Lately on the Hill
Here’s a look at recent tax-related happenings on the Hill, which includes some newly introduced bills and Hurricane Idalia tax relief.
- Hurricane relief. The IRS has granted tax relief to those affected by Hurricane Idalia in parts of South Carolina, postponing until February 15 various tax return filing and payment deadlines that occurred starting on August 29.
- The IRS has urged taxpayers to develop or update an emergency preparedness plan for 2023 so it will be easier to apply for natural disaster relief, such as the postponement of various filing and tax payment deadlines and other assistance.
- New bills and proposals introduced. Here is a roundup of some of the latest tax-related bills and proposals introduced in Congress:
- U.S. Sen. Sherrod Brown (D-OH) announced the introduction of the bipartisan Educators Expense Deduction Modernization Act to quadruple the current $250 amount educators can deduct from their taxes for out-of-pocket classroom expenses. The legislation would increase that to $1,000.
- U.S. Rep. Alma S. Adams (D-NC) introduced the Family Farmer and Rancher Tax Fairness Act of 2023, which would exclude pandemic aid payments from the gross income of qualified farmers, ranchers, and forest landowners.
- U.S. Sens. Shelley Moore Capito (R-WV) and Kyrsten Sinema (I-AZ) introduced the American Investment in Manufacturing (AIM) Act, which is bipartisan, bicameral legislation that would reinstate the earnings before interest, tax, depreciation, and amortization (EBITDA) measure for U.S. businesses.
IN CASE YOU MISSED IT
- The IRS has issued 2023-63, which defines specified research or experimental (SRE) expenditures and other relevant terms and provides examples of costs that are SRE expenditures, including labor costs, materials and supplies costs, cost recovery allowances, patent costs, certain operation and management costs, and travel costs, as well as examples of costs that are not treated as SRE expenditures. Taxpayers may rely on the interim guidance provided in Notice 2023-63 until the publication date of the pending proposed regulations in the Federal Register.
- The IRS has announced the opening of the application period for the 2024 Compliance Assurance Process (CAP) program and has outlined the eligibility requirements to apply for and participate in the CAP. The application period is open from September 6 to October 31, and the IRS said it will let applicants know if they are accepted into the program in February.
- The IRS has listed an organization that no longer qualifies as a charitable donee under Internal Revenue Code Sections 501(c)(3) and 170(c)(2).
- The IRS has requested comments on regulations (TD 9923) on qualified Achieving a Better Life Experience (ABLE) programs under §529A. Comments are due by November 7.
- The IRS has requested comments on Form 706, “United States Estate (and Generation-Skipping Transfer) Tax Return,” and Schedule R-1, which used to be part of Form 706. Comments are due by November 6.
- The IRS has announced the release of a fact sheet that provides guidance to pass-through entities that electronically file Schedules K-2 and K-3 to report negative amounts, noting that for tax year 2022 the computer system doesn’t permit the entry of negative values and that a workaround must be used.
- The IRS has announced guidance on the federal tax status of refunds of state or local taxes and certain other payments made by state or local governments to individuals.
Related to the Inflation Reduction Act (IRA) & CHIPS Act
- The IRS has announced it will use funding allocated to the agency by the Inflation Reduction Act of 2022 to “restore fairness in tax compliance by shifting more attention onto high-income earners, partnerships, large corporations and promoters abusing the nation's tax laws.” As part of that effort, the IRS will ensure that audit rates do not increase for taxpayers earning less than $400,000 a year.
- The IRS has announced several administrative corrections to guidance on the application process under §48(e) for an allocation of environmental justice solar and wind capacity limitation.
- The IRS has announced the proposed regulations on the increased tax credit or deduction amounts for clean energy facilities and projects if taxpayers satisfy certain prevailing wage and registered apprenticeship requirements.