Lately on the Hill
- Debt limit update. Congress managed to come together to pass the Fiscal Responsibility Act of 2023, which will increase the debt limit for two more years, along with spending cuts. The House voted 314–117 and the Senate voted 63–36, with far-right Republicans and some progressive Democrats voting against the bill. No proposed amendments in the Senate got enough votes. President Joe Biden signed the bill into law on June 3.
- The next battle to watch will be negotiations over appropriations for fiscal year (FY) 2024. The Fiscal Responsibility Act of 2023 includes an incentive for Congress to pass all 12 appropriations bills by the end of the year or risk a 1% spending cut compared to FY 2023. For context, Congress has not passed 12 appropriations bills since 1997 (instead, Congress passes a continuing resolution, which is basically taking the prior year budget and making it the new budget). Tax policy is expected to play a starring role in these negotiations as Republicans plan to unveil a tax bill this month.
- The Congressional Budget Office (CBO) estimates that the Fiscal Responsibility Act of 2023 will decrease mandatory spending by $10 billion, and revenues would—on net—decrease by $2 billion over the 2023–2033 period. As a result, interest on the public debt would decline by $188 billion. Additionally, in CBO’s estimation, if discretionary funding for 2024 and 2025 is capped by the limits as directed by the debt limit bill, budget deficits are estimated to be reduced by about $1.5 trillion over the 2023–2033 period relative to May 2023 baseline projections. Reductions in projected discretionary outlays would amount to $1.3 trillion between 2024 and 2033.
- New bills introduced. Here is a roundup of some of the latest tax-related bills introduced in Congress:
- Reps. Debbie Lesko (R-AZ) and Brad Schneider (D-IL) introduced the Tax Deadline Simplification Act, which would change the estimated tax payment deadlines to a uniform, quarterly schedule.
- The House Financial Services Committee and the House Committee on Agriculture released a discussion draft of legislation providing a statutory framework for digital asset regulation.
- Sens. Bob Casey (D-PA) and Tammy Baldwin (D-WI) introduced the Electric Motorcycle Parity Act of 2023, which would make motorcycles eligible for the 30D clean vehicle tax credit.
- Rep. Mike Carey (R-OH) introduced the Pay Less at the Pump Act, which would repeal the Superfund excise tax imposed on crude oil when it is received at a U.S. refinery and applies to imported petroleum products.
- Sens. Shelley Moore Capito (R-WV) and Gary Peters (D-MI) reintroduced the Workforce Development through Post-Graduation Scholarships Act, which would exclude post-graduation scholarships from gross income (similar to traditional scholarships).
- Sen. Martin Heinrich (D-NM) introduced the Grid Resiliency Tax Credit Act, which would provide a 30% investment tax credit to support investments in large-scale transmission projects and grid-enhancing technologies.
IN CASE YOU MISSED IT
- The IRS issued Notice 2022-44 to provide details for applicants seeking Section 48C credit allocations.
- The IRS issued proposed regulations for applicants investing in certain solar- and wind-powered electricity generation facilities.
- A Hollywood man has been arrested on federal charges alleging he sought more than $65 million from the IRS by falsely claiming on tax returns that his nonexistent farming business was entitled to the Employee Retention Credit.
- The IRS is soliciting comments concerning a penalty on income tax return preparers who understate a taxpayer’s liability on a federal income tax return or claim for refund.
- President Biden is nominating Marjorie Rollinson, a retired Ernst & Young partner, to fill the IRS chief counsel position. The chief counsel’s office is responsible for drafting regulations and other IRS guidance.
- The Treasury Inspector General for Tax Administration recommends that the IRS Large Business and International (LB&I) Division should consider shifting individual examination resources to more productive examinations. During the last five fiscal years, 67% of LB&I examinations consisted of individual taxpayers. However, 90% of individual examination closures by the LB&I Division’s Withholding Exchange and International Individual Compliance reported less than $200,000 in total positive income for fiscal years 2017 through 2021.
- Treasury released an analysis on the demographics of the recipients of the first round of stimulus payments made during the COVID-19 pandemic in 2020.
- William B. Weatherford, a managing director in the transaction advisory services practice at FORVIS, published his thoughts in TaxNotes on why the §197 anti-churning rules that were enacted in 1993 have far outlived their usefulness and should be repealed.
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.