March 17, 2023
Senators Reintroduce Bill Restoring and Expanding R&D Break - Chris Cioffi, Bloomberg ($):
A bipartisan Senate duo has revived an effort from last Congress to reverse a change to the research and development tax credit and expand it to apply to more startups and small businesses.
The reintroduced bill, from Sens. Maggie Hassan (D-N.H.) and Todd Young (R-Ind.), would roll back a provision of the 2017 tax law that, starting in 2022, requires companies to amortize their R&D costs over five years rather than the year they are incurred.
Don’t get excited. Here’s why:
During last year’s omnibus spending bill negotiations, Democrats sought to package an enhanced child tax credit with the R&D amortization change and others favored by business, but the parties were unable to strike a deal.
The political parties are still unable to strike this deal.
Yesterday, Senator Steve Daines (R-Mont.) tried to decouple R&D expensing from expanding the Child Tax Credit by saying if Democrats agreed to repeal the State and Local Tax Deduction (the deduction NOT the cap), Republicans might consider expanding the Child Tax Credit.
A quote from Senator Daines during yesterday’s Senate Finance Committee hearing on the President's budget:
Does the president believe that the child tax credit should be made permanent for $3,600? And if so, are you willing to then eliminate The Salt Deduction, which overwhelmingly benefits the wealthy, to give working families an expanded Child Tax Credit that importantly, never ends?
Democrats very much support the SALT deduction and expanding the Child Tax Credit. This is kind’ve a “Sophie’s Choice” proposal.
Senators Urge Treasury to Ease Barriers to Seeing Ownership Info - Michael Rapoport, Bloomberg ($). “The Treasury Department should make sure that law-enforcement officials and others with a need for newly collected information about companies’ ownership can access it without putting up unnecessary obstacles, a bipartisan group of US senators said.”
Repealing $80 Billion for IRS Would Hurt Customer Service, Yellen Says - Chris Cioffi, Bloomberg ($). “If Congress were to claw back the $80 billion provided for the IRS in the tax-and-climate law, customer service and refund processing times would suffer, Treasury Secretary Janet Yellen said before the Senate Finance Committee Thursday.”
‘Phones would go unanswered, wait times would grow, mail would be processed more slowly, refunds would be delayed,’ she said in response to a question from Chairman Ron Wyden (D-Ore.).
The hearing was about President Biden's budget, but Yellen talked about a lot of stuff unrelated to it. One of the most interesting off-topic subject dealt with the Trump-era tax cuts:
Treasury Secretary Defends Administration on Array of Issues in Budget Hearing – Jay Heflin, Eide Bailly:
Yellen was asked to provide a list of Trump-era tax cuts that if expired would increase taxes on taxpayers earning less than $400,000 a year...
She said completing this list might be impossible.
‘I don’t know that I can provide you with that… I think that it is a very complex exercise, and I’m not sure [we can do it],’ she said.
Biden has vowed to not increase taxes on individuals earning less than $400,000 a year. But if Yellen can’t produce a list identifying those provisions, how does one determine which tax cuts stay and which go?
Capitol Hill Recap: Tax Talk Everywhere, All At Once! – Jay Heflin, Eide Bailly. “Despite the House being out of session and the Senate focused on nominations, there was a reasonable amount of tax talk in both chambers; plus Werfel now runs the IRS.”
What to Know About Crypto This Tax Season After a Tough 2022 - Lauren Vella and Erin Slowey, Bloomberg ($):
Crypto had a tumultuous year in 2022. High volatility and a plunge in the value of major digital assets was followed by the downfall of several major cryptocurrency firms, including FTX, Celsius, BlockFi, and Voyager.
In the wake of those epic collapses, investors find themselves staring down the nose of a tax filing deadline where losses abound, funds are frozen in bankrupt firms, and the IRS is looking to regulate the crypto space more closely.
In other crypto news:
Crypto’s winners and losers after a bank run - Ben Schreckinger, Politico:
The smoke may still be clearing from the smoldering ruins of Silicon Valley Bank, and the financial world still sorting itself out, but it’s not too soon to declare some provisional winners and losers.
Here are five whose fortunes are worth watching:
The American Crypto Industry —
For one thing, the industry is running out of crypto-friendly U.S. banks.
One stop shopping for all your state news needs!
State Tax News & Views: Digital Taxes, Nexus Due Diligence, and a Confederate Pension Tax – Joe Kristan, Eide Bailly.
Welcome to this week's state and local tax roundup. Think of Eide Bailly for your state tax needs, whether you are dealing with income taxes, sales taxes, or business incentives and credits.
In other state tax news:
Pass-Through Entity Elective Tax Table – Bloomberg ($):
Almost half of the states have enacted legislation to lessen the impact of the deduction limit for individuals who conduct business through a pass-through entity. By allowing pass-through entities to elect income taxation at the entity-level, the tax burden is shifted to the pass-through entity.
With subscription, the table can be found here.
Truckers Quickly Resume Fight on New Connecticut Mileage Tax – Donna Borak, Bloomberg ($):
Less than three months since a new mileage tax on tractor-trailers took effect, Connecticut Republicans are already pushing to sunset a $90 million revenue-raiser instituted to pay for state roads and bridges.
Arizona Appeals Court Strikes Down Counties’ Property Tax System - Perry Cooper, Bloomberg ($). “Two Arizona counties violated state law when they calculated property taxes by comparing properties only to other properties in the same neighborhood, a state appeals court ruled Thursday.”
Colo. Lawmakers OK Requiring Written Notice Of Tax Credits – Zak Kostro, Law360 Tax Authority ($):
H.B. 1006 passed the state Senate by a 22-12 vote Wednesday after clearing the House of Representatives last month. The bill would require that employers provide employees written notice regarding the availability of the federal and state earned income tax credits and federal and state child tax credits at least once annually, according to an updated bill summary at the General Assembly's website.
Businesses Worry About Consistency, Info Needs For Pillar 2 – Todd Buell, Law360 Tax Authority ($):
Potential taxpayers worried in a webinar that it would be too complicated to provide the information required by the Pillar Two tax rules, which are supposed to ensure that companies with global revenue above €750 million ($794 million) pay a 15% effective tax rate in every jurisdiction they do business.
With Republicans controlling the House, it will be extremely hard for Pillar Two to become law.
OECD Rule Violates US Tax Treaties, GOP Senators Tell Yellen – Dylan Moroses, Law360 Tax Authority ($):
A component of the Organization for Economic Cooperation and Development's 15% global minimum tax would violate existing U.S. tax treaties and harm American businesses, Senate Finance Committee Republicans said Thursday during a meeting with Treasury Secretary Janet Yellen.
Senate Finance Committee ranking member Sen. Mike Crapo, R-Idaho, and Sen. Chuck Grassley, R-Iowa, both raised the idea during the meeting with Yellen that the so-called undertaxed profits rule, or UTPR, of the OECD's 15% global minimum tax known as Pillar Two could violate established bilateral U.S. tax treaties.
From the “Life Imitates Art” file:
Amazon Tax Structure Like Something Out of a Bond Movie, EU Says - Stephanie Bodoni, Bloomberg ($):
Amazon.com Inc.’s efforts to minimize its taxes in the European Union were given a code-name evocative of a spy thriller with British agent 007, according to an EU lawyer, who claimed the arrangements broke the bloc’s state-aid rules.
‘Project Goldcrest — it sounds like the title of a James Bond movie, but it is not,’ it’s the name ‘Amazon gave to a complex tax construction by which it fundamentally reorganized its global business,’ European Commission attorney Paul-John Loewenthal told a hearing at the EU’s top court on Thursday.
The Bond movie referred to is “Goldfinger.”
Other Bond movie titles that could describe tax situations:
Famous Irish sayings you might not know:
This is a roundup of tax news and opinion. Any opinions expressed or implied are those of the author and not necessarily those of Eide Bailly. Opinions found in linked items are those of the authors of the linked item, not of your bloggers or of Eide Bailly. “$” means link may be behind a paywall. Items here do not constitute tax advice.