Here is what to watch for this week on the Hill
The CHIPS Act passed Congress, and Senate Majority Leader Chuck Schumer and Sen. Joe Manchin caught everyone by surprise when they announced a reconciliation deal with tax and energy provisions. House members have started to depart D.C. for their August recess, but the Senate is still in session this week. Now, everyone is paying attention this week as the Senate meets with its parliamentarian to make sure the Inflation Reduction Act of 2022 meets the Senate reconciliation rules (the “Byrd bath”).
- Once Senate Democrats get the green light from the Senate Parliamentarian, they’ll hold a vote-a-rama to debate and vote on the bill, which may take this into next weekend or even next week as Senators are expected to introduce several amendments. If the Senate does advance this bill successfully, the House could potentially return from its recess to vote on the reconciliation deal.
- The potential unknown you need to watch for in the meantime: what Sen. Kyrsten Sinema is going to say about this deal.
- Last year, Sinema halted Build Back Better negotiations when she said she won’t vote on a bill with tax increases. In the past she was okay with a 15% corporate minimum tax, but we’ll see how she feels about the carried interest provision that would require portfolio managers to pay ordinary income tax rates versus capital gain rates on investments (in the past, she opposed this policy).
- Remember, Senate Democrats need all 50 Democrats to vote yes on this bill for it to pass, so they can’t afford to not have Sinema’s support.
- What won’t hold up the bill: the House SALT coalition. A group of representatives from states with high state taxes have repeatedly said they won’t vote for any deal that doesn’t include increasing the SALT cap. But they’ll allegedly vote on this reconciliation package even without a SALT fix.
- If you’re curious, here is the Joint Committee on Taxation’s review of the proposed reconciliation bill. The Republicans are using this report to say that Biden is not upholding his promise to not raise taxes for households making less than $400,000.
- Republicans are also going to try to use the Byrd rule, which allows for individual provisions of a bill to be challenged on the grounds that they’re incidental or extraneous to the budget and thus cannot be included in a reconciliation bill, to knock out as many pieces of the proposed bill as they possibly can.
IN CASE YOU MISSED IT
- Sen. Pat Toomey and Sinema introduced the Virtual Currency Tax Fairness Act, which would exempt crypto owners from reporting personal transactions under $50 or when there is less than $50 in gain.
- In PMTA 2022-05, the IRS concluded that a taxpayer who files a paper return when required to file electronically is subject to penalties for failure to timely file under Secs. 6651(a)(1) and 6652(c).
- The Joint Committee on Taxation published revenue estimates for the Biden administration’s FY 2023 tax proposals. The details of these proposals can be found in Treasury’s green book.
- Treasury issued two sets of technical corrections to the foreign tax credit regulations released last December.
- The IRS announced it was aware that some payments made for 2021 tax returns have not been correctly applied to joint taxpayer accounts, and these taxpayers are receiving erroneous balance dues notices (CP-14 notices) or notices showing the incorrect amount.
- The Senate Committee on Appropriations released its proposed FY 2023 funding bills.
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.