the spree of recent in-person job fairs held at its paper processing centers, and the agency expects to extend many more job offers to attendees of its virtual job fairs, although those 'require a little more follow up,' Rettig said April 7 at a Senate Finance Committee hearing.
IRS Commissioner: Tax Season off to ‘Strong Start’ – Jay Heflin, Eide Bailly. “IRS Commissioner Charles Rettig testified before the Senate Finance Committee on April 7th to provide an update on the current filing season, and said it was off to a ‘strong start.’”
‘I am pleased to report the 2022 filing season got off to a strong start in terms of tax return processing and the operation of our information technology systems,’ Rettig told the panel.
Rettig noted that through April 1st the IRS has processed more than 89 million individual federal tax returns and issued more than 63 million refunds totaling more than $204 billion.
Warren Says Top IRS Auditors Would Make Billionaire Tax Workable – Laura Davison, Bloomberg ($). “The IRS has the expertise to enforce President Joe Biden’s proposal to tax the unrealized gains of mega-millionaires and billionaires, Senator Elizabeth Warren contended in face of criticism over the workability of a proposal she strongly supports.”
Warren, a Massachusetts Democrat, said Thursday at a Senate Finance Committee hearing that the Internal Revenue Service has for more than a century audited the estate-tax returns for wealthy Americans who have died. That skill-set makes it possible for the agency to apply taxes on unrealized capital gains among the ultra-rich, she said.
Warren’s remarks address a common critique of plans to tax accumulated wealth or unrealized gains: that determining the worth of hard-to-value assets -- like art, real estate or closely held businesses -- would be an administrative nightmare for the IRS and largely impossible for an agency that has experienced staffing shortages and budget cuts.
House passes $55B aid package for restaurants, other businesses - Aidan Quigley and Lindsey McPherson, Roll Call. “The House passed a $55 billion package of aid to restaurants and other pandemic-ravaged industries following months of stops and starts, sending it to the Senate for negotiations with a rival bipartisan package that takes a different approach.”
The House bill would provide $42 billion to replenish a fund for struggling restaurants, food trucks, bars, caterers, brewpubs, bakeries and more which saw an initial tranche of funding run dry quickly last year. The measure would tack on another $13 billion for small businesses that suffered revenue losses of at least 40 percent during the pandemic, without regard to what industries they operate in, with grants capped at $1 million each.
That's a key difference with newly-unveiled Senate legislation that would set aside $8 billion for various specific groups on top of $40 billion for restaurants, bars and other food-service establishments. That $8 billion would be carved up into pots of money directed to gyms and fitness centers, live entertainment venues, motor coach and ferry operators, minor league sports teams, and small businesses that were cut off from customers and suppliers due to border closures.
House extends funding for Restaurants, Small Businesses still struggling with Covid-19 – Jay Heflin, Eide Bailly:
Today’s bill provides $42 billion to replenish that Fund and $13 billion aimed at small businesses and live venue operators. The legislation is paid for by recovering revenue that was fraudulently or mistakenly withdrawn from previous Covid-19 relief bills.
Like the previous legislation, revenue awarded to businesses will not be included in taxable income.
Employee Retention Tax Credit - Alex Clearfield, Bloomberg ($):
Reps. Carol Miller (R-W.Va.) and Andy Levin (D-Mich.), along with 66 other representatives, sent a letter to Rettig Thursday highlighting delayed employee retention tax credit payments and asking for the IRS to expedite delivery and improve customer service for those seeking information about missing payments.
The letter is here.
Opportunity Zone Tax Breaks Would See Tweaks in Bipartisan Bill - Colin Wilhelm, Bloomberg ($). “A bipartisan coalition of lawmakers want to change and extend the opportunity zone program created by the 2017 tax law to enhance investment and business creation in economically underserved areas of the U.S.”
The new legislation would establish reporting requirements for funds that raise capital for opportunity zone projects and the investors who are putting money into those funds. The absence of those data requirements—which were present in an original standalone opportunity zones proposal but weren’t in the 2017 tax law—has been a source of criticism for the program.
Sens. Cory Booker (D-N.J.) and Tim Scott (R-S.C.) on Thursday introduced the new proposal in the Senate, while Reps. Ron Kind (D-Wis.) and Mike Kelly (R-Pa.) introduced the House companion.
Manchin Says He Doesn’t Support Bonus EV Battery Tax Credit - Ari Natter, Bloomberg ($):
Democratic Senator Joe Manchin says he doesn’t support a proposal to boost a tax credit for electric vehicles that use batteries that are manufactured domestically.
Manchin opposes a provision in the Build Back Better bill. Imagine that.
The Energy Tax Policy Conundrum: Do We Want To Reduce Fossil Fuel Prices Or Increase Them? – Howard Gleckman, Tax Policy Center. “State and federal lawmakers are debating an extraordinary range of often-contradictory energy-related tax changes. These inconsistencies have existed for years, but they rarely have been more apparent than today.”
We are at a time when climate experts increasingly are warning of the growing risks of unchecked fossil fuel use. Yet, we also are confronting a rapid and steep rise in oil prices that creates political pressure for lawmakers to soften the blow for consumers. While Ukraine-related oil price increases have reversed themselves in recent days, prices remain close to $100/barrel.
Yellen Says a Digital Dollar Would Take Years of Development - Christopher Condon, Bloomberg ($). “Treasury Secretary Janet Yellen said a digital dollar would take years to develop if the U.S. decides to proceed with one, underscoring a deliberate approach by American policy makers as they flesh out their regulatory plans to address the rapid spread of digital assets.”
U.S. regulators are now engaged in a six-month review aimed at coming up with recommendations on a raft of issues linked to digital assets, including a digital version of the U.S. sovereign currency. The initiative was launched through an executive order by President Joe Biden.
‘I don’t yet know the conclusions we will reach, but we must be clear that issuing a CBDC would likely present a major design and engineering challenge that would require years of development, not months,’ Yellen said in prepared remarks to an event Thursday in Washington. CBDC refers to a central bank digital currency -- for the U.S., a digital dollar.
State and Local Tax Burdens, Calendar Year 2022 – Erica York and Jared Walczak, Tax Foundation:
Key Findings
- In calendar year 2022, state-local tax burdens are estimated at 11.2 percent of national product.
- Taxpayers remit taxes to both their home state and to other states, and about 20 percent of state tax revenue comes from nonresidents. Our tax burdens analysis accounts for this tax exporting.
- New Yorkers faced the highest burden, with 15.9 percent of net product in the state going to state and local taxes. Connecticut (15.4 percent) and Hawaii (14.9 percent) followed close behind.
- On the other end of the spectrum, Alaska (4.6 percent), Wyoming (7.5 percent), and Tennessee (7.6 percent) had the lowest burdens.
N.Y.’s $220 Billion Election-Year Budget Stuffed With Tax Breaks – Keshia Clukey and Donna Borak, Bloomberg ($). “New York Governor Kathy Hochul and legislative leaders on Thursday struck a $220 billion budget deal that promises a little less pain at the pump, help for working parents, and new tax breaks.”
Buoyed by more than $26 billion in pandemic recovery money and higher-than-anticipated tax collections, the Democratic leaders agreed to forgo $162 million in revenue by accelerating a scheduled reduction in personal income tax rates.
They also decided on a $2.2 billion homeowner tax rebate; a six-month suspension of the state’s fuel tax that will save New Yorkers 16 cents a gallon; and $287 million in child tax credits. In addition, the deal calls for letting cannabis operations qualify for tax deductions.
Nebraska Lawmakers Send Personal, Corporate Tax Cuts to Governor – Michael Bologna, Bloomberg ($). “Legislation slashing Nebraska’s income tax rates for individuals and corporations, and phasing out taxes on Social Security income is headed to Gov. Pete Ricketts.”
Lawmakers gave final approval to L.B. 873 on Thursday by a vote of 43-0. The bill creates a schedule for trimming the top individual income tax rate to 5.84% from 6.84% over five years, and chops the top corporate income tax rate to 5.84% from 7.5% over the same period. The bill also would create a four-year process that phases out taxes on Social Security income.
Some Hawaii Taxpayers Could Get A $300 Check From The State – Blaze Lovell, Honolulu Civil Beat. “Hawaii taxpayers earning less than $100,000 annually could receive a $300 tax rebate from the state government. Meanwhile, those earning more than $100,000 could get a rebate of $100, lawmakers announced Wednesday.”
House Finance Chair Sylvia Luke said that she and Senate Ways and Means Chair Donovan Dela Cruz have reached a tentative agreement to revive a proposal that would help to kick some of the state’s $2 billion budget surplus back to residents.
Illinois Lawmakers Shake Hands on $1.83 Billion Tax Relief Plan – Michael Bologna, Bloomberg ($). “Legislation promising $1.83 billion in tax relief to Illinois taxpayers will be sent to Gov. J.B. Pritzker under a fiscal year 2023 budget deal reached Thursday with Democratic leaders of the House and Senate.”
Pritzker outlined a plan that would cut sales taxes on groceries and gasoline, offer a one-time rebate on property taxes, and expand the state earned income tax credit. Energized by a strong budget surplus, the deal also makes a deposit in Illinois’s Budget Stabilization Fund, which was depleted over the course of the Covid-19 pandemic.
‘Our plan delivers more than $1.8 billion in tax relief to Illinois residents, adds $1 billion to our state’s long-depleted Rainy-Day Fund, and doubles down on our efforts to make unprecedented investments in public safety,’ said Pritzker, a first-term Democrat running for reelection in November.
Louisiana Lawmakers Move Toward Sales Tax Harmony – Michael Bologna, Bloomberg ($). “The Louisiana Senate approved legislation simplifying the sales tax code, responding to criticism the Pelican State administers the most complicated sales tax system in the country.”
The Senate approved one bill late Wednesday and another Thursday to streamline state and parish level filing and auditing practices. Two other bills aimed at harmonizing tax systems are under consideration. The four-bill package could serve as a placeholder for tax administrators ahead of the Legislature’s top tax priority, (H.B. 681), a proposed constitutional amendment for November’s ballot to allow creation of a centralized sales tax collection system.
NYC Guaranteed Income Pilot Gives New Mothers $1,000 a Month – Sarah Holder, Bloomberg ($). “As a single mother of a young boy and a baby, Kassandra Hernandez has spent a lot of brainpower thinking about how to stretch every last dollar.”
Since July, Hernandez has been part of a new guaranteed income pilot called the Bridge Project, designed for pregnant women and new mothers in high-poverty, heavily Black and Brown New York City zip codes making less than $52,000 a year.
The Bridge Project, funded by $16 million from the New York City-based Monarch Foundation, is the latest in a series of local cash pilot programs that provide no-strings-attached money to select populations in need. Early research on the first six months of the project, released this month, shows that women were able to access child care at higher rates and buy essentials for their babies.
Ohio High Court Rejects Bar’s Resort-Area Tax Refund Argument – Perry Cooper, Bloomberg ($). “A resort-town bar on an island in Lake Erie failed to convince the Ohio Supreme Court it is entitled to a refund of resort-area taxes.”
Colonial Inc., which operates the Beer Barrel Saloon in Put-in-Bay, argued the village failed to reenact the resort area tax after each federal census. The state’s resort-area tax applies to areas where at least 62% of total housing units are classified as seasonal or recreational under data from the most recent decennial census.
Massachusetts’ Tax Power Disputed in Briefs to Top State Court – Perry Cooper, Bloomberg ($). “Massachusetts lacks the statutory authority to tax capital gains realized by a Florida S corporation on its sale of a Massachusetts limited liability company, the corporation argued to the state high court.”
The state fought back, arguing in its supplemental brief filed Wednesday that the state’s statute on corporate taxation requires S corporations doing business or owning property in Massachusetts to pay tax on their net income, including income from the sale of an interest in a business.
Texas Appeals Court Rejects Cafe’s Resale Exemption Suit – Perry Cooper, Bloomberg ($). “Cheddar’s Casual Cafe Inc. isn’t entitled to recoup $266,000 it paid in sales and use tax from 2010-13 on dishes and utensils under the sale-for-resale exemption, a Texas appeals court ruled.”
The restaurant argued the dishes, glasses, and utensils—referred to as 'smallwares'—it reuses for dine-in customers qualify for the exemption in the Texas Tax Code, arguing that the utensils are transferred to customers while they are eating at the restaurant.
Senate unanimously passes Russia trade, embargo bills and House clears them - Ellyn Ferguson, Roll Call. “United in bipartisan outrage, the Senate voted unanimously Thursday to remove Russia’s favorable trade status and to ban the import of its energy products and the House followed a short while later, clearing the bills for the president to sign.”
Senators passed the trade status revocation bill (HR 7108), as amended, with a 100-0 vote. They then voted 100-0 to approve the oil embargo bill (HR 6968), as amended. The House vote to concur in the trade status measure was 420-3 and to concur on the embargo legislation was 413-9.
Yellen Unlikely to Get U.S. Firms’ Support for Global Tax Deal - Christopher Condon, Bloomberg ($). “Treasury Secretary Janet Yellen is counting on the support of corporate America for a recently agreed global tax deal to help win passage in the U.S. Congress -- a crucial step for its worldwide success."
The problem with that plan: Big business is nowhere near backing the plan. Executives at eight major U.S.-based multinational corporations interviewed by Bloomberg said that far too much remains unknown about the deal, whose fine print is still being negotiated.
Developing Countries to Get Global Tax Deal Help (Podcast) – Hamza Ali, Bloomberg ($):
The OECD’s Inclusive Framework on Base Erosion and Profit Shifting is aiming to help developing countries implement a global agreement to change how multinational companies are taxed, according to the co-chair of its steering committee.
Bipartisan Bill Targets Foreign Tax Credits in Russia – Benjamin Guggenheim, Tax Notes ($). “American companies operating in Russia or Belarus would be ineligible for foreign tax credits and subject to the full 21 percent corporate tax rate under a newly announced bipartisan bill.”
Released by Senate Finance Committee Chair Ron Wyden, D-Ore., and committee member Rob Portman, R-Ohio, as a discussion draft on April 7, the legislation would put Russia and Belarus in the company of countries such as North Korea, Iran, Syria, and Sudan under section 901(j).
Bipartisan effort underway to disallow Foreign Tax Credits for Companies Operating in Russia – Jay Heflin, Eide Bailly:
A discussion draft on legislation means that the lawmakers have released legislative text that other lawmakers can comment on and suggest changes to the text. This can be a time-consuming process before a finalized bill is completed and introduced.
A summary of the legislation can be found here.
The discussion draft legislative text can be found here.
Get your Empanada on! Today recognizes the pastries that are served from high-brow restaurants as well as everyday food trucks.
From National Day Calendar:
Empanadas are made by folding the dough or bread around a seasoned stuffing. The stuffed dough is then baked or fried. Very much like hand pies, these delicious pastries offer a variety of choices. You can make your empanadas with meat, cheese, vegetables or fruit fillings. However, they may be made with other ingredients, too.
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