Here’s a look at recent tax-related happenings on the Hill, which includes an IRS memorandum on whether OSHA guidance may be relied upon in determining the requirements of an “eligible employer” and the U.S. Department of Energy’s online portal for the Low-Income Communities Bonus Credit Program now ready to use.
- The Office of Chief Counsel of the IRS has issued a Generic Legal Advice Memorandum (GLAM) AM 2023-007 concerning whether an employer may rely on guidance issued by the Occupational Safety and Health Administration (OSHA) in determining requirements of an “eligible employer” under Section 2301(c)(2)(A)(ii)(I) of the CARES Act and Internal Revenue Code (IRC) §3134(c)(2)(A)(ii)(I) for purposes of determining eligibility for the Employee Retention Credit (ERC). The memorandum states, “Some taxpayers have argued that their businesses were fully or partially suspended for purposes of the employee retention credit because OSHA communications … constituted an ‘order’ that suspended the operations of their trade or business.” The memorandum concludes that, in general, OSHA communications do not qualify as “orders from an appropriate governmental authority.” The memorandum does, however, provide that if OSHA guidance did become mandatory through the orders of an appropriate governmental authority, such as an executive order from a governor, it would qualify under the requirements.
- The U.S. Department of Energy’s online portal to apply for the Low-Income Communities Bonus Credit Program is now ready for use. This bonus credit expands the already existing Investment Tax Credit (ITC) up to an additional 20 percentage points. The bonus credit is limited; therefore, it is important to apply as early as possible.
Lately on the Hill
After weeks of vacancy, Rep. Mike Johnson (R-LA) was sworn in on October 25 to fill the speaker of the House seat. Reportedly, in the run-up to his election, the speaker promised SALT cap relief to members of the SALT Caucus, although there is doubt that any major tax legislation will be passed anytime soon.
- New bills and proposals introduced. Here is a roundup of some of the latest tax-related bills and proposals introduced in Congress:
- The House of Representatives received a bill entitled the Federal Disaster Tax Relief Act of 2023 from the Ways and Means Committee by unanimous vote, extending and expanding prior legislation for federal tax relief for disaster victims.
- House members passed the Israel Security Supplemental Appropriations Act, 2024, which seeks rescission of $14.3 billion of IRS funding provided in the Inflation Reduction Act of 2022 (IRA) to fund emergency aid to Israel.
- Introduced by Rep. J. Luis Correa (D-CA), the Promoting Reduction of Emissions through Landscaping Equipment Act would amend IRC §46 to provide a business tax credit for the purchase of “zero-emission electric lawn, garden, and landscape equipment” equal to 40% of the basis of the equipment, not to exceed $25,000 in a taxable year and $100,000 within a 10-year period.
- The Retirement Investment in Small Employers Act introduced by Rep. Claudia Tenney (R-NY) proposes to add a new subsection to IRC §45E allowing a $2,500 pension startup credit for microemployers (defined as a business with 10 or fewer employees and accepts payments under §6433).
- Tenney also has introduced the Producing Incentives for Long-term production of Lifesaving Supply of Medicine Act or “PILLS Act” providing a credit for the production of generic drugs and biosimilars. The credit is equal to 30% or 35% of the value added to certain eligible components with a bonus credit for components with domestic content.
- Sen. Bill Cassidy (R-LA), a Senate Finance Committee member, introduced a resolution (S. Con. Res. 23) providing arguments on how a carbon tax would be detrimental to the U.S. economy.
- The Stop Subsidizing Multimillion Dollar Corporate Bonuses Act was introduced by Sen. Jack Reed (D-RI). The legislation seeks to expand IRC §162(m) to apply to all “covered individuals,” limiting the deduction of such individual’s remuneration to $1 million.
- Rep. Linda Sanchez (D-CA) introduced a bill known as the Mechanical Insulation Installation Incentive Act of 2023. The bill provides a credit equal to 10% of the labor costs paid or incurred for the installation of mechanical insulation resulting in a reduction of energy loss from a mechanical system.
IN CASE YOU MISSED IT
- A notice of allocation availability (NOAA) has been issued by the U.S. Department of the Treasury that also details important deadlines for applicants of New Markets Tax Credits (NMTCs) for the calendar year 2023 allocation round.
- The public has been invited to comment on regulations concerning the availability of the gift and estate tax marital deduction in the instance where the donee spouse or surviving spouse is not a U.S. citizen.
- The IRS has provided additional information on its webpage related to the withdrawal process for ERC claims. The updated webpage includes who can request a withdrawal, how to request it, and what happens after a request is submitted.
- The IRS has extended the comment period by two weeks to November 13, 2023 on the proposed regulations for digital asset sales and exchanges (REG-122793-19). The public hearing also has been moved to November 13, 2023.
- The Pension Benefit Guaranty Corporation (PBGC) has released the variable-rate premiums for plan years beginning in October 2023.
- The IRS is requesting comments on final regulations concerning requirements for the collection of estate tax under IRC §2056A(b).
- In response to the COVID-19 pandemic, the IRS had temporarily allowed the use of digital signatures and the transmission of documents by encrypted email in certain instances. These allowances, which were set to expire October 31, 2023, have been extended (IR-2023-199). The use of digital signatures was extended indefinitely (IRM 10.10.1) and the use of encrypted email has been extended to October 31, 2025 (PGLD-10-1023-0002).
- The IRS has announced that the renewal period has commenced for Preparer Tax Identification Numbers (PTINs) expiring on December 31, 2023. Renewal instructions and additional information can be found in IR-2023-197.
- In an effort to combat charitable donation scams, the IRS has issued IR-2023-196 urging charitable donors to make use of the Tax-Exempt Organization Search Tool (TEOS) to identify legitimate charities and confirm their eligibility to receive tax-deductible charitable donations.
- The IRS has invited public comments for a couple of issues. First, in regard to Rev. Proc. 2008-27 dealing with information submitted by taxpayers to request relief for late filings under §897 (dispositions by foreigners of U.S. real property interests) and §1445 (withholding on §897 dispositions). Second, concerning Notice 2010-54 interim guidance for pending IRC §45 refined coal tax credit regulations.
- The Energy Credit Online tool is now available for sellers of clean vehicles per IR-2023-202. Starting in 2024, sellers will be required to utilize the online tool to claim or transfer Clean Vehicle Credits.
- The 2024 annual contribution limits for qualified retirement plans and deferred compensation plans have been announced (Notice 2023-75).
- The IRS has extended the transition period for taxpayers to perfect deficient claims of an IRC §41 Research Credit within 45 days. The transition period has been extended to January 10, 2025.
Related to the IRA & CHIPS Act
- The IRS has outlined new initiatives (IR-2023-194) as a result of the additional investment received from the IRA. The initiatives seek to improve compliance of complex partnerships and large corporations, and pursue “high-income, high-wealth” individuals who owe overdue taxes. Furthermore, funds are being allocated to improve taxpayer and tax practitioner service through the development of online accounts and mobile platforms where taxpayers and tax practitioners will be able to file documents, make payments, track payment history, and respond to notices.
- The IRS has issued corrections to proposed regulations (REG-100908-23) concerning the increased credit or deduction amounts for taxpayers fulfilling the IRA prevailing wage and registered apprenticeship (PWA) requirements. The corrected proposed regulation concerns IRC §§30C, 45, 45L, 45U, 45V, 45Y, 45Z, 48C, 48E, and 179D.
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.