Lately on the Hill
House and Senate appropriators have reached an agreement on a top-line number and framework for an omnibus bill to fund the federal government for fiscal year 2023. Congressional leaders hope to pass this $1.7 trillion package by December 23. On December 20, Congress released proposed legislative text for the omnibus package. This is expected to be the final deal so that the Senate can take up the bill for a vote first and then move it to the House. A summary of the proposed bill is available here.
House Republicans are expected to oppose this version of the spending bill, as they would rather wait to take this on in January once Republicans take control of the House. So, it will be up to House Democrats to rely on their current majority in the House to pass this.
Tax policy provisions did not make it into the proposed omnibus package. Democrats aren’t budging on insisting that if corporate tax provisions are included, then so must the expanded child tax credit. But the numbers aren’t adding up to make both corporate tax provisions and the child tax credit work; plus, Republicans are saying they can always take on the corporate tax provisions, like R&D expensing, next year when they take control of the House, since changes to R&D expensing have bipartisan support.
However, retirement legislation, known as SECURE 2.0, did make it into the proposed omnibus package. SECURE 2.0 combines three separate bills: the RISE & SHINE Act, Enhancing American Retirement Now (EARN Act) and the Securing a Strong Retirement Act. SECURE 2.0 proposes to increase the required minimum distribution age to 75, increase catch-up contribution limits for IRAs, allow auto-enrollment of employees in new qualified plans, introduce a Saver’s Match program that would provide 50% matching contributions on up to $2,000 in retirement savings annually for lower and middle-class Americans, introduce starter 401(k) plans for employers with no retirement plans, and much more. A summary of the retirement provisions can be found here.
In other news on the Hill:
- A group of Democratic lawmakers are asking H&R Block, Tax Act, and TaxSlayer to explain an allegation that the tax preparation firms have secretly been transmitting sensitive taxpayer financial data to Meta and Google.
- Sens. Elizabeth Warren and Roger Marshall introduced the Digital Asset Anti-Money Laundering Act of 2022 (the Act). The Act proposes to address the risk cryptocurrency and other digital assets pose to U.S. national security by closing loopholes in the existing anti-money laundering and countering of the financing of terrorism framework. The Act also proposes to bring the digital asset ecosystem into greater compliance with the rules that govern the rest of the financial system.
- The White House released a guidebook that provides an overview of the clean energy, climate mitigation and resilience, agriculture, and conservation-related tax incentives and investment programs in the Inflation Reduction Act, including who is eligible to apply for funding and for what activities.
- Treasury announced a timeline for providing additional information on key tax provisions in the Inflation Reduction Act (IRA). Before the calendar year end, Treasury will provide the following guidance:
- FAQs for consumers on the tax credit for energy efficient home improvement projects and residential energy property
- Initial guidance on the Corporate Alternative Minimum Tax (CAMT)
- Initial guidance on the excise tax on stock buybacks
- Information on the anticipated direction of the critical mineral and battery component requirements that vehicles must meet to qualify for tax incentives in the IRA
This is the last issue of From the Hill for 2022. We’ll see you in the new year!
IN CASE YOU MISSED IT
- The IRS published its FY 2022 Financial Report highlighting the agency’s fiscal actions and financial management activities. During FY 2022, the IRS received more than $4.9 trillion in tax revenue and distributed $542 billion in federal tax refunds and other outlays.
- Treasury’s Financial Crimes Enforcement Network (FinCEN) released a second set of beneficial ownership regulations. The proposed regulations provide guidance on security protocols and access to information reported under the Corporate Transparency Act (CTA). The CTA requires corporations, LLCs, and other similar entities to begin disclosing information about beneficial owners to FinCEN starting in 2024.
- The IRS announced a new office dedicated to overseeing the agency’s implementation of the IRS-related provisions in the Inflation Reduction Act: the IRA Transformation & Implementation Office. This office will focus on implementation of new tax law provisions, taxpayer services transformation, tax compliance transformation, and human capital transformation.
- The IRS is reminding employers and self-employed individuals that chose to defer paying part of their 2020 Social Security tax liability that the second annual installment of the deferred amount is due on December 31, 2022. Since this date falls on a weekend, however, the IRS has clarified that the actual due date is January 2, 2023. Failure to make the deposit by January 2, 2023 would subject the employer to penalties and interest back to 2020.
- The IRS published Rev. Proc. 2022-43, finalizing the changes for qualified intermediary withholding agreements under which brokers withhold taxes on foreign investors’ sales of partnership interests.
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.