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Tax News & Views Hanging By A Thread Roundup

Jay Heflin
April 1, 2024

Key Takeaways

  • Tax bill is on the ropes.
  • Tax filing help: We got you.
  • Doling-out energy credits.
  • Energy in low-income areas.
  • Surge in finalized APAs.
  • Auditing jets.
  • No fooling: Happy April Fools’ Day!

Schumer’s most vulnerable members want the tax bill. It’s still stuck - Laura Weiss, Punchbowl News ($):

Endangered Democrats’ enthusiasm for the bill hasn’t been enough to shift the politics in favor of a floor vote, which is facing strong Republican objections…

The tax bill’s chances likely sink to zero after the next work period, which wraps not long after tax filing season ends on April 15. The last gasp of the efforts to pass the bill are about to play out.

Schumer’s sensitive scheduling situation – Burgess Everett and Katherine Tully-McManus, Politico. The November elections might seem a ways off, but Senate floor time is short and precious.

We count 15 weeks of floor time in the Senate before the election (and before the next funding deadline), which creates both an opportunity and tough decisions for Senate Majority Leader Chuck Schumer. He can pursue nominees, particularly judges, with a simple majority (and a tiebreaking VP Kamala Harris if necessary) or try to move bipartisan bills which his incumbents are eager to pass ahead of the election.

The tax bill is not a huge priority right now, which means giving it floor time is unlikely.

[A] bipartisan tax agreement is in real trouble, with Senate Republicans feeling snubbed after being left out of the deal between Senate Democrats and the House GOP.

Lobbyists who have promoted passage of the tax bill are not optimistic about its fate:

K Street isn’t betting on the tax bill - Laura Weiss, Punchbowl News ($):

However, never say never – ever!

Where’s a tax bill stand among Senate to-dos? – Bernie Becker, Politico:

There are business lobbyists out there who say that supporters of the tax bill are within shouting distance of securing the roughly 10 Senate Republicans needed for the bill to cross the magic 60-vote threshold, even as most observers believe the tax deal is in serious trouble in the Senate. 

So the questions facing Schumer are two-fold: If he believes that Democrats can get the votes, does he want to use what would be precious floor time on the tax bill instead of some of those other priorities?

Here’s the thing: There are ‘I dare you’ votes. Lawmakers talk a lot of fluff, but voting on legislation puts them on the record for either supporting or opposing a bill that might be popular with their constituents.

[O]ne school of thought would argue not to bring the tax bill up for a vote just to see it immediately go down. But another way of thinking is that Democrats might want to force Senate Republicans to fully own the defeat of the tax bill, which would restore key tax breaks that the GOP’s historical allies in the business community have spent years fighting for.

 

US tax returns are due in two weeks, but millions of people have some extra time to file – Jeanne Sahadi, CNN:

If you haven’t sent in your 2023 income tax return yet, you have until April 15 to do so. Unless, that is, you’re among the millions of people who, for different reasons, are granted more time to file later this year. 

That includes those who file for an automatic six-month extension by April 15. Taxpayers who choose this option don’t need to give the IRS any explanation as to why they want an extension… 

The next large group of people who don’t have to file by Tax Day are those who live or do business in a locality that was declared a federal disaster area in 2023.

Don’t know your deadline? Give us a buzz:

Tax Consulting & Planning – Eide Bailly:

Eide Bailly’s goal is to help you minimize your tax liability and manage your tax risk. With dedicated professionals who spend every day solving tax issues in a variety of industries, Eide Bailly brings a wealth of knowledge and resources to any tax situation or question. Our people are active in the development and review of tax legislation and work with you through industry and professional groups to advocate for your needs.

 

Reg Updates

Biden administration to hand out $4B in advanced energy tax credits – Kelsey Tamborrino, Politico Pro ($):

The Energy Department announced on Friday that more than 100 projects will receive the first $4 billion under an Inflation Reduction Act program to help spur domestic manufacturing of clean energy components and cut industrial emissions…

Context: The projects — spanning 35 states — were selected to receive the advanced energy project tax credit that was extended through the IRA.

Proposed guidance is here.

Green Energy Credit Sales Spur Surge In Tax Insurance – Kat Lucero, Law360 Tax Authority ($). “A new way for project owners to monetize clean energy tax credits by selling them for cash has turbocharged demand for insurance policies to cover various risks tied to the transactions, which can often be worth hundreds of millions of dollars.”

Green Energy Bonus Tax Credit Rules Spur Cottage Industry - Caleb Harshberger, Bloomberg ($):

So companies increasingly are turning to attorneys and tax advisers to fill the role of de-riskers and confidential go-betweens to meet requirements and give them enough confidence to go ahead with deals—while insurance companies provide backup if something still goes wrong. 

These third parties are working to build a middle ground between credit-seekers and suppliers, where they can confidentially review supplier and contractor direct cost information under protection of non-disclosure agreements. That’s required under the law to confirm if the materials or work meets the standard without exposing specific information to the credit-seeker.

 

IRS Looks to Help With Demand for Low-Income Communities Bonus – Mary Katherine Browne, Tax Notes ($):

New guidance explains how solar- and wind-powered energy facilities can receive the low-income communities bonus for the energy investment credit and provides specifics on the 2024 capacity limitation allocation divisions. 

The IRS’s guidance (Rev. Proc. 2024-19, 2024-16 IRB 1), released March 29, provides important updates to the application process and documentation requirements for the low-income communities bonus program for the 2024 year.

IRS release is here.

 

Income From Schools' Reinsurance Excluded, IRS Says – Jared Serre, Law360 Tax Authority ($):

A nonprofit insurance company can exclude income received for providing reinsurance coverage for a conglomerate of public charter schools from its gross income as its work is "an essential government function," the Internal Revenue Service said in a ruling published Friday.

The IRS said in PLR-113710-23 that due to the company's government ties, and the fact that the income ultimately accrues to a state or political subdivision, the company does not have to include income generated from providing reinsurance coverage in its gross income.

The document is here.

 

Court Side

Too Soon to Pull Plug on Electronics Manufacturer’s R&D Credit – Erin McManus, Tax Notes ($):

The Tax Court rejected the IRS’s position that production expenses are categorically excluded from the research and development credit computation even when a production worker directly supports research. 

Judge Ronald L. Buch denied March 14 summary judgment to the agency, saying that the question of fact — whether production expenses incurred in developing a pilot model qualify as specified research or experimental expenditures — remained in dispute in Intermountain Electronics Inc. v. Commissioner.

 

Second Circuit Closes Door on Appealing Small Tax Case Dismissals - Leslie Book, Tax Notes ($). “In this post, Book discusses a Second Circuit opinion that held that a petitioner who elected small tax case procedures in Tax Court couldn’t appeal the dismissal of his case for lack of jurisdiction.”

 

International Zone

APA Work Doubled In 2023, IRS Report Says – Natalie Olivo, Law360 Tax Authority ($):

The Internal Revenue Service finalized more than twice as many advance pricing agreements for U.S. multinational corporations in 2023 as in the previous year, according to an agency report released Friday. 

The IRS finalized 156 APAs in 2023, compared with 77 in 2022, according to a report issued by the agency's Advance Pricing and Mutual Agreement Program, which noted these numbers include both new agreements and renewed ones. In general, an APA is negotiated between a corporation and its home country's tax authority — and sometimes a foreign authority — on the pricing of assets that generate income across borders.

 

India's Congress bemoans 'tax terrorism' after second tax notice – Shilpa Jamkhandikar, Reuters:

India's main opposition party said on Friday it had been asked to pay an additional 18.2 billion rupees ($218 million) in taxes, which it called an attempt by the tax department to financially cripple it weeks before a national parliamentary election. 

Calling the latest notice from the Income Tax Department "tax terrorism", Congress treasurer Ajay Maken told reporters the party would fight the demand in court.

 

From the “First World Problem” file

What To Know About IRS' New Jet Use Audit Campaign – Mary Hevener, Steven Johnson and Jonathan Zimmerman, Law360 Tax Authority ($):

The Internal Revenue Service recently launched a new audit campaign initiative that will focus on executives' personal travel on company-provided aircraft. Companies with high visibility or generous corporate aviation programs should prepare now.

In his State of the Union address, President Joe Biden targeted tax breaks for corporations and wealthy individuals who use private jets as part of a broader goal to make big corporations and the wealthy pay "their fair share." Following the address, the White House highlighted a recently announced IRS audit initiative to "crack down on high-end tax evasion like deducting personal use of corporate jets as a business expense."

The audit announcement is here.

 

What Day Is It?

Hey! Godzilla just stole your car! April Fools!

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About the Author(s)

Jay Heflin Photo

Jay Heflin

Director of Legislative Affairs
Jay brings more than two decades of experience to his job as Director of Tax Legislative Affairs in Eide Bailly’s Washington D.C. office. Jay provides political intelligence and guidance to the firm on the progress of tax legislation on Capitol Hill. Prior to joining the firm, he was a director at the tax lobbying shop Federal Policy Group, LLC, where he tracked tax legislation in Congress and participated in lobbying efforts to amend tax legislation. Before joining the Federal Policy Group, he was a Congressional reporter for several news organizations where his beat was tax policy.

Any opinions expressed or implied are those of the author and not necessarily those of Eide Bailly. Opinions found in linked items are those of the authors of the linked item, not of your bloggers or of Eide Bailly. “$” means link may be behind a paywall. Items here do not constitute tax advice.