Biden signs major climate, health care and tax bill into law - Laura Weiss, Roll Call:
President Joe Biden signed his party’s climate, tax and health care package into law on Tuesday, celebrating that key planks of his domestic agenda finally made it across the finish line with congressional Democrats at his side.
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The package is estimated to cut the federal deficit by about $300 billion over the next decade, thanks to revenue raisers that include a 15 percent minimum tax on the largest corporations, a 1 percent tax on companies’ stock buybacks and measures to lower prescription drug costs for seniors. The legislation also adds almost $80 billion to the IRS budget over 10 years to ramp up tax collection.
Related: Legislation upping taxes heads to the White House..
Biden signs sweeping bill to tackle climate change, lower health-care costs - Amy Wang, Washington Post. "President Biden on Tuesday signed into law the Inflation Reduction Act, an ambitious measure that aims to tamp down on inflation, lower prescription drug prices, tackle climate change, reduce the deficit and impose a minimum tax on profits of the largest corporations."
Biden Signs Landmark Tax And Climate Bill Into Law - Asha Glover, Law360 Tax Authority:
The bill differs from the Build Back Better Act passed by the House late last year in several respects. That bill included a one-year extension of the expanded child tax credit for families earning up to $150,000 per year. The BBB Act also would have extended the earned income tax credit for childless workers for an additional year. Senate Democrats, in an effort to preserve the overall legislative agreement with Sens. Joe Manchin, D-W.Va., and Kyrsten Sinema, D-Ariz., rejected amendments to the final version of the bill that would have expanded the child tax credit.
House Speaker Nancy Pelosi, D-Calif., has said that lawmakers intend to address the provisions that were left out of the bill with future legislation.
Hard Part Begins for IRS, Treasury as Biden Signs Reconciliation Bill - Alexander Rifaat, Tax Notes ($):
Eric Solomon, a former Treasury assistant secretary for tax policy under President George W. Bush, told Tax Notes that it’s important for the IRS and Treasury to figure out which provisions are most in need of guidance, singling out the corporate alternative minimum tax.
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Solomon, now with Steptoe & Johnson LLP, also highlighted the organizational constraints at Treasury and the IRS. He said that because most of the tax measures in the law focus on domestic concerns, the guidance will largely be crafted by the Treasury Office of Tax Policy, which he said “doesn’t have a lot of people at the moment.”
Breaking Down the Tax Changes in the Inflation Reduction Act - David Stewart and Kyle Pomerleau, Tax Notes Opinions. "Now, on the tax side it's certainly not as robust as what they had hoped at the beginning. It leaves out a lot of important tax policies that the Biden administration had been pushing for, chiefly the global tax deal. But it does have some significant revenue raisers and some of them that were originally proposed back during the campaign."
IRS Issues Immediate Guidance as EV Credit Changes Are Enacted - Mary Katherine Brown and Chandra Wallace, Tax Notes ($). "Cars made by Tesla and General Motors, which weren’t eligible for the credits ahead of the August 16 bill signing, suddenly saw their tax breaks renewed, while Kia and Porsche cars immediately lost their credits because of a new requirement that the credit can only be used on vehicles assembled in North America."
IRS guidance: Plug-in Electric Drive Vehicle Credit at a Glance
Tax Credits in US Climate Deal Bring Paris Accords Goals Closer - Thornton Matheson, Bloomberg. "The largest tax credit increases are for the renewable energy investment tax credit ($65 billion) and production tax credit ($62 billion), which together form the core of US energy transition policy. The bill also creates or expands green tax credits for renewable energy equipment manufacturing ($37 billion), commercial and residential buildings ($37 billion), nuclear power ($30 billion), alternative fuels ($21.8 billion), and electric vehicles ($14.2 billion)."
IRS Issues Applicable Federal Rates (AFR) for September 2022 - Bailey Finney, Eide Bailly. "There are rates for 'short-term,' 'mid-term,' and 'long-term' instruments. Short-term covers demand loans and instruments extending up to three years. Mid-term covers loans and instruments of over three years and up to nine years. Long-term covers loans and instruments with maturities longer than nine years."
The annual short term rate, 3.05%, is now above the mid term rate of 2.93%.
IRS Cleared To Seek Info On Crypto Platform SFOX's Users - Elise Hansen, Law360 Tax Authority:
The IRS can serve a "John Doe" summons to Ox Labs Inc., which does business as sFOX, to get information about some of its high-value users, U.S. District Judge Otis D. Wright II said Monday. The summons doesn't identify specific individuals by name as targets of the probe; instead, it seeks information about any individuals who meet specified criteria.
In this case, the U.S. is seeking account and transaction records for U.S. persons with accounts at sFOX and at least $20,000 in transactions in any year from 2016 through the end of 2021, according to court filings.
Related: New Tax Guidance Issued on Cryptocurrency Transactions.
IRS Seeing Exempt Organization E-Filing Errors - Fred Stokeld, Tax Notes ($):
There are a number of issues “that can interfere with the successful submission of an electronically filed return,” Elaine Leichter of the IRS Tax-Exempt and Government Entities Division said August 16 during the 2022 Virtual IRS Nationwide Tax Forum.
Incorrect entity information is one such error. The heading area, above Part I of a return, asks for information that must match the information the IRS has, Leichter explained. “Errors here prevent a return from being accepted for filing,” she said.
Don't commit these federal tax crimes - Kay Bell, Don't Mess With Taxes. "The IRS not only wants your timely filed 1040, it wants the document to be complete and accurate. Filing a false tax return is a serious offense punishable by significant fines and potential imprisonment. Basically, filing a false tax return is tax fraud."
Amid Trump Passport Flap, Here’s How To Keep IRS From Taking Yours - Robert Wood, Forbes. " The IRS is one agency that has the clout to cause the State Department not to issue or renew a passport. The IRS periodically reminds taxpayers that they may not be able to renew their passports or to get a new one if they owe $55,000 or more in federal taxes."
A totally off-the-news post about taxes - Matthew Yglesias, Slow Boring. "Saying that we should tax consumption rather than savings sounds good to a lot of people. But saying we should tax labor income at a higher rate than investment income sounds bad to a lot of people — you get Warren Buffet saying he shouldn’t be paying a lower tax rate than his secretary."
New Buyback Excise Tax Snares Foreign Investors - Steven Rosenthal, TaxVox. "As a result, it will increase US tax receipts from foreign investors, who do not pay US capital gains tax when they sell stock but are taxed on dividends they receive."
FDA Ban on Flavored Cigars Could Cost $836 Million in Annual Excise Tax Revenue - Adam Hoffer, Tax Foundation. "The FDA’s proposal to ban flavored cigars would be a disruptive force in the cigar market and would carry significant revenue implications for many state governments. Flavored cigars make up between one-third and one-half of all cigar sales. We estimate that the aggregate effect of a ban on flavored cigar sales in the U.S. would be a decline of $836 million in excise tax revenue annually. This estimate does not include lost revenues from state sales taxes or import and customs duties."
Court Finds No Government Immunity for Perjurious IRS Agents - Mary Katherine Browne, Tax Notes:
In its August 12 opinion in Mynatt v. United States, the Sixth Circuit unanimously held that the discretionary function exception under the Federal Tort Claims Act couldn’t save the government from litigation after a federal employee used false testimony and forged documents to obtain an indictment from a Tennessee grand jury. The opinion was penned by Judge Richard A. Griffin.
Ken Mynatt was a senior revenue agent for the IRS for 30 years and served as executive vice president of Chapter 39 of the National Treasury Employees Union. Mynatt blew the whistle to a member of Congress about wasteful spending by IRS employees and managers during a “lavish” managers conference in 2010, which led to a congressional inquiry.
From the opinion:
Plaintiff Kenneth Mynatt is an Internal Revenue Service employee. Over a decade ago, he “blew the whistle to a member of the United States Congress about a wasteful IRS manager conference” and gave an interview to the Washington Post in which he was critical of his union president's leadership and more specifically, her “perceived abuse of power.”
These two unrelated events did not sit well with other government employees and union members. Mynatt asserts that various federal employees formed a plan to retaliate against him — framing Mynatt for stealing funds from the union. The conspiracy's first step was for two separate employees to report his alleged theft to two federal entities, the Department of Labor's Office of Labor Management Standards and the Treasury Inspector General for Tax Administration. These reports triggered internal investigations, and government agents ultimately “urged the filing and prosecution of federal felony charges” against him. But the Department of Justice “determined the alleged crimes did not occur,” and that the investigations “were political in nature,” and declined to prosecute.
The co-conspirators then turned to Tennessee's criminal justice system, lobbying district attorneys from Tennessee's 20th Judicial District to pick up the cudgel. Government agents presented “false testimony and forged documents” to prosecutors, doing so despite admitting that “they were being pressured by their respective management structures to have [Mynatt] indicted” and “the charges were political in nature and not based on provable facts.” The plan culminated with one special agent, Scott Kemp, testifying before a state grand jury “using false testimony and altered documents,” which resulted in a two-count grand-jury indictment of Mynatt. During the resulting criminal proceedings, government agents tried to “pressure [Mynatt] into pleading guilty to lesser unfounded misdemeanor charges” and “offer[ed] to drop all criminal charges if he resigned his employment with the Federal government.” The District Attorney ultimately dismissed the charges.
The IRS is getting a big increase in funding under the Inflation Reduction Act. One hopes that the funding won't go for this sort of thing.
Japan’s tax agency launches contest to promote alcohol to young people - NewsPub.live. "Japan’s Nationwide Tax Company is pleading for concepts which may encourage extra youthful residents to drink alcohol as the federal government frets over the fiscal implications of generational change."
You're welcome for the big national debt and Social Security insolvency. Today is Baby Boomers Recognition Day!
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