Lately on the Hill
Here’s a look at recent tax-related happenings on the Hill, which include some newly introduced bills and an extension of postponed tax deadlines for California taxpayers in FEMA disaster-area localities.
- New bills and proposals introduced. Here is a roundup of some of the latest tax-related bills and proposals introduced in Congress:
- Republicans and Democrats of the Senate Finance and the House Ways and Means committees released text of a Taiwan tax bill that seeks to strengthen economic ties between the U.S. and Taiwan. Notably, the bill would relieve double taxation on businesses and encourage investment in key industries such as semiconductors. Since the U.S. does not recognize Taiwan as a nation, this is not a tax treaty between the U.S. and Taiwan. Instead, the bill seeks to provide treaty-like provisions to the Internal Revenue Code.
- The Retirement Savings for Americans Act of 2023, introduced by Sen. John Hickenlooper (D-CO), would facilitate retirement saving for low-income taxpayers who do not have access to an employer-sponsored retirement plan. The act would establish an American Worker Retirement Fund, provide a 1% automatic contribution, and up to a 5% matching contribution through a refundable tax credit.
- Introduced by Rep. Glenn Grothman (R-WI), the H.R. 5920 Student Loan Marriage Penalty Elimination Act would allow married couples to separately apply the student loan interest deduction limitation.
- Promotion of “clean” hydrogen. A group of senators collaborated on a letter written to the U.S. Department of the Treasury recommending measures to preserve the intent of the Section 45V Tax Credit for Production of Clean Hydrogen of the Inflation Reduction Act (IRA). The letter seeks to distinguish “clean” hydrogen from “grey” hydrogen and urges the implementation of rules to promote the former.
- Estimated increased deficit. In response to the Senate Committee on the Budget request for additional details on the budgetary effects of rescinding the $25 billion in funding for tax enforcement activities as provided in the IRA, Phillip L. Swagel, director of the Congressional Budget Office, has issued an estimate of an increased deficit of $23.762 billion over the 2024–2033 period.
IN CASE YOU MISSED IT
- The IRS issued IR-2023-189, which extends the postponed tax deadlines for California taxpayers whose address of record lies within a FEMA disaster-area locality (55 of the 58 California counties). Eligible returns and payments previously postponed to October 16 are now due November 16. Eligible returns and payments include individual income tax returns and payments, quarterly estimated payments, IRA and health savings account contributions, partnership and S corporation returns, payroll and excise tax returns, tax-exempt organization returns, corporate income tax returns and payments, and fiduciary income tax returns and payments. Additional information can be found on the IRS website’s disaster assistance page.
- The November applicable federal rates (AFRs) have been released and can be found in Revenue Ruling 2023-20.
- Revenue Procedure 2023-32 has been released, detailing the calendar year 2023 amounts of §42(h)(3)(D) unused low-income housing tax credit carryovers. State and local allocating agencies direct these funds for the construction or rehabilitation of low-income housing. Allocations were made to 28 qualifying states with the largest allocations made to Texas, Florida, and New York.
- The IRS announced with IR-2023-193 a process allowing employers that filed Employee Retention Credit (ERC) claims to withdraw such claims if they have not yet received the refundable credit. Filers concerned that they may have been subject to a scam or filed inaccurate claims may rescind their claims as if they were never filed. The IRS does plan to issue guidance to assist employers that have already received the refundable credit.
- Mortality tables for use under defined benefit pension plans are now available for valuations made on or after January 1, 2024 (Notice 2023-73). Proposed regulations (REG-103525-23) also have been presented that would update requirements for IRS approval to use specific mortality tables as opposed to the use of the generally applicable mortality tables in calculating present value for minimum funding purposes.
- Final regulations have been provided supporting changes made by the Pension Protection Act. The regulations contain guidance on contributions to Type I and Type III supporting organizations and their supported organizations from persons who control such organizations. (TD 9981)
- The Financial Crimes Enforcement Network (FinCEN) notice of proposed rulemaking requires domestic financial institutions and financial agencies to administer certain requirements targeting convertible virtual currency (CVC) mixing transactions.
- In response to the attacks in Israel, Notice 2023-71 provides relief to affected taxpayers. Certain taxpayer requirements, such as filing returns and making payments, that are due on or after October 7, 2023 and before October 7, 2024 are postponed until October 7, 2024.
- The American Institute of CPAs has requested guidance from the IRS concerning the ERC and the effects of non-deductible wages on an S corp’s accumulated adjustment account (AAA).1 Specifically, the AICPA seeks to clarify that AAA is not reduced by the amount of non-deductible wages, which it argues would create a second level of tax when AAA is depleted and taxable distributions are made from an S corp’s accumulated earnings and profits.
Related to the IRA & CHIPS Act
- Newly issued proposed regulations REG-113064-23 contain guidance for clean vehicle credits as contained in the IRA under §30D(g) and §25E(f). The proposed regulations apply to taxpayers who wish to transfer a previously owned clean vehicle credit or new clean vehicle credit to eligible dealers. In addition, the proposed regulations detail how dealers can become eligible to receive either credit.
- In conjunction with the proposed regulations, Revenue Procedure 2023-33 also has been released, providing procedures under §30D(g) and §25E(f) concerning the transfer of the credits, procedures for dealer registration and revocation or suspension of such registration, and procedures for an advance payment program to registered dealers.
Please note, there will be no From the Hill publication next week, October 31, while we tend to a bit of housekeeping. We’ll be back with the latest legislation updates on November 7!
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.
- 1“RE: Guidance on Employee Retention Credit as it Relates to S Corporations,” us.aicpa.org, October 5, 2023.