Tax News & Views Drama Alert Roundup

July 17, 2023

A group of GOP centrists threatens hardline tactics on tax bill – Sarah Ferris and Benjamin Guggenheim, Politico:

A group of House Republican centrists is taking a page from their hardliner colleagues, demanding critical changes to their party’s signature tax plan — and threatening to hold the bill up until they get it.

A small band of Republicans from New York, New Jersey and California is effectively blocking the House GOP’s tax plan from reaching the floor anytime soon as they seek relief for taxpayers back home who’ve been hit with heftier bills due to a Trump-era tax law that limited a key deduction.

There is a lot going on behind the scenes regarding this bill:

  • First off, its not one bill, but three. They are expected to be combined at some point in the future.
  • The SALT situation is keeping the bill from get a House floor vote. The legislation is not expected to get a vote this month and highly unlikely a vote happens on it in September (lawmakers are out of session the entire month of August).
  • It is unclear if pro SALT cap repeal lawmakers will stand their ground and block a tax bill from happening. 
    • There are lawmakers who privately have said they expect these lawmakers to fold and support the bill without a SALT fix.
    • Others say that they won't fold because they folded last year to took a bunch of heat for it.
  • It looks extremely likely that the best opportunity for Congress to approve this bill is at year-end.
  • If year-end passage doesn’t happen, the next opportunity to pass a tax bill will be in 2025. 
  • Lawmakers on the House Ways and Means Committee have dinners together to talk about taxes. The events are being held to allow the lawmakers to get to know each other. The primary goal for these dinners is to foster legislative results that have bipartisan support.   

Employers Get Temporary Reprieve on 401(k) Required Payouts - Austin Ramsey, Bloomberg ($):

The IRS is providing transitional relief for workplace retirement plans to implement changes Congress made to the beginning date for required minimum distributions, and intends to issue regulations that will affect plans in 2024.

Guidance (Notice 2023-54) the tax agency issued Friday states that the IRS won’t penalize employers for failing to properly treat distributions between Jan. 1 and July 31, 2023, for participants born in 1951. Regulators also extended the 60-day deadline for certain distribution rollovers.

IRS Announces New Guidance and Relief for RMD Changes – Doug Sword, Tax Notes ($):

Notice 2023-54, 2023-31 IRB 1, says that forthcoming final regulations won’t apply until calendar years beginning in 2024, but that in the meantime, plan administrators, payers, plan participants, IRA owners, and beneficiaries would be offered transition relief because of the short time period to adjust. The transition period also may give Congress time to address ambiguities in the law.

The RMD changes are part of the SECURE 2.0 package of retirement provisions, which was included in the Consolidated Appropriations Act, 2023 (P.L. 117-328) signed into law December 29, 2022. The change to the age threshold was one of the most expensive features of the retirement package, whose provisions are projected to cost $44 billion over 10 years.

The guidance is here.


The IRA’s Green Energy Subsidies May Cost More Than Expected. Is That Good Or Bad? – Howard Gleckman, Tax Policy Center:

It appears that the green energy tax breaks included in last year’s Inflation Reduction Act (IRA) are more popular among businesses than Congress imagined when it passed the bill. That likely would further increase the federal deficit but also reduce carbon emissions more than first forecast. Which raises the question: On net, is that a good thing or a bad thing?   

In large part, it depends on your perspective. If you believe that climate change is a left-wing fantasy, you probably think all subsidies aimed at mitigating it are a waste of taxpayer money and a windfall to business.

On the other hand, what if you believe global warming is an existential threat to the planet? Then, the subsidy story is much more ambiguous.

NEC Touts Impact of Biden’s Tax Incentives – Alexander Rifaat, Tax Notes ($):

The Biden administration has unveiled a report intended to promote the president’s decision to pursue a series of tax credits to spur a clean energy transformation in the American economy.

In the report, released July 14, the White House’s National Economic Council argues that the “government-enabled, private sector-led” approach of encouraging firms to produce clean energy technologies and semiconductors in the United States would achieve the trifecta of modernizing America’s infrastructure, lowering carbon emissions, and boosting domestic job opportunities.

Pro Tip to the White House: Make this report easier to find on the NEC web page. People might want to read it.


Obamacare Eligibility Match Program to Be Re-Established - Sara Hansard, Bloomberg ($):

Verification of eligibility to enroll in Obamacare plans and get subsidies will be re-established, the Department of Health and Human Services said Friday.

A “matching program” between the Centers for Medicare & Medicaid Services and the Social Security Administration will be re-established for an initial term of 18 months from Sept. 9 to March 8, 2025, and may be renewed for an additional year if no changes are made, the notice said. Comments may be submitted. The notice will be published in the July 17 Federal Register.

The document is here.


IRS to Make Fast-Track Private Letter Ruling Program ‘Evergreen’ - Lauren Vella, Bloomberg ($):

The fast-track private letter ruling pilot program will graduate from its temporary status to become more ‘evergreen,’ an IRS official said Saturday as the agency bumps up against a phase-out date.

During a lunch at the New York State Bar Association’s summer tax meeting, Mark Schneider, associate chief counsel, corporate, at the IRS, said the agency would issue an announcement that would ‘remove it from a pilot program and makes it more evergreen.’


Biden Chip Money Sparks Debate Over Plants’ Environmental Impact - Stephen Lee, Bloomberg ($):

Both Democrats and Republicans want last year’s CHIPS and Science Act (Public Law 117-167) to succeed because it checks so many boxes in its effort to scale up the production of semiconductors. The measure promises to create domestic manufacturing jobs, wean the nation off foreign supply chains, expand the corporate tax base, kick-start a broad range of new technologies, and firm up national security.

Yet the permitting requirements under NEPA [the National Environmental Policy Act] are throttling those ambitions, Sen. Mark Kelly (D-Ariz.) said in an interview… To cut through the bureaucracy, Kelly, Todd Young (R-Ind.), Bill Hagerty (R-Tenn.), and Sherrod Brown (D-Ohio) brought forward a bill on Tuesday that would exempt certain CHIPS Act projects from NEPA review.

A summary of the bill is here. There will likely be broad support for this legislation, meaning the odds for enactment are higher than usual. (Usual = not enacted.)


Levy Upheld Given Notice and Hearing Chance on Partnership Taxes - Aysha Bagchi, Bloomberg ($):

An IRS lien and levy on a couple’s property is appropriate because the pair received notice and had a prior opportunity to dispute liabilities stemming from interests in two partnerships, a federal appeals court ruled Friday.

Ronald and Gail Goldberg wanted the US Court of Appeals for the Seventh Circuit to rule on their argument that the Internal Revenue Service missed its deadline to assess more than $500,000 in taxes against them. They said their own failure to challenge the taxes in earlier proceedings should be excused because the agency didn’t adequately notify them when it started auditing their partnerships.


Indiana Ford Dealership Wins Refund of Kentucky Vehicle Use Tax - Perry Cooper, Bloomberg ($):

A Ford dealership in Indiana that sells cars to out-of-state customers is owed a refund of Kentucky motor vehicle use taxes as a credit for taxes it paid to its home state on the same transactions, the Kentucky Court of Appeals ruled Friday.

Carriage Ford Inc. is entitled to a refund of $183,000—the amount of sales taxes it paid to Indiana—plus interest, despite the fact that the car buyers were responsible for the Kentucky use taxes and the company didn’t pay the Indiana sales taxes until after it registered the vehicles in Kentucky, Judge Donna L. Dixon wrote for the court.


Texas Tax Cuts Set as Abbott Vows to Sign $18 Billion Package - Angélica Serrano-Román, Bloomberg ($):

Texas property taxes and business franchise taxes are set to fall considerably as Gov. Greg Abbott signs bills that lawmakers approved in final votes Thursday.

The $18 billion package, shaped after a months-long standoff among legislative leadership and the governor, all Republicans, lowers the school property tax rate, establishes a three-year pilot program for a 20% tax circuit-breaker on non-homestead properties valued at $5 million or less, and reduces the number of businesses that have to pay the franchise tax.


More IRS Book-Tax Guidance Possible, Though No Plans Yet - Michael Rapoport, Bloomberg ($):

The IRS is ‘open to the possibility’ of issuing more guidance on the new book-income tax before formal regulations are issued later this year, but right now there are no plans for such guidance, an IRS official said Sunday.

So, they’re open but aren’t planning on it. I too am open to winning the lottery, but not planning on it.

Right now, the next step for the IRS would be the formal regulations to codify that guidance, and those regulations are still planned by the end of the year…


US Companies Get Temporary Reprieve from Foreign Minimum Taxes - Isabel Gottlieb, Bloomberg ($):

Countries have agreed to a 'transitional safe harbor' that could temporarily protect US companies’ US income from other governments’ application of the global minimum tax.

The measure released Monday could help alleviate the heated political tensions in the US over a consequence of the 15% global minimum tax, known as Pillar Two. Under the undertaxed profits rule or UTPR, a US multinational could see other governments apply extra tax to its US income if it’s paying lower than a 15% effective tax rate in the US—for example, because it took certain tax credits.


From the “Help Wanted” file:

IRS Turns to Contractors for Hiring and Recruiting Help – Lauren Loricchio, Tax Notes ($):

The IRS is searching for companies that are interested in providing support for its plans to fill as many as 97,500 vacancies over a five-year period…

The agency added that it expects to process more than 36,000 hiring actions this year ‘to keep pace with attrition, internal movement and adding additional employees’ and that it is “implementing recruitment and succession planning strategies” to curb the effects of an aging workforce and high attrition.

The IRS said the contractor should be able to provide ‘end-to-end hiring support including recruitment through completion of the hiring action to include on-boarding.’


Thank heavens! Today is National Get Out of the Doghouse Day! I spent the weekend with my former fraternity brothers.

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