Lately on the Hill
Happy Election Day!
Last week, we talked about what Democrats want to prioritize if they keep control of Congress. Today, let’s consider what could change if Republicans take control.
First, the party will determine its leadership roles, likely holding elections as early as next week (in contrast, Democrats historically hold their leadership elections after Thanksgiving). House Republican leader Kevin McCarthy has expressed an interest in shifting policy making to committee and committee chairs (versus the House leadership). This is important because it means that those chosen to lead each committee will be responsible for drafting bills, leading investigations, and controlling the overall policies on the Hill.
Republicans also continue to write letters to Treasury and the IRS on various issues, which could indicate what areas a Republican-led house could focus its investigations on. Here is the latest batch:
- Members of the House Ways and Means Committee are requesting information from Treasury on whether any of the Inflation Reduction Act (IRA) funding will be used for surveilling private banking transactions.
- Republicans on the House Ways and Means Committee are also requesting that Treasury preserve all documents and communications related to the Organisation for Economic Co-Operation and Development (OECD) Pillar One Agreement.
- House Republicans are also seeking more information from the IRS on the agency’s distribution of the Advance Child Tax Credit under the American Rescue Plan Act, including the issues with the online portal released by the IRS to facilitate this process.
Finally, we’ll also likely see a variety bills from Republicans to increase accountability and transparency on how the IRS uses the funding it received under the IRA. The latest news on this front is that Sens. John Thune and Chuck Grassley intend to introduce legislation to give Congress a direct say in how the IRS spends its $80 billion in IRA funding. The legislative text is still being finalized but is expected to be introduced in the Senate later this month.
IN CASE YOU MISSED IT
- Last week, the Federal Reserve (the Fed) raised interest rates again. In response, Democrats are sending a flurry of letters to Chairman Jerome Powell. Senate Banking Chair Sherrod Brown is warning the Fed that its efforts to control inflation should not come at the expense of increasing unemployment and Sen. John Hickenlooper is asking that the Fed pause any further interest rate hikes until more data is available. Finally, a group of Democrats expressed further concerns with the recent rate increases.
- The IRS released its Priority Guidance Plan for 2022–2023, which includes the agency’s priorities from July 1, 2022 to June 30, 2023.
- Treasury announced more than $5 billion in New Markets Tax Credit (NMTC) awards, which will go to 107 organizations across the country. These awards are intended to spur investment and economic growth in urban and rural communities. Learn more about the NMTC and how FORVIS can help you through the NMTC process here.
- The IRS is seeking additional comments on different aspects of extensions and enhancements of energy tax benefits in the IRA, including comments related to the qualified clean vehicles provision and the alternative fuel vehicle refueling property, the credit for carbon capture, and the credit for the preproduction clean hydrogen and clean fuel production credit.
- The IRS Criminal Investigation division released its FY 2022 Annual Report. The highlights include initiating more than 2,550 criminal investigations, identifying over $31 billion from tax and financial crimes, and obtaining a 90.6% conviction rate on cases accepted for prosecution.
- The division plans to hire 360 more special agents and 150 additional personnel in 2023.
- The IRS Criminal Investigation division is also in the process of building hundreds of cryptocurrency cases, focusing on “off-ramping” transactions and failure to report cryptocurrency transactions. Many of these cases are expected to be made public soon.
- The IRS Independent Office of Appeals released its focus areas for FY 2023, which include increasing stakeholder outreach, improving access to in-person and video conferences, leveraging technology to improve how cases are managed, and developing training for appeals employees on enhancing customer engagement.
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.