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From the Hill: March 12, 2024

Biden’s State of the Union address provided insight into his tax platform in the upcoming election.
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Here’s a look at recent tax-related happenings on the Hill, including a look at President Joe Biden’s State of the Union address and the status of the Tax Relief for American Families and Workers Act of 2024.

Lately on the Hill

Biden gave his State of the Union address Thursday night touting an envied economy, 50-year-low unemployment, and reduced inflation from 9% to 3%. Biden praised existing tax provisions such as the CHIPS and Science Act passed in 2022, authorizing nearly $300 billion in funding for semiconductor research and manufacturing in the U.S., while also outlining new tax provisions he would like to see, such as a $400-a-month credit for taxpayers to put toward mortgages.

Biden made his case for “fairness” within the tax code, blasting the Tax Cuts and Jobs Act he asserts was a “$2 trillion tax cut that overwhelmingly benefits the very wealthy and the biggest corporations,” and promising no additional federal taxes for taxpayers earning less than $400,000. “The way to make the tax code fair is to make big corporations and the very wealthy pay their share,” Biden proclaimed. The president proposed increasing the Inflation Reduction Act’s 15% corporate minimum tax to “at least 21% so every big corporation finally begins to pay their fair share” and a minimum tax of 25% for billionaires which he implied would provide affordable child care for working families, paid leave, and senior care.

While the promises and proposals expressed in the State of the Union address are typically viewed rhetorically, especially in a divided government, the speech provided insight into President Biden’s—and perhaps the wider Democratic Party’s—tax platform for the upcoming election and possible second term. In a Fact Sheet provided by the White House prior to the speech, additional tax proposals are outlined that are not explicitly mentioned in President Biden’s address, including raising the corporate tax rate to 28%, denial of corporate tax deductions for employees paid more than $1 million, quadrupling the stock buyback rate from 1% to 4%, increasing the Medicare tax rate on income exceeding $400,000, and strengthening the Earned Income Tax Credit.

Last week’s flurry of press releases and political posturing did little to make any apparent advancement on the Tax Relief for American Families and Workers Act of 2024 (Act). As reported in Tax Notes, Senate Finance Committee Chair Ron Wyden (D-OR) complained, “There is no outline of a process for moving forward. What you see is circulation, this kind of smorgasbord of ideas.” Mike Crapo (R-ID), ranking member of the Senate Finance Committee, would like to see a majority, 25 of the 49 Republican senators, support a bill—likely requiring amendments to what it is now—even though only nine Republican votes would be required if all Democrats and Independents also voted for the Act. Crapo told Bloomberg Tax, “I’m getting a lot of clarity as to what probably needs to be fixed before we can get to a majority of support in the caucus. I hope to be able to get even more clarity in the next few days.” Many Senate Republicans do support the Act; however, Tax Notes reports that Crapo views their support of the Act as one thing, while voting for it against a majority of Republican members is another.

President Biden signed into law the first set of appropriations bills late last week, avoiding the pending government shutdown. This leaves just two likely potential vehicles on which the Act may ride, the second tranche of appropriation bills due March 22, 2024 or the Federal Aviation Administration’s funding bill which also was recently extended to May 10, 2024. If the Act is not attached to either of these two options, or they are further delayed, there is substantial risk that the Act will be shelved until after the November elections.

Other Important Developments

IRS Technical Guidance

  • Notice 2024-28 invites public submission to the IRS recommendations for the 2024–2025 Priority Guidance Plan. This plan is used to identify and prioritize tax issues that should be addressed through regulations, revenue rulings, revenue procedures, notices, and other guidance. Submissions are due by May 31, 2024.
  • The IRS is requesting comments due May 6, 2024 on Form 6765, Credit for Increasing Research Activities, which is used by businesses and individuals to figure and report the credit.
  • The IRS is requesting comments due May 6, 2024 on Revenue Procedure 99-21, which provides guidance on Section 6511(h), which suspends the statute of limitations on claims for credit or refund when a taxpayer is unable to manage their financial affairs due to mental or physical impairment.
  • The IRS is requesting comments due May 6, 2024 on T.D. 8096 final regulations relating to product liability losses and accumulations for the payment of reasonable anticipated product liability losses.
  • The IRS is requesting comments due May 6, 2024 on Form 1098-Q, Qualifying Longevity Annuity Contract Information, and related final regulations concerning the use of longevity annuity contracts in tax-qualified defined contribution plans under §401(a), §403(b), IRAs under §408, and eligible governmental plans under §457(b).

Employee Retention Credit (ERC)

  • IRS Tax Tip 2024-15 informs taxpayers by outlining “seven suspicious signs” that may indicate an ERC claim is incorrect. The seven signs are: too many quarters being claimed, government orders that don’t qualify, too many employees and wrong calculations, business citing supply chain issues, business claiming ERC for too much of a tax period, business didn’t pay wages or didn’t exist during eligibility period, and promoter says there’s nothing to lose. The tip urges taxpayers who have any suspicion of an incorrect filed claim to see a trusted tax professional to resolve it without penalty or interest.
  • IRS Tax Tip 2024-14 emphasizes the upcoming March 22, 2024 deadline to apply to the ERC Voluntary Disclosure Program. To learn more about resolving incorrect ERC claims, the IRS invites taxpayers to view the recorded webinar. The webinar includes information such as who can participate in the program, how to apply, and other ERC resources. These resources are intended to assist taxpayers who may have been misled by aggressive tactics to make noncompliant claims of the credit and provide avenues to rectify them.


  • IR-2024-67 grants penalty relief—in response to fuel shortages caused by wildfires—for the sale or use by diesel-powered highway vehicles of dyed diesel fuel in certain counties in Texas. The relief extends through March 22, 2024.
  • IR-2024-65 alerts taxpayers to the misrepresentation of circumstances by some companies under which food and wellness expenses can be paid or reimbursed under flexible spending arrangements, health savings accounts, health reimbursement arrangements, or medical savings accounts. Personal expenses for general health and wellness are not considered medical expenses. The alert points out that obtaining a doctor's note does not cause non-medical expenses such as food and exercise expenses to become medical expenses. The IRS urges taxpayers to review the FAQs on medical expenses to make such determinations.
  • IR-2024-63 reminds taxpayers to report all earned income, including income from digital asset transactions, the gig economy and service industry, and foreign sources. Additional guidance can be found in the IRS’ Publication 17 on federal income taxes for individuals.
  • IR-2024-59 provides information and a link to register for the 2024 IRS Nationwide Tax Forum held during various dates beginning in July through September. The forum provides continuing education on a variety of federal and state topics and up-to-date developments in tax law. The event will take place in five cities across the nation, including Chicago, Orlando, Baltimore, Dallas, and San Diego.

Continued Coverage of the Inflation Reduction Act (IRA) & CHIPS Act

  • The instructions to various forms were recently updated requiring a statement to report certain prevailing wage and apprenticeship (PWA) information to support a taxpayer’s claim of the increased tax credit for various clean energy tax incentives introduced in the IRA. It is not enough to gather and retain documentation; it also must be included with the return to the extent required by the instructions.
  • Final regulations T.D. 9988 have been issued concerning the election to treat the amount of certain tax credits as a payment of federal income tax under the IRA. Accompanying the elective payment guidance, the regulations also provide definitions and special rules for partnerships and S corporations, repayment of excessive payments, and the required IRS pre-filing registration process. Related FAQs also have been updated.
  • Final regulations T.D. 9989 have been released providing rules on the elective payment election of the advanced manufacturing investment credit under §48D as enacted by the CHIPS Act of 2022. The regulations include special rules applicable to partnerships and S corps, repayment of excessive payments, basis reduction and recapture, and the IRS pre-filing registration process.
  • Proposed regulations REG-101552-24 have been issued modifying existing regulations to allow certain unincorporated organizations that are organized exclusively to produce electricity from certain property and are owned by one or more applicable entities to be excluded from the partnership tax rules relating to the §6417 elective payment election added by the IRA. A public hearing is scheduled for May 20, 2024.
  • Notice 2024-27 requests comments on situations an election under §6417 could be made for a credit purchased in a transfer under a §6418 election. This sequence of elections is referred to as “chaining.”

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.

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