Welcome to the inaugural issue of “From the Hill,” a weekly tax policy newsletter delivered straight to your inbox. You’ll receive easy-to-read highlights of the latest developments from Congress, the IRS, Treasury, and more.
Here’s what you should know about this week on the Hill: Legislators are back in D.C. and Democrats have high ambitions for what they want to accomplish this summer.
The Expected Legislative Lineup for Congress in June
Congress is back in session this week after a two-week recess for Memorial Day. The next two months are crucial as Democrats attempt to pass something before the August recess and hitting the campaign trails this summer. Here’s a recap of what’s on the Congressional agenda and what to watch for in the coming weeks:
- Reconciliation legislation negotiations continue behind closed doors. Democrats said there was a 50-50 chance a handshake deal would emerge before Memorial Day on a new budget reconciliation bill to replace the fallen Build Back Better Act, but the holiday passed with no official deal reached.
- Senate Majority Leader Chuck Schumer and Sen. Joe Manchin are negotiating behind closed doors on a legislative package that could include corporate tax rate increases, energy and climate provisions, and prescription drug reform.
- Democrats hope to use the budget reconciliation process (requiring 50 votes in the Senate) to pass a bill to replace the Build Back Better Act, which fell apart last year due to Sen. Manchin’s concern over rising inflation and adding to the budget deficit.
- The new deadline is September 30 when the reconciliation instructions expire. Democrats hope to come to an agreement by the August recess to give them August to draft legislation and September to pass it on the floor.
- A new development: Democrats want to use the reconciliation package to address a hike in Affordable Care Act premiums. Congress limited premium hikes as part of the American Rescue Plan, but if Congress doesn’t act this year, premiums could spike as much as 50%, which won’t look good come midterm elections this fall.
- PPP fraud. The House is set to consider bills addressing fraud in the Paycheck Protection Program and the Small Business Administration’s Economic Injury Disaster Loan Program. The proposed bills would give prosecutors up to 10 years to pursue civil penalties or criminal charges against loan recipients accused of committing fraud.
- RISE & SHINE Act. The Senate Finance Committee is slated to mark up the bipartisan retirement legislation, Securing a Strong Retirement Act of 2022 (SECURE 2.0).
- The House passed a version of this bill in March, which includes provisions to automatically enroll employees in 401(k) plans, enable older workers to contribute more to tax-advantaged retirement accounts, and help small employers offer retirement plans by giving them a tax credit.
- Last week, Sens. Patty Murray and Richard Burr released a discussion draft of the Senate version of this legislation (the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg (RISE & SHINE) Act of 2022), which would require businesses that auto-enroll participants voluntarily to do so every three years, leading workers who opt out to reconsider regularly, and allow businesses to offer emergency savings accounts directly linked to workers’ 401(k) plans that automatically deduct no more than 3% of a worker’s salary in an account capped at $2,500. You can read a summary of the bill here and the bill text here.
- Congress hopes to pass a final version of the semiconductor/domestic manufacturing bill by July 4.
- This legislation is currently in Conference Committee, where 50 House and 13 Senate members attempt to reconcile differences between the Senate’s version of the bill (the United States Innovation and Competition Act of 2021 (USICA)) and the House version (America COMPETES Act of 2022).
- It is still uncertain whether the bill will include any tax provisions. Some of the proposed tax policies include a 25% tax credit for investments in manufacturing facilities or related equipment, an extension on taxes owed for auto dealers who have been hurt by chip shortages, or the return of 100% R&D expensing.
In Case You Missed It
- The IRS published its 2022 “Dirty Dozen” list with potentially abusive arrangements that taxpayers should avoid, including abusive transactions involving charitable remainder annuity trusts, Maltese individual retirement arrangements, foreign captive insurance, and monetized installment sales.
- Sen. Elizabeth Warren released a report on special purpose acquisition companies (SPAC) and plans to introduce the SPAC Accountability Act of 2022, a bill to codify expanded definitions of SPAC “underwriters” into law, close loopholes to make overblown projections, and increase disclosures required for a de-SPAC transaction.
- Sens. Kirsten Gillibrand and Cynthia Lummis released the Responsible Financial Innovation Act, which would create clear definitions of digital assets, assign regulatory authority over digital asset spot markets to the CFTC, and create a structure for taxation of digital assets. Read the full text of the bill here and a section-by-section summary here.
- A group of Representatives introduced a bipartisan bill in the House to disallow foreign tax credits for companies that pay taxes to the governments of Russia or Belarus, in addition to other tax benefits. The Support Ukraine Through Our Tax Code Act is a companion bill to a version that was introduced in the Senate in May.
For the 2024-2025 school year, under the FAFSA Simplification Act, non-parent family members (grandparents, godparents, aunts, uncles, etc.) will be able to contribute as much as they want into 529 accounts without impacting the student’s eligibility for financial aid.
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.