Tax News & Views Hope Dimming for Tax Bill Roundup

Baby steps on the bipartisan tax bill – Bernie Becker, Politico Pro ($):

First things first — does the procedural step that Schumer took on Wednesday evening mean that he’s definitely bringing the bipartisan tax bill to the floor?

In a word? No. Essentially, what Senate Democrats did on Wednesday night is get the ball rolling in case they ever do want to put the measure negotiated by Finance Chair Ron Wyden (D-Ore.) and House Ways and Means Chair Jason Smith (R-Mo.) to the floor.

But that was also a step — moving to put the measure on to the Senate calendar — that people closely watching the debate over the tax bill had been waiting for Schumer to take, as they look to see whether Democrats can overcome widespread GOP opposition to the measure or if the two sides can find some kind of agreement to allow the package to move forward.

Long story short: The bill lacks the bipartisan support it needs to pass. If - at some point - that support materializes the bill, which has already passed the House, could get a floor vote in the Senate. Also, next week Senators go on a two-week recess and return April 8th. At that point there could be a vote on the tax bill.  

Background on the situation in the Senate:

Capitol Hill Recap: Tax Bill Stuck in the Senate – Jay Heflin, Eide Bailly:

Legislation containing R&D expensing for domestic firms, expanding the 163(j)-interest deduction, upping Bonus Depreciation to 100%, modifying the Child Tax Credit, and other provisions, that all passed the House with resounding, bipartisan support has apparently stalled in the Senate.

The reason the legislation is stuck is because Senators want to make changes to the bill, but making those changes is not their top priority. Funding is the top priority.

The biggest issue is what to do about the Child Tax Credit:

Senate Finance Ranking Member Mike Crapo released a statement about how he feels about the credit.

From his statement:

“I remain concerned the CTC [Child Tax Credit] provisions undermine the work requirement and represent a significant shift… [T]he prior year’s earnings provision must be dropped and replaced with actual tax relief…”

We’re in wait-and-see mode on if the Senate can get the votes to move the tax bill:

Thune: Too soon to know what Republicans do if Democrats force vote on tax deal – Brian Faler, Politico Pro ($):

The Senate’s No. 2 Republican said Wednesday that he didn’t know yet whether his side would be able to stop Democrats if they try to force a nearly $80 billion tax deal through the chamber.

Majority Whip John Thune, his party’s chief vote counter, said it’s too soon to say whether Democrats would be able to peel off enough Republican support to reach the all-important 60-vote threshold that would allow them to set aside procedural hurdles.

“I don’t know that we know the answer to that just yet,” he said.

But it's not looking good for the tax bill:

Crapo pans Wyden-Smith tax bill to GOP colleagues - Laura Weiss, Andrew Desiderio and John Bresnahan, Punchbowl News ($):

The Wyden-Smith tax bill is in deep trouble.

The Senate Finance Committee’s top Republican, Sen. Mike Crapo of Idaho, told GOP colleagues privately on Wednesday that he doesn’t want to pass a tax bill this year, according to three sources with direct knowledge of the conversation.

Bottom line:

There’s no hard deadline for the tax bill, and hopes are already dimming. The bill’s prospects will only get worse with tax filing season ending soon.

To be sure, in the past there have been major pieces of legislation that were considered dead - but eventually became law. Stay tuned.  

Wyden, King Introduce Bill to Close Major Tax Loophole Involving High-Value Trusts – Senate Finance Committee:

Senate Finance Committee Chair Ron Wyden, D-Ore., and Senator Angus King, I-Maine, introduced legislation today that would crack down on schemes involving the abuse of certain high-value trusts by ultra-wealthy individuals to avoid income, gift and estate taxes. The Getting Rid of Abusive Trusts Act would close a loophole and modify rules dealing with grantor retained annuity trusts (GRATs). Under current law, GRATs are commonly used by the ultra-wealthy to minimize or zero-out any income, gift or estate tax liability on assets worth at least tens of millions of dollars. They are neither available nor useful to middle-class Americans as a financial planning tool. 

Most bills that are introduced in Congress go nowhere. This one might be worth keeping an eye on.

Living the dream

The worst of times: Issues in accounting in 2024 – Daniel Hood, Accounting Today:

While many members of Accounting Today's Top 100 Firms and Regional Leaders are reporting record revenues, more work than they can handle and a number of exciting emerging opportunities, they are also facing a daunting roster of serious challenges.

Even before getting into the issues that are specific to accounting, leaders from some of the most successful firms in the profession noted the atmosphere of economic risk that is enveloping the country — and, indeed, the world.

"The uncertainty of the marketplace remains a challenge for firms across the globe," explained David Kessler, CEO of New York City-based CohnReznick. "We enter our fiscal 2025 with many of the socio-economic issues we had in fiscal 2024: high inflation and interest rates, tightened lending, uncertainty in the real estate markets, global conflicts."

IRS and Treasury related

IRS Spending Stays Flat in Plan to Avert Shutdown – Cady Stanton, Tax Notes ($). “Fiscal 2024 IRS spending would stay the same year-over-year in measure that would keep the government funded until September 30. The Financial Services and General Government spending bill released March 21 would avert a partial government shutdown if Congress passes it before the Saturday deadline.”

Seven warning signs of incorrect Employee Retention Credit claims for businesses to review as key March 22 deadline approaches – IRS:

To counter promoters that marketed misleading information about the Employee Retention Credit (ERC), the Internal Revenue Service urged businesses to review seven suspicious signs of a bad claim and see if the agency’s special programs can help them avoid future compliance issues.

To combat a wave of dubious ERC claims, the IRS has sharply increased compliance action through audits and criminal investigations – with more activity planned in the future. To help those businesses that were misled, the IRS has created special programs to help, including a limited-time offer through March 22 for employers to correct improper ERC claims at a sharp discount.

Employers who improperly claimed ERC can avoid penalties and interest – and even get a discount on repayments if they apply by March 22, 2024, to the ERC Voluntary Disclosure Program.

Treasury data show surging interest in Biden's clean energy tax credits – Kelsey Tamborrino, Politico Pro ($):

Interest is booming in new provisions created under Democrats' climate law to expand clean energy into new communities that historically have not been able to utilize tax incentives, according to updated data released by the Treasury Department on Tuesday.

The new data provided just a glimpse into overall interest into the Inflation Reduction Act's sprawling clean energy tax incentives, as Republicans on the Hill criticize the law's increasing price tag and as former President Donald Trump pledges to undo the green incentives if elected.

Roughly 500 entities are trying to benefit from these provisions, according to the Treasury Department.

Proposed Regs Issued on Advance Notice of Third-Party Contacts – Tax Notes ($). “The IRS has issued proposed regulations (REG-117542-22) that update the regulations on the advance notice made to taxpayers before IRS contact with third parties and provide exceptions to the 45-day advance notice requirement in specified situations.”

Court side

IRS Asks Justices To Scrap Couple's Late-Filed Tax Court Suit – Law360 Tax Authority ($):

The IRS asked the U.S. Supreme Court to consider reversing the Third Circuit's revival of a couple's challenge to their tax bill, saying the appeals court incorrectly concluded that a 90-day deadline for petitioning the U.S. Tax Court need not always be met.

The Third Circuit's July decision reviving a suit by Isobel and David Culp conflicted with decades of precedent in innumerable cases, the Internal Revenue Service said Tuesday in a certiorari petition. Several appellate courts and the Tax Court itself, the agency said, have found that the deadline for challenging IRS deficiency notices in the Tax Court under Internal Revenue Code Section 6213(a)  is a jurisdictional hurdle set in stone.

H&R Block sues US Federal Trade Commission over tax ads probe - Mike Scarcella, Yahoo! Finance:

H&R Block sued the U.S. Federal Trade Commission on Wednesday, seeking an order that could upend the agency’s case accusing the tax giant of misleading consumers about the scope of its free tax-filing services.

The lawsuit in Kansas City, Missouri federal court claims the FTC's use of internal administrative law judges to hear cases violates the U.S. Constitution.

The FTC last month accused H&R Block of deceiving customers with broad marketing for “free” online tax filing services that really only apply to simple returns. The agency also said H&R Block had unfairly deleted consumers’ tax data.

IRS Withholding Docs On Partnership Audits, Baker Atty Says – Law360 Tax Authority ($):

The Internal Revenue Service has not responded to a request for documents pertaining to the agency's scrutiny of large partnerships and should be forced to disclose them, an attorney with Baker McKenzie told a D.C. federal court.

The IRS has failed to respond to the Freedom of Information Act request for a paper written by an attorney in the agency's Office of Chief Counsel related to audits of large partnerships and other pass-through entities, according to a complaint filed Tuesday by George M. Clarke. He is a partner and chair of Baker's North American tax dispute resolution group.

International zone

EU Floats Alternative To Unanimity As Bloc Eyes Growth – Todd Buell, Law360 Tax Authority ($):

The European Commission floated an alternative Wednesday to unanimity voting on matters such as tax as it seeks to streamline the way the bloc reaches decisions amid talk of expanding the number of EU countries.

In a nonbinding statement, the European Union's executive branch said the need to achieve unanimity among member countries to pass laws in areas such as tax and foreign policy is already raising questions about the EU's ability to act with its current grouping of 27 member countries.

From the “Who You Gonna Call” file

Tax season is underway. Here are some tips to navigate it – Adriana Morga, Associated Press:

It’s tax season in the U.S., and for many people, filing tax returns can be a daunting task that’s often left until the last minute. But if you want to avoid the stress of the looming deadline, start getting organized as soon as possible.

Whether you do your taxes yourself, go to a tax clinic or hire a professional, navigating the tax system can be complicated and stressful. Courtney Alev, a consumer financial advocate for Credit Karma, recommends you go easy on yourself.

“Take a breath. Take some time, set out an hour, or go through it over the weekend. You’ll hopefully see that it’s a lot simpler than you think,” Alev said.

Or you could call us:

Let us help you relieve your tax headache – Eide Bailly:

Federal, state, local, and international tax burdens and responsibilities consume time and cash flow. Whether you’re an individual, a business, a nonprofit, or handling a trust or estate, proper planning and guidance from a well-versed professional can make managing taxes less painful.

Eide Bailly has the depth of tax resources to help you gain peace of mind. Plus, our professionals are supported by the National Tax Office, allowing clients to dig into specialized tax situations.

What Day Is It?

3...2...1... It’s National Countdown Day! Get it? Today is March 21st, or 3.21.