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Tax News & Views Floor Action Roundup

Jay Heflin
May 21, 2024

Key Takeaways

  • Disaster tax relief up for floor vote.
  • Lawmakers seek permanent free file.
  • AARP joins TCJA fight.
  • Seeking a new IRS.
  • Court updates.
  • Global wealth tax is a “no” in U.S.
  • Taxes and Broadway.
  • Did you get the memo?

Disaster Tax Relief Comes to the House Floor – Samantha Handler, Bloomberg ($):

The House votes as soon as Tuesday on a measure to give those impacted by certain disasters—including wildfires and the train derailment in East Palestine, Ohio—relief from having to pay taxes on certain benefits.

The expected vote now comes to the House floor through a fast-track process, after 218 members signed on to the discharge petition to force a vote. It has notable backing from Ways and Means top Democrat Richard Neal (Mass.) and broad bipartisan support.

How the bill got to the House floor:

Capitol Hill Recap: Disaster Tax Relief Bill to Hit House Floor – Jay Heflin, Eide Bailly:

The maneuver? A Discharge Petition.

In short, a Discharge Petition is where a congress person sends a petition to fellow lawmakers and asks them to sign it. These petitions call for a House floor vote on a certain piece of legislation. If 218 House lawmakers sign the petition, the bill gets a floor vote.

What the bill does:

The legislation provides an exclusion from gross income for amounts received as qualified wildfire relief payments. It also broadens the scope of the term “qualified wildfire relief payment” and includes East Palestine train derailment payments as disaster relief. These changes would apply to major disasters beginning any time after the date of enactment of the 2020 Disaster Act. 

Legislative outlook: The bill should get a floor vote in the House. Passage is likely. Once it travels to the Senate, it could pass there as well. In other words, this bill could become law if President Biden signs it.

Don't expect the tax bill that includes R&D expensing and other business tax breaks to be added to this bill. 

 

Lawmakers Ask IRS For Broader, Permanent Free E-File Plan – David van den Berg, Law360 Tax Authority ($):

More than 135 Democratic and Independent members of Congress urged Internal Revenue Commissioner Daniel Werfel and Treasury Secretary Janet Yellen in a letter to expand the IRS' pilot program for free electronic tax return filing and make it permanent.

The lawmakers want the program's capabilities to grow, including to support more income sources and integrate with more states, according to their letter obtained by Law360 on Monday. The program should also use taxpayer data the Internal Revenue Service already possesses to further streamline the filing process, the lawmakers said.

The letter is here ($). 

 

AARP to get in on the 2025 tax tussle – Laura Weiss, Punchbowl News ($):

The expiring Trump tax cuts next year mean an opportunity for the big-ticket groups around Washington to press their tax priorities.

Enter the AARP.

The lobbying force for people 50 and over will be jumping into the mix with support for family caregivers at the top of its priority list. That could be a tricky ask for lawmakers, who will be juggling big political priorities and potentially trillions of dollars in tax cuts.

The 2025 fight about extending the individual tax cuts in the Tax Cuts and Jobs Act (TCJA) is already underway. Discussions started in earnest earlier this year – and will only grow in intensity as we approach 2025. Also, this tax fight will likely extend into 2026 if we wind up with a divided Congress after the 2024 elections. And 2026 is also an election year. This means the fate of the TCJA tax cuts could be determined by an election two cycles away.  

 

IRS Updates

IRS is making headway on modernizing 1960s-era tax system, commissioner says – Natalie Alms, NextGov/FCW:

The IRS is inching forward in its efforts to modernize the system for individual tax account data, called the Individual Master File, that dates back to the 1960s.

The IRS has been trying to modernize the system — an effort the agency’s watchdog has called “one of the most complex modernization programs in the federal government” — since at least 2009.  

The tax agency is currently testing a new processing engine as part of a possible replacement, IRS Commissioner Danny Werfel said in a recent interview with Nextgov/FCW. 

 

The IRS Has More to Say About Transferability and Elective Pay – Marie Sapirie, Tax Notes ($):

Final regs aren’t the end of the story, at least not where the rules of the road for the multibillion-dollar energy tax credit market are concerned. This spring’s releases have, of course, helped pave the way for many transactions by offering certainty on a number of key points and smaller details, but there are still open issues that the government is mulling over. Here’s your cheat sheet from the American Bar Association Section of Taxation’s session on transferability and elective payment at its recent meeting.

 

Court Side

Baker McKenzie Ends FOIA Suit Over IRS Partnership Audits – Ali Sullivan, Law360 Tax Authority ($):

A Baker McKenzie attorney has dropped a public records lawsuit against the Internal Revenue Service that sought to compel the agency to turn over documents pertaining to its scrutiny of large partnerships.

Firm partner George M. Clarke, chair of Baker McKenzie's North American tax dispute resolution group, filed the notice of voluntary dismissal with prejudice Friday in D.C. federal court. The one-page filing did not detail Clarke's reasons for ending the suit, which was brought under the federal Freedom of Information Act.

 

Ex-IRS Agent, Five Others Sentenced In COVID Fraud Scheme – Phillip Bantz, Law360 Tax Authority ($). “A former Internal Revenue Service agent, his brother and four other defendants have pled guilty to participating in a scheme that netted more than $3 million in fraudulent COVID-19 pandemic relief loans.”

 

Domino's Franchisee Gets Year In Prison In $2.5M Tax Case – Anna Scott Farrell, Law360 Tax Authority ($):

The owner of dozens of Domino's Pizza restaurants was sentenced to a year in prison Monday and ordered to pay $2.5 million to the Internal Revenue Service after having admitted he filed false tax returns, the U.S. Department of Justice said.

U.S. District Judge Joshua D. Wolson sentenced [the defendant] to a year and one day in federal prison, the DOJ said. [The defendant] was also ordered to pay a $50,000 fine and serve one year of supervised release, the DOJ said.

 

Ninth Circuit Affirms Tax Court on Accounting Method Change – Tax Notes ($). “The Ninth Circuit affirmed a Tax Court decision in favor of a continuing care community after the IRS changed its accounting method, finding that the Tax Court properly concluded that the community’s accounting method for deferred entrance fees met the all-events test and clearly reflected income and the IRS could not impose a method to more clearly reflect income.”

 

California Estate Not on the Hook for Gift Taxes, Tax Court Says - Tristan Navera, Bloomberg ($):

A California woman didn’t make a taxable gift when she dissolved a family trust and passed interest in the family business to her children, the Tax Court ruled.

The US Tax Court invalidated a $9 million underpayment and $1.8 million penalty the IRS had levied against the estate of Sally J. Anenberg.

 

International Zone

U.S. Opposes Global Tax on Billionaires, Yellen Says – Alexander Rifaat, Tax Notes ($):

Treasury Secretary Janet Yellen said the United States is against the adoption of an annual global wealth tax on billionaires.

A Treasury spokesperson confirmed to Tax Notes the comments made by Yellen in a May 20 article by The Wall Street Journal, in which she said the Biden administration won’t support a proposal introduced by Brazilian Finance Minister Fernando Haddad that calls for a 2 percent annual tax on the ultrawealthy.

 

Global Minimum Tax: 3 Key Priorities for U.S. Multinationals - Perry Hatch, CPA Practice Advisor:

For U.S.-based multinationals, rather than wait for the U.S. guidance, tax leaders and their advisors will need to prepare now for how they will meet the requirements of the nations in which they are doing business. Preparation is everything when it comes to managing and responding to requirements as complex and wide-reaching as this new tax framework. 

The following are three key priorities when preparing for the global minimum tax:

1. Transforming tax data connectivity…

2. Adjust tax processes to accommodate country-by-country reporting… 

3. Collaborate across functions…

 

US Companies Move Behind American Shield to Delay Global Tax - Lauren Vella and Caleb Harshberger, Bloomberg ($):

US multinational companies are engaging in what essentially amounts to a political game of chicken, dissolving their overseas holding companies and reshoring ownership of their subsidiaries to delay paying the new 15% global minimum tax—perhaps indefinitely.

It’s unclear how many US companies are part of this trend, but practitioners tell Bloomberg Tax they have helped US companies move ownership of their foreign subsidiaries to the US, which has yet to sign up to the global minimum tax. The move triggers a one-year delay in compliance.

 

India's Top Court Says Accounting Body Can Limit Tax Audits – David Hansen, Law360 Tax Authority ($):

India's regulatory association for accountants has the authority to limit the amount of tax audits performed by an individual accountant to 60, the Supreme Court of India ruled — even as it canceled ongoing disciplinary proceedings over the restriction because of inconsistent enforcement.

The Institute of Chartered Accountants of India is empowered by the Indian government to set up the terms and conditions under which India's accountants can perform their professional duties, the court said in a decisionFriday. At the same time, it said the regulation at issuewas selectively enforced and therefore quashed all ongoing disciplinary proceedings against violators that were brought before April 1.

 

From “The Great White Way” file

Does a Smash Hit Like ‘Lion King’ Deserve a $3 Million Tax Break? – Jay Root and Michael Paulson, New York Times:

There is no greater success story on Broadway than “The Lion King.” It is reliably among the top-grossing stage shows in New York, where it has brought in nearly $2 billion over its 26-year run; its global total is five times that amount…
And yet, the show was one of roughly four dozen productions that have received millions of dollars in assistance from New York State under a program designed to help a pandemic-hobbled theater industry in New York City.

Over the three years since the program was established, New York State has bestowed over $100 million on commercial Broadway productions.

As a former NYC actor who performed in Off-Broadway productions earning way less than the union minimum (even though I was a union member), I would hope that New York State considers doling some of that bread to shoestring productions that occur in Blackbox theaters all over NYC and hardly ever breakeven when it comes to the bottom line.

 

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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.