Tax News & Views Weekly Roundup: Year-end and 2027 Congress Plans, New OZ and 401(k) Releases

Not-So Lame Duck Session

Hollywood’s tax credit push runs into a post-midterm wall - Daniel Miller and Bernie Becker, Politico:

It’s a notable turn for a proposal that drew broad bipartisan support when introduced in September but now faces a tough path to passage.

Asked what the election results meant for the legislation and whether Republicans would still be willing to work on it during the lame-duck session, Democratic Rep. Laura Friedman, whose Los Angeles-area district includes several major Hollywood studios, told POLITICO, “I don’t know.”

“But this is a really important bipartisan effort,” said Friedman, a former movie producer who is among the legislative effort’s leaders. “It’s a jobs bill. It’s about a signature industry that’s one of our top exports, and I’m hoping that we can still move it forward in the lame duck.”

GOP Looks to Draft Year-End Extenders, Tax Package - Macon Atkinson, Ashley R. Williams and Chris Cioffi, Bloomberg Tax ($):

Republican tax writers are working on a year-end package that they hope Democrats will support, according to a top senator.

Senate Finance Committee Chair Mike Crapo (R-Idaho) said members have agreed to a number of basic extenders spanning both tax and healthcare, as well as “a few other issues” he declined to detail. But there’s a chance Democrats will want to wait until next year, he said, to do things differently.

“I don’t know the answer to that yet,” he told Bloomberg Tax. “I know there is some interest on their side in clearing the deck of those issues that are bipartisan.”

What Now? History’s Lessons for a Lame-Duck Congress - Joseph J. Thorndike, Tax Notes ($):

Political defeat can focus the legislative mind, too. In the fall of 1874, Democrats won control of the House of Representatives for the first time since the start of the Civil War. Republican protectionists, determined to protect their program of high tariffs, used the lame-duck session to reverse a tariff cut their own party had passed in 1872. President Ulysses S. Grant signed the measure on March 3, 1875 — the outgoing Congress’s final day in office.

“The protectionists, having only a short term of power left them, hastened to take advantage of it,” explained the pioneering investigative journalist Ida Tarbell in a 1911 description of the episode.

Congress: 2027 and Beyond

Trump Deal, IRS CEO Seen as Prime Targets for Dem Majority - Ben Valdez, Tax Notes ($):

Democrats could use their newfound majority to attack the legitimacy of IRS CEO Frank Bisignano’s position absent a Senate-confirmed commissioner — an issue that they’ve raised several times as the minority party.

“There may be oversight hearings with respect to IRS operations and maybe even an effort to challenge the ability of the administration to have the IRS led by a chief executive officer instead of a confirmed commissioner,” said David Kautter of RSM US LLP.

Kautter, former acting commissioner and Treasury assistant secretary for tax policy, added that lawmakers will likely be interested in knowing more about the impact of IRS downsizing on taxpayer services and enforcement. Kautter also chairs Tax Analysts’ board of directors.

Democrats Plan Early Action on Tariffs, Health Insurance Costs - Caitlin Reilly, Bloomberg Tax ($):

Congressional Democrats plan to strike quickly next year on Americans’ affordability concerns with votes to roll back President Donald Trump’s tariffs, revive expired Obamacare subsidies and reverse Republican healthcare and food assistance cuts, a key Democratic lawmaker said.

Representative Richard Neal, who is set to lead the powerful House committee with jurisdiction over tax, health and trade policy, said he and his Senate counterpart already have a coordinated the strategy to show “we heard what voters had to say.”

The initial salvo of cost-of-living legislation would unite a party that is divided between moderates who want to stay focused on Americans’ most pressing economic concerns and progressives who seek a far-reaching expansion of the safety net.

Senate Democratic Tax Aide Jabs Treasury on Eased Book-Tax Rules - Lauren Vella, Bloomberg Tax ($):

The Treasury Department has taken the wrong direction in using its authority to defang a minimum tax on the most profitable companies in the US, a top Democratic tax staffer said.

“Treasury has taken a pretty broad view of what it can do under statutes where they were granted broad grants of authority, and specifically under corporate alternative minimum tax,” Jonathan Goldman, senior tax counsel for Senate Finance Committee Democrats, said Friday.

When Democrats passed the minimum tax, known as CAMT, as part of its massive 2022 tax-and-climate bill, Congress gave the department broad authority to regulate the levy “with the concept that determining income was going to require some detailed look into financial accounting rules,” Goldman said.

IRS News

IRS announces 2027 401(k) contribution limits, raises savings cap: What it means for your money - Kate Dore, CNBC:

The IRS has announced new retirement account contribution limits for 2027.

In its release on Thursday, the agency increased the 401(k) employee deferral limit to $25,500 next year, up from $24,500 in 2026. The change applies to 401(k)s, 403(b)s and most 457 plans, along with the federal Thrift Savings Plan.

The IRS also unveiled 2027 catch-up contribution limits for savers age 50 and older, new individual retirement account savings limits and higher income thresholds for Roth IRA contributions.

Opportunity Zones Go Rural - Marie Sapirie, Tax Notes ($):

The OBBBA changes were designed to make rural investments attractive. Investors in qualified rural opportunity funds get a 30 percent step-up in basis after five years, instead of the 10 percent accorded to investments in nonrural qualified opportunity funds. A qualified rural opportunity fund is a QOF that holds at least 90 percent of its assets in QOZ property. Substantially all of the property’s use during substantially all of the fund’s holding period for the property must be in a QOZ composed entirely of a rural area. Alternatively, the QOZ property can be QOZ stock or a QOZ partnership interest in a QOZ business in which substantially all of the tangible property owned or leased is QOZ business property, substantially all of the use of which is in a QOZ composed entirely of a rural area.

Around the World

Australia Public Tax Data Raises Fresh Profit-Shifting Concerns - Ryan Hogg and Michael Rapoport, Bloomberg Tax ($):

Australia’s reporting regime is one of three that now require companies to disclose more about where they’re paying taxes and how much, though the others don’t require information about related-party revenue. The EU has its own country-by-country reporting regime, under which many companies filed their first detailed reports this year, and the US now requires companies to disclose more tax information, including the location of significant cash-tax payments.

Old Ideas Die Hard: France Revisits the Bit Tax - Nana Ama Sarfo, Tax Notes ($):

No country currently appears to levy a broad-based gigabyte tax on internet traffic. Earlier this month, France’s National Assembly adopted a legislative proposal, Amendment No. I-1358, which sought to do just that. However, the proposal suffered a significant setback on November 4, when the Assembly rejected the first, revenue-related portion of the 2027 budget bill containing the amendment.

Supporters viewed the tax as a way to raise sorely needed revenue, potentially generating €10 billion annually, but the proposal is much more than a simple revenue-raising measure. Amendment No. I-1358 challenges a long-standing policy understanding that has shaped international digital tax policy for nearly three decades: Taxing internet traffic based on the volume of data transmitted, commonly known as a bit tax, is generally problematic.

Blogs & Bits

CHIPS Act Tax Credit: The Data Center Subsidy No One Is Talking About, Adam Michel, The Cato Institute. "Efforts to limit data center construction through new restrictions or special taxes are economically destructive and should be opposed, but data centers shouldn’t be subsidized either."

What History Can Teach Us About Making Child Tax Benefits More Inclusive, Margot Crandall-Hollick and Aravind Boddupalli, Tax Policy Center TaxVox blog. "But not all families raising children in the US benefit equally from these tax policies, often because of rules that limit tax benefits or exclude families entirely."

Tax Justice Now, Amy Hanauer, Institute for Taxation and Economic Policy blog. "If you’re saving for retirement, you may be able to put away more in 2027 thanks to inflation adjustments announced by the IRS."

What Day Is It?

It's Friday the 13th--stay away from lakes!

Tax News & Views Weekly Roundup: Congress Year-end and 2027 Plans, New OZ and 401(k) Releases