Tax News & Views Calendar Controversy Roundup

August 18, 2023

Republicans fear revolt over House budget stopgap - Juliegrace Brufke, Axios:

Top House Republicans are worried they'll need Democratic help just to pass a stopgap spending bill by Sept. 30 to avoid a government shutdown, Axios has learned.

Why it matters: One GOP lawmaker told Axios that passing the measure would be 'a cluster,' despite House Speaker Kevin McCarthy's (R-Calif.) assertion — backed by Senate Majority Leader Chuck Schumer (D-N.Y.) — that it's their best option.

What does spending legislation have to do with moving a tax bill? Everything. Debate over spending could monopolize the rest of the calendar year, which would eat up time to pass a tax bill.

In other words, when (or if) Congress funds the federal government will decide when (or if) lawmakers try to pass a tax bill.

Worst-case scenario: Congress can’t fund the federal government for an extended period of time and a partial shutdown eventually occurs.  In this case, no lawmaker will seek to pass tax legislation as the focus will be on reopening the federal government for an extended period of time.

Best-case scenario: Congress approves a Continuing Resolution that funds the federal government into early December. In this case, lawmakers will spend much of October, November and early December arguing over how the federal government should be funded beyond early December. If a tax bill is to pass Congress, it will likely occur after lawmakers agree on funding the federal government beyond early December, i.e., a year-end tax bill.

Speak of a year-end tax bill:

R&D Expensing Revamp Tops Wish List for Year-End Tax Talks – Doug Sword, Tax Notes ($):

Republicans and Democrats agree on one thing, at least: What businesses are clamoring for most this legislative season is a return to full research and development expensing.

And they’d like it made retroactive to January 1, 2022, please.

According to tax staffers I have spoken with, if a tax bill materializes it will include R&D expensing, but making the measure retroactive to January 2022 is not a done deal. Why? Making the provision retroactive might be too expensive, which could be a political liability for some lawmakers as the federal government's debt keeps increasing. 


As Biden celebrates climate funding, Republicans eye the money – David Jordan, Roll Call:

The Biden administration is marking the first anniversary of its climate, tax and health care package on Wednesday as House Republicans are doing their best to gouge out big chunks of the funding provided by the bill but remains unspent.

Many Republicans have also vowed to repeal the bill while many of their constituents reap its rewards. This could make for some awkward moments at townhalls.

The right’s playbook for crypto, climate – Jasper Goodman and Zachary Warmbrodt, Politico Morning Money. “Conservatives gearing up for a Republican White House are already crafting plans to overhaul cryptocurrency regulation and reverse President Joe Biden’s climate finance initiatives.”

EV tax credits in Biden's climate bill were a big sell that so far few are buying: 

Tax credits struggle to boost sales of electric vehicles – Keith Lang, Accounting Today:

President Joe Biden's signature economic legislation promised to create a wave of demand for made-in-America electric vehicles by offering lucrative tax credits. A year later, EV uptake is more of a wavelet as U.S. car buyers and automakers grapple with qualifications that have limited eligibility for many current electrified models.

The bar for full credits will soon get higher as the U.S. sets new rules aimed at curbing foreign battery sourcing and manufacturing. Automakers, who already are seeing a build-up of EV inventories, may have to change supply chains further or risk losing some or all of their qualifications to make their electric cars more affordable.


Tax pros hike fees by more than 20%: NATP – Roger Russell, Accounting Today. “Tax preparers are planning double-digit increases in their fees, according to the National Association of Tax Professionals newly released 2023 Fee Study.”

‘Our study found an average cost for a new client in 2023 to be $218 versus $174 in 2021, an increase of just about 23%,’ said Tom O'Saben, director of tax content and government relations at NATP.


Beefier IRS gets endorsements as funding hangs in the balance – Tobias Burns, The Hill:

Support is coming in for a bigger and stronger IRS souped up by Democrats, even as Republican suspicion toward the agency threatens to undercut its overhaul…

National Treasury Employees Union (NTEU) president Doreen Greenwald said the new funding will help reduce the national deficit by going after tax revenue the government is owed but doesn’t collect. 

The funding the IRS received from the Inflation Reduction Act has already been reduced. It will be reduced more if Republicans take Congress and the White House – no matter who is cheering for it to continue.


Tax Lawyers Push for Specifics on IRA Tax Credit Eligibility - Caleb Harshberger, Bloomberg ($):

The American Bar Association Section of Taxation is warning the IRS that tax-exempt groups have unresolved questions about their eligibility for Inflation Reduction Act tax credits.

The ABA letter, dated Monday, urged the IRS to clarify lingering questions around the eligibility of government entities’ subsidiaries for tax credits—such as whether eligible groups could use LLCs and other legally protective structures and still qualify for a direct payment or cash in lieu of the credit.


Blown Tax Court Deadline Was Excusable Neglect, IRS Says – Kristen Parillo, Tax Notes ($). “The IRS Office of Chief Counsel quickly adopted remedial measures after it missed a Tax Court summary judgment deadline in an easement case — a failure it says was excusable neglect caused by an IRS attorney’s health issues and gaps in operations.”


Taxpayers Call Return Filing Decision ‘Internally Inconsistent’ - Aysha Bagchi, Bloomberg ($):

Ritchie Stevens and Julie Keene-Stevens said the three-judge Ninth Circuit panel that ruled against them July 3 recognized that the Tax Court had acknowledged the existence of their asserted partnership losses when it said it lacked jurisdiction to rule on the validity of those assertions.

It didn’t make sense for the panel to then argue that, because no tax returns were filed, the Tax Court couldn’t recognize the couple’s asserted losses for the purpose of calculating their tax bills, they said in the Wednesday petition.


Ore. City Payroll Tax Faces Voter Referendum – Sanjay Talwani, Law360 Tax Authority ($):

A payroll tax slated to take effect next July in Salem, Oregon, will first need approval of local voters in November because enough voters signed a petition seeking a referendum, according to a letter from the county to the city.

The Marion County clerk told the Salem city recorder in a letter Monday that the county had verified enough signatures to place a referendum against the payroll tax, approved in July by the City Council, on the November ballot.


NYC Kicks Off Plan to Rezone Midtown, Turn Offices to Houses - Mark Schoifet, Bloomberg ($):

New York City is rolling out a plan to convert vacant offices into as many as 20,000 new housing units by creating a multi-agency group to help developers cut through red tape and rezoning a section of Manhattan known as Midtown South…

New York, Boston, San Francisco and other major US cities are struggling with the dual challenges of what to do with office buildings emptied by the shift to remote work and an affordable housing crisis that’s driving up rents. Converting offices to housing is complicated and expensive, so city officials are looking at tax breaks, speeding up approvals and other incentives to facilitate the process.


California Cities Agree to Rein in Apple-Like Tax Windfalls - Laura Mahoney, Bloomberg ($):

California cities will seek legislation to limit tax-sharing arrangements that give windfalls to a handful of cities and millions in public money to retailers like Apple Inc., Best Buy Co. Inc., and Williams-Sonoma Inc.

The League of California Cities has endorsed a plan to limit deals that hinge on e-commerce and a quirk in California’s sales tax rules sending the local portion of sales tax to the location where the transaction takes place, rather than where the customer lives.


BGOV OnPoint: Lawmakers Spar Over Global Tax Deal - Lauren Turenchalk, Bloomberg ($):

A group of House lawmakers is headed to Paris over recess to discuss the Organization for Economic Cooperation and Development’s global tax deal, which has met Republican opposition in Congress.

A House Ways and Means Committee delegation, led by Chairman Jason Smith (R-Mo.), is planning to travel to Paris over Labor Day weekend to meet with OECD officials about the tax deal.

Smith wants this trip to include members from both political parties. But the overriding message to their European counterparts is expected to be 'you're doing it wrong' when it comes to Pillar One. Not many Democrats are going to want to align with that point of view.


From the “Breaker, Breaker” file:

IRS encourages truckers to e-file by August 31 tax payment deadline – IRS:

The Internal Revenue Service today encouraged all those who have registered, or are required to register, large trucks and buses with a taxable gross weight of 55,000 pounds or more to e-file Form 2290, Heavy Highway Vehicle Use Tax Return, by the Aug. 31, 2023, payment deadline for vehicles first used in July 2023.

Form 2290 is here.


Lunch! It’s National Fajita Day! Enjoy!

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