Tax News & Views 2024 Outlook Roundup

Federal Tax Policy To Watch In 2024 – Stephen Cooper, Law360 Tax Authority ($):

Renewing provisions of the Tax Cuts and Jobs Act will take center stage in the 2024 political landscape as both parties vie for control of Congress, the White House and the ability to shape federal tax policy for the foreseeable future…

[House Ways and Means Committee Chairman Jason] Smith said he considers his committee's work this year will be to prepare for the "Super Bowl of tax" policy, which is his slang for starting the process of renewingthe 2017 tax law.

Lawmakers are expected to host hearings vetting these provisions throughout 2024.

[Senate Finance Committee Chairman Ron] Wyden told Law360 that the Finance Committee has a lot of work to do this year, including on his Billionaires Income Tax Act, a bill he introduced in December that would require the ultra-wealthy to pay income taxes each year on their tradeable assets.

So far, efforts to enact this bill have failed. The same is expected to happen if Republicans control at least one chamber of Congress or the White House after the 2024 elections.

The first chance for passing tax legislation will occur early in 2024, when Congress must pass legislation to keep the government operating beyond the end of a two-tiered, short-term spending agreement reached just before Thanksgiving… The upcoming budget legislation is the most likely tax vehicle for a bipartisan deal to make several TCJA business incentives permanent in exchange for making the American Rescue Plan Act 's expanded child tax credit permanent.

The article is talking about the Big Three (R&D expensing, expanding 163(j)-interest deduction, returning Bonus Depreciation to 100%) and likely measures amending the Secure 2.0 bill.  

Adding tax provisions to the upcoming spending bills could happen, but it is unlikely to occur. There is a lot of disagreement between lawmakers on what the spending bills should include and adding tax provisions into the mix would make those discussions harder for lawmakers to reach an agreement.

Little movement occurred in 2023 on repealing or modifying the TCJA's $10,000 cap on deducting state and local taxes paid from federally taxable income.

The outcome of the 2024 elections will have a huge impact on the fate of TCJA provisions – this is especially true for the SALT cap.

If one political party sweeps the elections, the SALT cap is expected to continue beyond 2025 and it will likely be increased to $20,000 for joint filers (the cap for single filers would continue to be $10,000). If the other party sweeps the elections, the cap will be fully repealed. If Washington is politically split after the elections, all bets are off.  

These 2024 IRS changes can increase paychecks, lower taxes – Kelly Tyko, Axios:

The new year brings slightly larger paychecks to many Americans thanks to changes the IRS made to adjust for inflation…

The big picture: New IRS tax brackets and increased standard deductions go into effect Jan. 1 along with other tax inflation adjustments that include the mileage rate increasing by 1.5 cents a mile and higher contribution limits for tax-deferred retirement plans.

Tax-and-Climate Law, Global Tax Deal Rules Are on Tap for 2024 - Michael Rapoport, Lauren Vella, Caleb Harshberger and Erin Slowey, Bloomberg ($):

Guidance on President Joe Biden’s tax-and-climate law, the global tax deal, and cryptocurrency will take center stage this year.

Ahead of this year’s presidential election, the Treasury Department and IRS will likely be focused on rules that flesh out how many tax-and-climate law provisions will work, including the corporate alternative minimum tax and clean energy tax credits. Treasury and the IRS are also planning to release several long-awaited guidance items in areas such as previously taxed earnings and profits and cloud-computing transactions.

A Look Ahead: Estate Planners Relieved by Legislative Limbo, Hesitant Treasury – Jonathan Curry, Tax Notes ($):

It’s been nearly three years since President Biden took office, but the legislative and regulatory reckoning that many estate planners feared has yet to materialize.

And 2024 looks to be no different. A risk-averse Treasury and a divided Congress — in an election year, no less — means wealthy individuals and families shouldn’t expect significant changes in the estate planning advice they receive next year, observers say.

Four Federal Cases Tax Practitioners Must Watch in 2024 - John Woolley,  Bloomberg ($). "Here are four cases tax practitioners should track in 2024: Moore v. United States… Loper Bright Enterprises v. Raimondo… Farhy v. Commissioner… Connelly v. United States…”

IRS Mulls Home Energy Credit Identification Number Rules - Caleb Harshberger, Bloomberg ($):

Treasury and the IRS are seeking comments to inform coming guidance on product identification number requirements to claim the energy-efficient home improvement credit.

The agencies issued Notice 2024-13, saying they planned to issue regulations on PIN requirements for the credits, and listed questions for industry and other stakeholders to answer.

The Notice is here.

Functional Analysis of Limited Partner SECA Taxes – Lee Sheppard, Tax Notes ($):

The IRS chief counsel always picks the ugliest facts for litigation.

In the typical investment fund setup, the profits interest in the fund partnership is held by the general partner, which itself may be a limited partnership, of which the asset manager (or personal S corporation) is a limited partner. He (or his S corporation) has a limited partner capital interest in that fund, purchased with his own money. He is an active member of the management company, which earns management fees based on net assets of the fund. Managers often own limited partner interests in the management company, and they’ve argued that the separate purchase means that separate roles should be respected. Distributive share on these latter interests is the subject of the SECA tax debate.

Dip in IRS Call Responses Comes Amid Pressure for Better Service - Chris Cioffi, Bloomberg ($). “IRS phone service levels have slipped in recent months even as pressure on the agency rises to match a dramatic boost in taxpayer calls returned this past filing season, agency data compiled by a Treasury Department watchdog shows.”

Electric Car Models Eligible for $7,500 US Tax Credit Cut to 13 - Ari Natter, Bloomberg ($):

The number of electric vehicle models eligible for a popular $7,500 consumer tax credit fell sharply as new rules from the Biden administration kicked in on Jan. 1.

Narrower criteria reduced the number of qualifying models to 13 from about two dozen, according to federal data from fueleconomy.gov. The new rules exclude from the tax credit vehicles that use battery components made by Chinese manufacturers.

U.S. Beneficial Ownership Information Registry Now Accepting Reports – FinCEN:

[T]he U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) began accepting beneficial ownership information reports. The bipartisan Corporate Transparency Act, enacted in 2021 to curb illicit finance, requires many companies doing business in the United States to report information about the individuals who ultimately own or control them.

International Tax Policy To Watch In 2024 – Dylan Moroses, Law360 Tax Authority ($):

Multinational companies face new global minimum taxes this year as countries continue to work to address international taxing rights in two forums, giving stakeholders plenty to monitor in 2024.

Many countries will bring online initial components of the global minimum tax known as Pillar Two this year, while negotiators among the inclusive framework at the Organization for Economic Cooperation and Development continue to finalize the multilateral convention required for a taxing rights overhaul known as Pillar One.

From the “Book'em Danno” file:

Tax Crime Roundup: Ex-Swiss Banker Pleads Guilty in Fraud Scheme – Mary Katherine Browne, Tax Notes ($):

Rolf Schnellmann, a Swiss national, pleaded guilty December 21, 2023, to conspiring to defraud the United States in a scheme to help high-net-worth American taxpayers conceal their income and assets in offshore accounts.

According to the government, Schnellmann is the former head of Zurich-based Allied Finance Trust AG. From 2008 to 2014, he and his co-conspirators worked to conceal over $60 million of assets held by U.S. citizens at a Swiss bank.

Uh-Oh! It’s National Buffet Day. How many weight-loss New Year’s resolutions will be postponed until January 3rd?