Tax News & Views It's BACK Roundup

February 17, 2023

The congressional deficit and spending fight tying child tax credit to corporate R&D cash is coming back – Eric Rosenbaum, CNBC:

A 'major blow' was how corporations described the failure by Capitol Hill late last year to extend an expiring tax provision of the 2017 Tax Cut and Jobs Act which allowed for full and immediate deduction of research and development costs from taxable income. The fate of that corporate tax policy, supported by many Democrats, had been linked to the Democratic Party’s desire for a deal on the child tax credit.

But the dollar figures remained far apart and a compromise never materialized. Now the fight is back over these tax provisions pitting corporations and families as each others’ best chances, or depending on how you look at it, obstacles.

State of play: There is bipartisan support to fix R&D. There is not bipartisan support to modify the Child Tax Credit. The lack of support for a CTC change is what stopped these provisions from passing Congress last year. Unless something unforeseen occurs, this same situation could stop fixes from happening this year. 


Surprising boom in tax receipts waning, new government report shows – Brian Faler, Politico Pro ($):

A multi-year boom in tax receipts that had surprised budget forecasters appears to be ending, a government report released Wednesday shows.

After growing in each of the past two years by roughly 20 percent, the Congressional Budget Office says it now expects revenues to fall in 2023 by two percent to $4.8 trillion.

A big culprit: a major decline in capital gains taxes following last year’s wipeout on Wall Street.

The government report is here


Farm Bill Year Lends Momentum to Business Tax Policy Push – Samantha Handler and Maeve Sheehey, Bloomberg ($). My emphasis added:

Lawmakers have floated measures like reviving full bonus depreciation, which allowed farmers—and companies—to immediately expense capital expenditures, or a research and development tax deduction that expired last year, as possible inclusions in the package the agriculture committees will write this year. In a divided Congress, the legislation is seen as one of the only vehicles for tax-related items to hitch a ride.

Getting any tax provisions into the farm bill would be a tough sell. “We don’t really do tax policy in the farm bill,” House Agriculture Committee Chairman Glenn 'GT' Thompson (R-Pa.) said in a hallway interview, adding that there’s other agriculture-related policy he’ll work on with the tax-writing Ways and Means Committee.

Though a tax component in the farm bill is unlikely, conversations around the legislation could generate momentum for tax policies that provide certain incentives or breaks for farmers, ranchers, and businesses. Some members hope that continued coordination between the tax and agriculture panels will, eventually, be fruitful.

So the "momentum" mentioned in the headline is about pushing for tax policy, and not about actually getting tax policy in the bill. Congressional staffers with whom I have spoken to do not expect the farm bill to include tax provisions.


FinCEN Blasted Over Beneficial Ownership Registry Plan – Sarah Jarvis, Law360 Tax Authority ($):

The U.S. Treasury Department's financial crimes unit has received a tidal wave of criticism on its proposed rule detailing access to so-called beneficial ownership information, including a strong rebuke from a major banking trade group that urged the unit to scrap the proposal altogether and replace it.

The American Bankers Association on Tuesday called the Financial Crimes Enforcement Network's proposal ‘fatally flawed’ and said FinCEN should withdraw the proposal and work with the financial services industry and small businesses to come up with a new proposal more in line with the Corporate Transparency Act, or CTA.


Smith Demands Timely and Public Answers from IRS Watchdog on Investigation into Leak of Taxpayer Private Data – House Ways and Means Committee:

Nineteen months after a massive leak of confidential taxpayer information was published by ProPublica, the American people are still in the dark, charged House Ways and Means Chairman Jason Smith (MO-08) in a letter sent today to the Treasury Inspector General for Tax Administration (TIGTA) J. Russell George.

Expect to hear more about this subject. 


IRS Option Gives Taxpayers Ability to Upload More Documents – Bloomberg ($):

The IRS has created the option of submitting documentation online for taxpayers who receive notices of requests for information for nine separate notices, the agency said Thursday.

Taxpayers who receive these notices can respond to the IRS online.

The document is here.


The $80 Billion Plan – Kim Dixon, Bloomberg ($):

The IRS said in a statement Thursday that it anticipates submitting a plan for spending its $80 billion in multiyear funding to Treasury Secretary Janet Yellen in the ‘coming weeks.’


Biden Seeks to Examine Possible Algorithmic Bias in Tax Code – Alexander Rifaat, Tax Notes ($). “President Biden has signed an executive order that would, among other measures, establish whether algorithms the IRS uses to select returns to audit discriminates against minority groups.”


How ‘tax friendly’ is it where you live? Study gives every state a grade – Alix Martichoux, The Hill:

The least cheery of all seasons, tax season, is upon us. As you file this year, you may be paying a very different amount than your neighbors in a state next door.

An updated analysis by MoneyGeek, a personal finance site, evaluates how 'tax friendly' each state is by evaluating the tax burden on the average citizen. States with low tax burdens earned an A, while those with the highest tax burden earned Fs.

From the website:

Map of the most and least tax-friendly states in the U.S.


Texas Governor Pledges to Prioritize Tax Cuts, Border Security - Shelly Hagan, Bloomberg ($):

Texas Governor Greg Abbott urged lawmakers to prioritize lowering property taxes, improving school safety and securing the border with Mexico in his first State of the State Address since winning election to a third term in November.


Mich. Plan To Block Income Tax Cut Fails Initial Vote In Senate – Paul Williams, Law360 Tax Authority ($):

Michigan's Senate advanced legislation Thursday that would lower taxes on retirement income and increase the earned income tax credit, but the bill failed to pass with the supermajority required to forgo an income tax rate cut in favor of one-time rebates.

The Democratic-controlled chamber approved H.B. 4001 by a 20-17 vote along party lines. Republicans, who opposed the bill, objected to provisions that would use $800 million of fiscal year 2022 revenue to send residents $180 rebate checks, which would drain enough revenue from last year's coffers to avert an automatic income tax cut that's triggered by the previous year's tax collections. Married taxpayers would each receive a $90 rebate.


Governors’ Budget, Tax Plans Continue Middle-Class, Family Focus - Angélica Serrano-Román, Bloomberg ($):

Wisconsin Gov. Tony Evers (D) sent a plain message delivering his 2023-25 biennial budget announcement Feb. 13.

He will block a Republican-backed flat-income tax proposal if the bill makes it to his desk, he said, and his new $1.2 billion tax relief plan targets relief to middle-class and working families, not ‘breaks for the wealthiest 20% of earners in our state who don’t need the extra help affording rising costs.’


India Views Tax Deal's Two Pillars As Linked, Official Says – Kevin Pinner, Law360 Tax Authority ($):

India's government views both pillars of the global tax deal as linked and will implement them when it determines it's the appropriate time, an Indian Revenue Service official said Thursday during a conference.

Chetan Rao, director of foreign tax at the Indian Revenue Service, said India's government — which holds the Group of 20 presidency this year — will make a call on implementing both pillars domestically ‘at an appropriate time.’ Rao made the comments during a virtual conference on tax and development hosted by the Organization for Economic Cooperation and Development.


From the “Ka-Ching” file:

Australia Revises Calculation For Remote Work Expenses – Matthew Guerry, Law360 Tax Authority ($):

Australian tax authorities revised the method for calculating some deductions of home-based employment expenses Thursday.

Taxpayers using the so-called fixed rate method can now claim AU$0.67 ($0.46) per work hour, up from AU$0.52, for energy, phone and internet costs, among other things, the Australian Taxation Office said in a news release. 

Ok. It’s a small Ka-Ching. But it’s still a Ka-Ching.


Happy National Random Acts of Kindness Day! Get flowers. Pass them out!

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