Lately on the Hill
Here are your latest legislative updates:
- Another effort to keep Congress humble. Rep. Angie Craig (D-MN) intends to re-introduce her bill, the Halt Unchecked Member Benefits with Lobbying Elimination (HUMBLE) Act, to impose a lifetime ban on lobbying for members of Congress, restrict elected members from serving on boards of corporations while in office, and require members of Congress to sell individual stocks once they’re sworn in. The bill also proposes to disallow members of Congress from flying first class using taxpayer funds. This is a companion bill to the TRUST in Congress Act introduced by Reps. Abigail Spanberger (D-VA) and Chip Roy (R-TX).
- “Dear government, please don’t snoop.” Sen. Bill Hagerty (R-TN) is re-introducing the Stop the Nosy Obsession with Online Payments (SNOOP) Act to repeal the provision in the American Rescue Plan that requires third-party payment platforms to report transactions totaling over $600 per year to the IRS. These new reporting requirements were set to take effect for the 2022 filing season, but the IRS has delayed these reporting requirements by one year.
- Manchin wants the IRS to issue guidance around EV credits. Sen. Joe Manchin (D-WV) introduced the American Vehicle Security Act (AVSA) directing Treasury to issue guidance to implement the Sec. 30D electric vehicle tax credits. The Inflation Reduction Act instructed the IRS and Treasury to issue guidance on the battery and battery material sourcing requirement for the Sec. 30D credit by December 31, 2022. But Treasury likely won't issue this guidance until spring, which delays changes to how the credit is computed.
- A bill to expand disclosure requirements for certain nonprofits. Sen. Jon Tester (D-MT) introduced the Sunlight for Unaccountable Non-profits (SUN) Act, which would require the IRS to make public information on donors who give more than $5,000 to tax-exempt groups that engage in political activity, as well as make publicly available to view and download tax return information for tax-exempt organizations and deferred compensation plans.
- Tax extenders update: Fiscal year 2023 funding negotiations included three potential tax provisions: rolling back the change to R&D expensing under §174 and delaying changes to business interest expensing under §163 and bonus depreciation phaseouts. However, regardless of bipartisan support, none of these polices made it into the final bill, leaving taxpayers wondering if Congress will take up these issues in the current session.
- Here’s the lay of the land on this: Democrats are firm that they will only agree to any of these tax changes for businesses if the expanded Child Tax Credit is reauthorized in full and without exceptions. Republicans, however, are worried about the cost of this policy, so they would only reinstate changes to the Child Tax Credit with certain limitations and if a work requirement is attached. So, big picture, there does not currently appear to be enough votes to get both of these done: reinstate the expanded Child Tax Credit and pass the tax extenders for businesses. Now, that doesn’t mean it won’t get done—one or both parties could agree to a compromise. If that happens, the most likely legislative vehicle for these policies is the year-end funding package when Congress takes up fiscal year 2024 appropriations.
- Debt limit updates:
- Treasury Secretary Janet Yellen wrote to Congress that the next “extraordinary measure” Treasury is taking to avoid breaching the statutory debt limit is to suspend investment of the Government Securities Investment Fund (G Fund) of the Thrift Savings Fund, which is part of the Federal Employees’ Retirement System.
- Manchin met with House Speaker Kevin McCarthy (R-CA) to discuss the debt ceiling. According to Manchin, the meeting was very productive and McCarthy agrees that any deal on this should not involve cuts to Social Security and Medicare. Manchin is pushing forward his proposal to assemble a bipartisan panel to come up with solutions on how to make federal spending more effective. Specifically, Manchin says Sen. Mitt Romney (R-UT) has the right idea with his proposed TRUST Act, which would create bipartisan committees tasked with reviving the Medicare and Social Security trust funds and addressing the national debt at the same time. There is some GOP support for this approach.
- House Republicans are considering a short-term extension of the debt ceiling to buy more time to negotiate. The thinking behind this is that September is when government funding expires for the fiscal year, which means Congress will be negotiating appropriations for FY 2024. Since Republicans are saying they’ll only raise the debt limit if significant spending cuts are made, it makes sense to combine the negotiations, but we shall see how perceptive Democrats and the White House are to this potential delay.
IN CASE YOU MISSED IT
- The House Ways and Means Committee set up an online form where IRS employees can anonymously submit information regarding inappropriate behavior or mishandling of taxpayer information.
- The IRS opened a free portal where taxpayers can now file Form 1099 series information returns online.
- The IRS expanded and clarified instructions on how to correctly answer the digital asset question and report digital-asset related income on 2022 federal income tax returns.
- The IRS is drafting instructions and revising the draft Form 720, which taxpayers will use to comply with the new stock buyback excise tax under the Inflation Reduction Act.
- The IRS issued Rev. Proc. 2023-09, providing new rules and conditions for implementing the optional safe harbor method of accounting for real estate developers to determine when common improvement costs may be included in the basis of individual units of real property in a real property development project held for sale to determine the gain or loss from sales of those units, e.g., the Alternative Cost Method.
- The U.S. Supreme Court declined to take up a case, Monica Toth v. U.S., on whether foreign bank account reporting penalties are subject to the excessive-fines clause under the Eight Amendment.
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.