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Tax News & Views Coin Flip Roundup

December 12, 2023
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Key Takeaways

  • Will Congress pass a tax bill this year or not
  • EVs not moving off of car dealers’ lots
  • Legislative fix for 1099 snafu?
  • Increase in FSAs
  • Building the BOI database
  • Pillar Two Revenue Estimate
  • IRS Service Plan

 

Heads: A tax bill does not pass by year-end (most likely):

Taxwriters Said to Be Looking at Vehicles for Nearly Done Deal – Doug Sword, Tax Notes ($):

Negotiators are “very close” to an agreement, but there isn’t time to finish a tax extenders deal this year, according to a firsthand account of a closed-door interview with House Ways and Means Committee Chair Jason Smith, R-Mo…

Smith said with the House scheduled to be in session for only one more week, it appears the tax deal won’t happen this year, [former House Ways and Means Chairman Dave] Camp said.

“You never want to say ‘never’ in politics because there could be something that came forward, but hearing from him, it really seemed as if it’s going to be next year,” Camp said…

House Ways and Means communications director J.P. Freire was present at the interview and agreed that Smith “said we are getting closer to a tax deal, but it’s unlikely we make it by year’s end, and his focus is on replacing bad tax policy with good tax policy and looking at various options for vehicles.”

FYI: The legislative vehicles being pursued for moving tax legislation are next year's spending bills:

Congress’ Long To-Do List Leaves Scant Tax Time - Chris Cioffi, Bloomberg ($):

Lawmakers say they’re still negotiating a deal that pairs business credits with boosted child tax credit provisions. Democrats say they’re willing to extend the business breaks as long as there’s parity with the CTC.

Lawmakers asked Johnson to consider advancing the priorities before the end of the year, though the omnibus spending bills that tax legislation would most likely hitch a ride won’t get addressed until next month.

The current legislation funds some parts of the government through Jan. 19 and others through Feb. 2.

The fate of the tax bill lies with congressional leaders (which has always been the case). And right now leaders are not focused on taxes:

The bullish case for a tax bill – Bernie Becker, Politico. "Leading tax writers have been keeping congressional leadership informed about the progress they’re making in discussions… it’s not clear that a leadership that’s kept in the loop on tax talks will give their backing to a final product."

 

Tails: A tax bill passes by year-end (least likely): 

The Tax Angle: R&D Deal, Tax-Writer Retirements – Stephen Cooper, Law360 Tax Authority ($):

Hopes for a year-end tax bill were revived this week when the Senate's top tax writer said he is optimistic about reaching an agreement with Republicans to renew tax incentives to promote research and development spending by businesses in exchange for expanding a child tax credit for working families.

Senate Finance Committee Chairman Ron Wyden, D-Ore., told reporters Thursday that he's been working with Republicans, including Rep. Jason Smith, R-Mo., who chairs the House Ways and Means Committee, on a possible tax deal that would provide "parity" on the two incentives in terms of the revenue costs of the proposals.

FWIW: Both Chambers of Congress are scheduled to adjourn for the holidays by the end of this week. Their timeline in D.C. could be extended, but so far there has been no announcement on extending their stay.

Currently, lawmakers are expected to focus on spending and not taxes. But passing spending legislation is not assured:

Ukraine, NDAA and impeachment — Congress' big week - Andrew Desiderio, Jake Sherman and John Bresnahan, Punchbowl News ($):

There’s a better-than-even chance that Congress will leave town without approving critical new aid for Ukraine and Israel, two staunch U.S. allies locked in bitter wars. And the House is on track to formalize its impeachment inquiry into President Joe Biden… The Senate is on track to pass the annual defense authorization bill as soon as Wednesday. Then the chamber is supposed to recess on Thursday until January… After the Senate passes the NDAA, the House will pick it up and try to clear it by the end of the week.

Also, passing tax legislation in 2024 is not expected to happen. Chairman Smith has said he wants to examine the expiring TCJA provisions in 2024 (decide what stays and what goes) and pass tax legislation in 2025. Offsets will likely be a big deal and could include a new form of taxation.

It’s been stated before, but worth repeating, the outcome of the 2024 elections will have a major impact on the fate of the TCJA extensions.

 

Car Dealers on Why Some Customers Hesitate With EVs – Sean McLain, Wall Street Journal ($):

Auto dealers across many parts of the country say electric vehicles are becoming too hard a sell for buyers worried about the range, reliability and price of these models…

Battery-powered models have been piling up on car lotsdealers say, as EV sales growth has slowed in the U.S. this year. Car companies have been offering a combination of discounts and lower interest-rate deals in an effort to juice demand. But it hasn’t been enough, because buyer reticence extends beyond the price tag, dealers say…

Customers cite concerns about vehicles burning through a battery charge faster in cold weather or not being able to travel as far as they expected on a single charge, dealers say. Potential buyers also worry that chargers aren’t as readily accessible as gas stations or might be broken.

This news comes as the first Biden charging station has opened:  

1 big thing: First Biden-funded charging station opens – Axios:

More than two years after President Biden signed legislation allocating $5 billion for a nationwide network of taxpayer-funded electric vehicle charging stations, the first one finally opened last Friday in Ohio, Joann reports.

Why it matters: Having convenient, reliable fast chargers along major highways is an important confidence-booster for people considering an electric car…

Catch up fast: 2021's infrastructure law included $5 billion to establish the National Electric Vehicle Infrastructure (NEVI) program, administered by the Federal Highway Administration.

For car dealers struggling with EVs, Eide Bailly can help:

A comprehensive approach to planning puts you in the driver's seat - Eide Bailly:

Dealerships face a complex business landscape with legislation, manufacturer demands, economic changes, real estate costs, and technological challenges. These complexities often make it daunting to evaluate vital business activities such as cash flow, floor planning, and operational efficiencies. However, a trusted firm with expertise ranging from monthly bank reconciliations to intricate tax strategies can help you navigate these challenges and maintain optimal performance in your dealership.

 

IRS Delay Of 1099-K Threshold Could Prompt Legislative Fix – David van den Berg, Law360 Tax Authority ($):

The Internal Revenue Service's decision to delay implementation of a change in law requiring peer-to-peer payment platforms such as Venmo and PayPal to report aggregate payments exceeding $600 — down from $20,000 — provides an opportunity for congressional lawmakers to reinstate or put in place their own threshold…

Despite the challenging legislative environment, there could be opportunities for action on the Form 1099-K required reporting threshold. Rep. Dan Kildee, D-Mich., a co-sponsor of a bill introduced in May to change the reporting level to $5,000, said 2024 legislation to fund the federal government could provide an opportunity to replace the threshold.   

 

2024 Flexible Spending Arrangement contribution limit rises by $150 – IRS:

For 2024, there is a $150 increase to the contribution limit for these accounts.

An employee who chooses to participate in an FSA can contribute up to $3,200 through payroll deductions during the 2024 plan year. Amounts contributed are not subject to federal income tax, Social Security tax or Medicare tax.

 

Procedures Amended for Employee Plan Determination Letter Program – Tax Notes ($). “The IRS has modified (Rev. Proc. 2022-40) prior guidance (Rev. Proc. 2016-37) that specifies the circumstances under which a plan sponsor may submit a determination letter application to the agency regarding a qualified individually designed plan to permit the submission of determination letter applications for section 403(b) individually designed plans.”

 

IRS Crime Unit Is Helping Build Beneficial Ownership Database – Erin Slowey, Bloomberg ($):

The IRS Criminal Investigation unit is playing a role in building the database to house newly disclosed information about companies’ ownership, the unit’s deputy chief said Friday.

Starting in 2024, millions of US and foreign companies will be required to disclose identifying information about their “beneficial owners"—who own at least 25% of the company or exercise significant control over it—to the Treasury Department’s Financial Crimes Enforcement Network, or FinCEN.

IRS Criminal Investigators Won’t Enforce New Transparency Rules – Nathan Richman, Tax Notes ($):

The IRS Criminal Investigation division provided input on how to build the Corporate Transparency Act beneficial ownership database but won’t be enforcing reporting requirements, according to CI Deputy Chief Guy Ficco.

Enforcement of the new beneficial ownership reporting rules will be a priority for the Financial Crimes Enforcement Network rather than CI, Ficco said December 8 at a conference hosted by the American Bar Association Section of Taxation in Las Vegas.

 

Silver Grilled on IRS Guidance Reliance in Return Disclosure Case – Kiarra Strocko, Tax Notes ($):

A circuit court judge questioned a taxpayer’s reliance on an IRS reference guide, irrespective of its lack of legal authority, in a suit for damages for the unauthorized disclosure of return information.

During oral arguments before the D.C. Circuit December 8 in Silver v. United States, Judge Karen L. Henderson cast a shadow of doubt on the extensive reliance by Monte Silver’s attorney, L. Marc Zell of Zell & Associates International Advocates LLC, on IRS Publication 4639, “Disclosure & Privacy Law Reference Guide,” in his arguments. Responding to the judge, Zell said the guide is “the single most authoritative assessment by the IRS of the rules in this area. There is nothing else.”

 

Losses on Partnership Rights, Obligations, and Property – Monte Jackel, Tax Notes ($) (commentary). “Jackel examines whether Rev. Rul. 93-80, addressing the character of loss for the abandonment or worthlessness of a partnership interest, is still good law — an issue that was first raised in Pilgrim’s Pride and that recently resurfaced in Estate of McKelvey. Jackel was one of the drafters of Rev. Rul. 93-80 while at Treasury’s Office of Tax Policy in 1993.”

 

Big Increase in OECD Estimates of Profit Subject to Pillar 2 Tax – Jonathan Martin, Tax Notes ($). “OECD economists have calculated that the annual amount of multinationals’ profit that could be subject to pillar 2 minimum tax is $2.14 trillion, using a new and substantially improved estimating method. That’s up from $1.26 trillion annually if profit is estimated using a simpler but more widely used method.”

 

From the “Service with a Smile” file:

Building Solid Workforce Tops IRS Appeals Office 2024 Priorities – Bloomberg ($):

The IRS Independent Office of Appeals will work on building and retaining a strong workforce in 2024, officials said in the office’s focus guide for fiscal year 2024 released Friday.

The focus guide details where the office will make improvements to taxpayer service in its goal to resolve tax disputes in an impartial manner without requiring litigation, the agency said.

The document is here.

 

Happy National Stretching Day, International Mountain Day and National App Day! Here’s the plan: Stretch, go climb a mountain, and once home order your favorite food using an app. Total hat trick!

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About the Author(s)

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Jay Heflin

Director of Legislative Affairs
Jay brings more than two decades of experience to his job as Director of Tax Legislative Affairs in Eide Bailly’s Washington D.C. office. Jay provides political intelligence and guidance to the firm on the progress of tax legislation on Capitol Hill. Prior to joining the firm, he was a director at the tax lobbying shop Federal Policy Group, LLC, where he tracked tax legislation in Congress and participated in lobbying efforts to amend tax legislation. Before joining the Federal Policy Group, he was a Congressional reporter for several news organizations where his beat was tax policy.