Lately on the Hill
Here’s a look at recent tax-related happenings on the Hill, including a slew of newly introduced bills and a looming deadline for a potential government shutdown.
- September 30 deadline. Congress must decide whether it will pass all 12 appropriations bills by September 30, 2023 to avoid a government shutdown.1
- Conservatives want the appropriations bills passed individually so that an opportunity remains to propose amendments.
- This will be the last issue of From the Hill until Congress resumes.
- New bills and proposals introduced. Here’s a roundup of some of the latest tax-related bills and proposals introduced in Congress. Just as a point of reference, there have been no tax bills introduced, passed, and signed into law in 2023. The bills that have been reported on in the From The Hill newsletter are largely symbolic:
- Business
- The Main Street Tax Certainty Act would make the 20% pass-through business deduction permanent to “ensure small businesses continue to have tax parity with corporations,” House Ways and Means Committee member Lloyd Smucker (R-PA) and Chair Jason Smith (R-MO) said in a July 25 release.
- The Fostering Innovation and Research to Strengthen Tomorrow Act, introduced by House Ways and Means Committee member Claudia Tenney, (R-NY), would double the research tax credit to 40% and expand startup eligibility for the credit. The bill is intended to “unleash economic growth and create jobs on American soil,” said Tenney in a July 27 release.
- The Tax Fairness for Workers Act would allow employees to deduct expenses for travel, uniforms, union dues, and other expenses because “they should enjoy the same tax breaks and write-offs as employers and businesses do,” House Budget Committee ranking member Brendan F. Boyle (D-PA) and Rep. Donald Norcross (D-NJ) said in a July 27 release.
- The Small Business Growth Act, introduced by Senate Finance Committee member John Barrasso (R-WY), would raise the expensing cap on certain depreciable business assets. The bill is intended to help small business owners purchase equipment by raising the expenses deduction cap to $2.5 million so they can “expand their operations, better compete and hire more workers,” said Barrasso in a July 27 release.
- Sports
- The Motorsports Fairness and Permanency Act of 2023, introduced by Senate Finance Committee member Mark R. Warner (D-VA), would create a permanent seven-year recovery period for motorsports entertainment complexes. A permanent seven-year depreciation would “give speedways the ability to make needed improvements, invest in safety and enhance the spectator experience.”
- Note: The IRS has requested comments on Form 4562, “Depreciation and Amortization,” which is used to claim a deduction for depreciation or amortization and provide enough information to determine the correct deduction amount. Comments are due by September 25.
- The Sports League Tax-Exempt Status Limitation Act, introduced by Senate Finance Committee Chair Ron Wyden (D-OR), would exclude sports organizations from tax-exempt status if they have assets exceeding $500 million.
- The Motorsports Fairness and Permanency Act of 2023, introduced by Senate Finance Committee member Mark R. Warner (D-VA), would create a permanent seven-year recovery period for motorsports entertainment complexes. A permanent seven-year depreciation would “give speedways the ability to make needed improvements, invest in safety and enhance the spectator experience.”
- Family & Healthcare
- The Health Insurance Price Transparency Act of 2023, introduced by House Ways and Means Committee member Brian K. Fitzpatrick (R-PA), would expand requirements and tools for group health plan price transparency.
- H.R. 4822, the Health Care Price Transparency Act of 2023, introduced by House Ways and Means Committee Chair Jason Smith (R-MO), would restrict group health plans offering pharmacy benefits management services from contracting with drug companies that limit information disclosure to plan sponsors.
- The Providing for Life Act of 2023, introduced by Rep. Ashley Hinson (R-IA), would provide tax support for families through measures such as expanding the child tax credit, making the adoption tax credit refundable, and expanding parental leave benefits.
- The Preserving Family Farms Act would provide estate tax relief for family farms by increasing the amount of farmland that can be valued for farming operations under the Section 2032A special use valuation, House Ways and Means Committee members Jimmy Panetta (D-CA) and Mike Kelly (R-PA) said in a July 26 release.
- The Auto Reenroll Act of 2023, introduced by Sen. Tim Kaine (D-VA), would provide for automatic re-enrollment in automatic contribution retirement arrangements.
- The Promotion and Expansion of Private Employee Ownership Act would encourage retirement savings by cultivating the growth of S corporations owned by employee stock ownership plans (S-ESOP), a bipartisan group of four House and Senate tax writers said in a July 27 release.
- Other
- The Wall Street Tax Act of 2023, introduced by Sen. Brian Schatz (D-HI), would impose a financial transaction tax of 0.1% on stocks, bonds, and derivatives. A financial transaction tax of only 0.1% would raise an estimated $752 billion in revenue over 10 years that could be invested in community and social programs, more than 50 organizations said in a July 26 letter. The bill is intended to “discourage speculative trading” and “generate billions of dollars that we can use to invest in affordable health care, infrastructure, and jobs.”
- The Oligarch Act of 2023, introduced by Rep. Barbara Lee (D-CA), would impose a tax on four new high-income brackets and requiring higher auditing (no fewer than 30% of taxpayers required to pay the tax) of households covered by the tax.
- The Ending Tax Breaks for Massive Sovereign Wealth Funds Act, introduced by Wyden, would tax investment income of foreign governments that hold more than $100 billion in assets.
- The Denying Expenditures for False Accusations with Malicious Effect (DEFAME) Act, introduced by Senate Finance Committee member Sheldon Whitehouse (D-RI), would block large corporations (over $10 billion in revenue) from claiming deductions for defamation suit payments of at least $500 million.
- Business
- News on the Employee Retention Tax Credit (ERTC) – Fraud Warning
- The IRS has announced (IR-2023-135) it is making substantial progress in the ongoing effort to screen dubious employee retention credit claims while renewing consumer warnings against aggressive marketing.
- The IRS is closely examining erroneous employee retention credit claims, and there will be consequences for fraudsters and promoters of ERTC-related schemes, according to an IRS official.
IN CASE YOU MISSED IT
- The IRS, announcing it will halt surprise tax collector visits to homes and businesses, has released a fact sheet (FS-2023-17) describing the role of IRS revenue officers; the differences between revenue officers, agents, and special agents; and how revenue officers work.
- The IRS has issued a revenue procedure (Rev. Proc. 2023-26) describing a program that provides an opportunity for fast-track processing of certain requests for letter rulings solely or primarily under the jurisdiction of the associate chief counsel (corporate).
- An unofficial transcript is available of a July 26 IRS hearing on proposed regulations (REG-120653-22) on the advanced manufacturing investment credit.
- Two House Republican tax writers are restating a request for a memorandum detailing the IRS’ decision to destroy about 30 million unprocessed tax return documents in 2021, hoping for more answers from new agency leadership.
- There are now two sign-in options for small tax-exempt organizations submitting Form 990-N, “Electronic Notice (e-Postcard) for Tax-Exempt Organizations (EO) Not Required to File Form 990 or Form 990-EZ.” Multifactor authentication was added to the sign-in process to provide more security for EOs, the IRS explained in the July 25 edition of its electronic newsletter, “Exempt Organizations Update.” The IRS also said it has published four new technical guides on EO issues.
- Treasury has requested comments on the transaction level report for the new markets tax credit program. Comments are due by August 28.
- The IRS could enhance the design of statistical models and issue guidance to improve its auditing of large partnerships, which have been audited at a declining rate since 2007, the U.S. Government Accountability Office said in a July 27 report.
- The IRS has issued final regulations (T.D. 9978) authorizing the assessment of any erroneous refund of employment tax credits paid under the Families First Coronavirus Response Act; the Coronavirus Aid, Relief, and Economic Security Act; and Sections 3131, 3132, and 3134.
Related to the Inflation Reduction Act (IRA) & CHIPS Act
- 33 clean hydrogen industry executives and project developers have warned against subjecting the Section 45V credit for production of clean hydrogen to overly restrictive proposals that they say “have the potential to skew the balance between clean hydrogen growth and environmental integrity in the nascent life of this market.”2
This newsletter features developing content that is subject to change at any time. It does not constitute legal or tax advice. Consult your professional advisors prior to acting on the information set forth herein.