Lately on the Hill
Here’s a look at recent tax-related happenings on the Hill, which includes interim IRS guidance on the new corporate alternative minimum tax (CAMT) and some newly introduced bills.
- CAMT and Notice 2023-64. The IRS recently issued Notice 2023-64 to provide interim guidance designed to help corporations determine whether the new CAMT applies to them and how to compute the tax.
- The Inflation Reduction Act (IRA) created the CAMT, which imposes a 15% minimum tax on the adjusted financial statement income (AFSI) of large corporations for taxable years beginning after December 31, 2022. The CAMT generally applies to large corporations with average annual financial statement income exceeding $1 billion. Considering the challenges of determining CAMT liability, the IRS will waive the penalty for a corporation's estimated income tax with respect to its CAMT for a taxable year that begins after December 31, 2022, and before January 1, 2024. Treasury and the IRS intend to introduce regulations that align with the interim guidance for tax years starting on or after January 1, 2024.
- Changes discussed in the 72-page document include a list of financial statements that meet the definition of an applicable financial statement (AFS), as well as priority rules for identifying a taxpayer's AFS. The guidance provides general rules for determining a taxpayer's financial statement income and AFSI. In addition, there are different financial accounting and taxable years, discontinued operations, and changes in accounting principles.
- Keep an eye out for more details from FORVIS in an upcoming alert.
- New bills and proposals introduced. Here is a roundup of some of the latest tax-related bills and proposals introduced in Congress:
- The Clean Energy Victory Bond Act of 2023 (Sen. Jeff Merkley (D-OR) and Reps. Zoe Lofgren (D-CA) and Doris O. Matsui (D-CA)) would direct Treasury to issue Clean Energy Victory Bonds and establish a Clean Energy Victory Bonds Trust Fund. The bill would allow people to buy bonds modeled after World War II victory bonds to help create jobs and fight the climate crisis.
- The Adoption Tax Credit Refundability Act of 2023 (Sen. Bob Casey Jr. (D-PA)) would make the adoption credit fully refundable.
- The Rural Veterinary Workforce Act (Sen. Debbie Stabenow (D-MI)) would exclude from income some rural veterinarians’ forgiven student loan amounts.
- The Rewarding Efforts to Decrease Unrecycled Contaminants in Ecosystems (REDUCE) Act of 2023 (Sens. Chris Van Hollen (D-MD) and Sheldon Whitehouse (D-RI) and Rep. Lloyd Doggett (D-TX)) would impose an excise tax on plastics to reduce waste.
- The Native American Health Savings Improvement Act (Reps. John R. Moolenaar (R-MI) and Raul Ruiz (D-CA)) would help Native Americans save for healthcare by ending a requirement that they wait three months before contributing to a health savings account. The bill calls for an amendment to Section 223 to remove the requirement.
IN CASE YOU MISSED IT
- Kristin Balding Gutting of FORVIS talks about the IRS’ moratorium on processing new employer retention credit claims in this article on Bloomberg.1 Gutting stresses that “new claims won’t be processed until at least 2024, but the IRS is warning taxpayers to use the moratorium to review any claim before filing.”
- Marjorie Rollinson, President Joe Biden’s nominee for IRS chief counsel, is scheduled to testify September 28 at a confirmation hearing before the Senate Finance Committee.
- Republican presidential candidate Nikki Haley unveiled her tax package, “The Freedom Plan,” which would look to eliminate the federal gas tax, reduce the number of income tax brackets, and scrap the state and local tax deduction if elected to the White House.2
Related to the IRA and CHIPS Act
- The IRS has requested comments on Notice 2023-18 concerning the establishment of a program to allocate the advanced energy project tax credit. Comments are due by November 17.
- The IRS has announced it will establish a new work unit focusing on large or complex pass-through entities as part of the agency’s bid to disrupt efforts by certain large partnerships to use the structures to intentionally shield income to avoid paying taxes. The new unit will use funding provided by the IRA to open exams of 75 of the country’s largest partnerships that represent a cross section of industries, including hedge funds, real estate investment partnerships, publicly traded partnerships, and large law firms. The agency also will start mailing compliance letters to 500 large partnerships that have ongoing balance sheet discrepancies.
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.