Tax News & Views TCJA 2.0 Roundup

By Jay Heflin
September 12, 2023

Trump advisers plot aggressive new tax cuts for second White House term – Jeff Stein, Washington Post:

Trump and his advisers have discussed deeper cuts to both individual and corporate tax rates that would build on his controversial 2017 tax law, which they see as a major accomplishment worth expanding, according to interviews with a half-dozen people close to the former president, some of whom spoke on the condition of anonymity to describe private conversations. The cuts could be paid for, at least in theory, with a new 10 percent tariff on all imports to the United States that Trump has called for, which could raise hundreds of billions in revenue. The sharp new tax cuts would help offset higher consumer costs caused by the tariffs…

Trump’s advisers, though, have discussed proposals to make deeper cuts to the overall corporate tax rate, potentially to as low as 15 percent, or to use the revenue from the proposed tariffs to pay a dividend to U.S. households. Further cutting corporate taxes, which would primarily benefit large firms, would contrast with the GOP’s increasing antagonism against publicly traded companies that many Republicans accuse of siding with liberals on cultural issues.

The ONLY way this plan would be enacted is if Republicans control both chambers of Congress and the White House. Procedural short cuts would also be required.

The timing for introducing a new tax bill in 2025 could make things difficult for extending the 2017 individual tax cuts, which are scheduled to expire in 2025. 

About those tariffs:

Trump’s $300 Billion Tax Hike Would Threaten U.S. Businesses and Consumers – Erica York, Tax Foundation:

Former President Donald Trump’s proposed 10 percent tariff would raise taxes on American consumers by more than $300 billion a year—a tax increase rivaling the ones proposed by President Biden. If implemented, the significant trade tax hike would trigger retaliatory tax increases on U.S. exports.

International trade is vital to the United States. Each year, Americans as a whole purchase more goods and services than they produce. By the same token, we save less than needed to fulfill our investment opportunities. International trade bridges the gap. We purchase the additional goods and services from abroad while the rest of the world lends us the money to do so by investing in U.S. bonds and businesses.


Americans for Tax Reform, Other Groups Urge GOP Tax Bill Passage - Samantha Handler, Bloomberg ($):

More than a dozen conservative groups called for lawmakers to pass the GOP tax package that’s been stalled by Republicans from states with heavy tax loads.

Grover Norquist’s Americans for Tax Reform, the National Taxpayers Union, and the Taxpayers Protection Alliance were among the organizations urging Congress in a Monday letter to pass the tax package advanced by Ways and Means Republicans earlier this summer. House Republicans at the end of the summer didn’t have enough votes to pass the legislation, as New York and California GOP members demanded a provision that would raise the $10,000 state-and-local tax deduction limit.

The legislation does not include a modification to the Child Tax Credit. More on this below.


Crypto Backers Ask Senate Panel for Clear Rules on Use, Lending – Caleb Harshberger, Bloomberg ($):

The Senate Finance Committee’s recent interest in the nuances of taxing digital assets has sparked hope among cryptocurrency businesses for a holistic approach that won’t cripple the ecosystem.

The committee released a request for information this summer asking the public for its thoughts on topics surrounding digital assets, including how things such as cryptocurrencies should fit into existing laws and whether new legislation is needed. Responses were due Sept. 8.

The request is here.


Direct Filing System – Benjamin Guggenheim, Politico Morning Tax (scroll down):

More than 120 professors across the country have signed onto a new letter addressed [yesterday] to public officials that applauds the IRS for its efforts to pilot a direct free-filing system run by the agency.

The letter is here.

The American Coalition for Taxpayer Rights, which represents the nation’s leading tax prep companies, insists on the other hand that the IRS will run into significant challenges administering the system and ultimately produce a far inferior tax filing tool.


IRS: Meet this Sept. 15 deadline to ‘avoid a surprise at tax time’ – Kate Dore, CNBC:

Sept. 15 is fast approaching — and if you’re not withholding taxes from your income, it’s time to send a payment to the IRS.

Many employers withhold taxes from every paycheck, but freelancers, self-employed workers, small business owners, investors and others pay on their own via quarterly estimated tax payments.

Typically, you must make quarterly estimated payments if you’re expecting an annual tax liability of $1,000 or more. Last week, the IRS reminded filers that these payments can help 'avoid a surprise at tax time.'

The IRS press release is here.


Proposed Penalty Rules Could Erode Protections, IRS Hears – Anna Scott Farrell, Law360 Tax Authority ($):

Critics of an IRS proposal that would allow agents to communicate tax penalties to taxpayers earlier in the supervisory approval process said at a public hearing Monday that the new rules would erode taxpayer protections established by Congress 25 years ago.

The proposed rules, which would also expand the definition of who counts as a supervisor for purposes of satisfying the approval requirements, could roll back the protections Congress established when it passed the Internal Revenue Service Restructuring and Reform Act of 1998, critics said. That law, which established that IRS employees must get their supervisors to sign off on tax penalties of Internal Revenue Code Section 6751(b), was meant to prevent the IRS from using penalties as bargaining chips in negotiations, said Pete Sepp, president of the National Taxpayers Union.

Untrained IRS Contractors Put Taxpayer Info at Risk, GAO Says - Erin Slowey, Bloomberg ($):

Employees at the IRS are required to take multiple training courses for protecting taxpayer information, and in 2021, the IRS met its goal of a 97% completion rate for all trainings, the report found.

In the same year, less than 75% of contractors—who don’t have an agency-wide training goal—completed the assigned training.

The report is here:

‘If IRS contractors do not complete required training, they have an increased risk of not being prepared to handle taxpayer information and create administrative burdens,’ the report said.

IRS Has Hiccups in Move to Electronic Records, Watchdog Says - Samantha Handler, Bloomberg ($):

The IRS is struggling to transition its remaining temporary records to an electronic format, the Treasury Inspector General for Tax Administration said in a report released Monday.

While the Internal Revenue Service has met deadlines for managing all permanent records in a digital format, it has faced delays in converting all temporary records to electronic versions, which includes tax returns and supplemental documents, TIGTA found. The IRS isn’t on track to manage all temporary records—the vast majority of all records the IRS handles—by the June 30, 2024 deadline set by the National Archives and Records Administration, the report found.

The report is here.

IRS Needs to Better Police Fuel Tax Credit Scams, Watchdog Finds - Caleb Harshberger, Bloomberg ($):

The IRS still is leaving many millions of dollars on the table by not better policing applications for the fuel tax credit and fining those abusing the system, despite recent improvements, the Treasury Inspector General for Tax Administration said in a report.

In one example in the Sept. 7 report, released Monday, TIGTA found that of 1.2 million fuel tax credit claims filed from January 2018 through 2021, 263,522 had no business purpose—and therefore were ineligible for the credit. Of those, 24,769 included returns above the examination threshold for $32.5 million in fuel tax credit claims, yet the IRS failed to examine 15,779 of those.

The report is here.


Proposed Labor Requirement Regs Contain Few Surprises – Marie Sapirie, Tax Notes ($):

Substantively, the rules are generally in line with what practitioners anticipated and what the comment letters requested. The Davis-Bacon Act and related rules were selectively incorporated into the proposed regulations. The preamble explains that the government attempted to “strike the appropriate balance” between when Davis-Bacon requirements are ‘relevant for purposes of the PWA requirements and when they are not.’ Accordingly, the definitions and wage determinations were generally adopted, but the contractual provisions and certified payrolls required by Davis-Bacon were not.

‘We think the proposed guidance is spot-on and consistent with the legislative intent behind these standards,’ said Jason Walsh of the BlueGreen Alliance. He said that the proposed regulations give enough clarity to developers, improve job quality, and leverage the network of registered apprenticeship programs.


US Shouldn't Tax Unrealized Income, States Tell Justices – Maria Koklanaris, Law360 Tax Authority ($):

The federal repatriation tax should be struck down in part because it is a tax on unrealized income that encroaches into territory that has always been the domain of the states, West Virginia and 16 other states told the U.S. Supreme Court.

In an amicus brief filed Wednesday, the states argued that allowing the repatriation tax to continue would infringe on state taxation and create multiple layers of tax. They posed the question of whether the 16th Amendment to the U.S. Constitution can be read broadly enough to permit the repatriation tax without apportionment among the states.

This is about the Charles and Kathleen Moore v. the United States case that could blow the tax code apart or wide-open based upon the decision.


From the “Writing is on the Wall” file:

If recent articles are correct, it appears we’re in for a repeat of last year’s failed attempt to pass tax legislation that would include R&D expensing, expand the 163(j)-interest deduction, and up Bonus Deprecation to 100%.

Exhibit A:

Fall Session is All about Spending, NDAA fights – and McCarthy’s ‘Hobson’s choices’ – John Bennett, Roll Call:

Fights over federal spending and military policy — and maybe even impeaching President Joe Biden — will dominate the fall and winter legislative session, meaning work on ironing out deep partisan differences on other legislation might be punted into next year.

Where does tax legislation rank on must-pass? Low.

Further down the article. Emphasis added:

Several veteran senators just shrugged when asked what they think might get done this month and until both chambers adjourn in December for a holiday break. But their six-week summer sojourn did seemingly nothing to bridge the parties’ gaping differences on military promotions, tax code changes, abortion policy, immigration, Ukraine aid and federal spending.

Exhibit B:

Some Business Owners Are Facing Giant Tax Bills. Why Congress Hasn’t Done Anything. – Richard Rubin, Wall Street Journal:

Republicans and Democrats agree that Congress should reverse a piece of the 2017 tax law that sticks research-intensive startups and military contractors with enormous tax bills. 

But don’t expect them to fix it quickly. After all, they tried and failed to do the same thing last year.

Further down the article:

Lawmakers say they are trying. They wanted to reverse the research change last year. But Democrats, who controlled the House and Senate, wanted to expand the child tax credit at the same time. A deal couldn’t be reached.

The fight over expanding the Child Tax Credit continues to this day. A deal on it remains elusive – and until a deal is reached it appears business tax relief will have to wait. That could change, but it hasn't in over a year.


Happy National Chocolate Milkshake Day! The only thing better is a Black and White malt.

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