Lately on the Hill
- Republican tax package released. The House Ways and Means Committee advanced along party lines a tax package that would undo recent restrictions on several business tax breaks (including Section 174 research and development expensing), temporarily expand the standard deduction for individuals, and revive tax incentives for businesses that have lapsed under the 2017 GOP tax law. Likely the most controversial piece of the package remains—the removal and alteration of some clean energy tax credits included in the Inflation Reduction Act (IRA).
- The Build It in America Act, mentioned in last week’s issue of From the Hill for treatment of retroactive changes under §174 and the interest expense deduction under §163(j), currently includes the opportunity to file a method change on a 2023 return instead of amending returns from the 2022 tax year. Allowing taxpayers to make this change through a method change lowers the administrative burden and cost of compliance that would accompany amended returns (or administrative adjustment requests for partnerships).
- The Republican Study Committee of the SALT Caucus released its proposed 2024 budget this week, which included a full disallowance of state tax deductions on individual returns.
- New bills and proposals introduced. Here is a roundup of some of the latest tax-related bills and proposals introduced in Congress:
- Sen. Sherrod Brown (D-OH) introduced the Working Families Tax Relief Act to permanently expand the Earned Income Tax Credit (EITC) and reestablish the Child Tax Credit (CTC). He’s joined by Sens. Michael Bennet (D-CO), Cory Booker (D-NJ), Raphael Warnock (D-GA), Ron Wyden (D-OR), and Dick Durbin (D-IL).
- This is a separate effort from a similar bill introduced in the House last week by Reps. Rosa DeLauro (D-CT), Suzan DelBene (D-WA), and Ritchie Torres (D-NY), the American Family Act of 2023, which reintroduced the CTC without expanding the EITC.
- Sen. Dianne Feinstein (D-CA) introduced the Disaster Mitigation and Tax Parity Act, a bicameral, bipartisan bill that would provide taxpayers with a gross income exclusion for payments received from state-based catastrophe loss mitigation programs. This bill would place natural disaster mitigation efforts in a similar category as rebates for energy conservation improvements, which are already exempt from federal income taxes.
- Sen. Bernie Sanders (I-VT) and Rep. Barbara Lee (D-CA) introduced the Tax on Wall Street Speculation Act of 2023, which would impose a tax on some securities trading transactions.
- Senate Finance Committee member Maggie Hassan (D-NH) and Sen. Thom Tillis (R-NC) reintroduced the Middle Class Mortgage Insurance Premium Act, which would double the income cap for mortgage insurance premium deductions (from $100,000 to $200,000) and make the deduction permanent.
- Sen. Rand Paul (R-KY) introduced the Tan Tax Repeal Act, which would repeal the indoor tanning services excise tax previously established under the Affordable Care Act.
- Sen. Sherrod Brown (D-OH) introduced the Working Families Tax Relief Act to permanently expand the Earned Income Tax Credit (EITC) and reestablish the Child Tax Credit (CTC). He’s joined by Sens. Michael Bennet (D-CO), Cory Booker (D-NJ), Raphael Warnock (D-GA), Ron Wyden (D-OR), and Dick Durbin (D-IL).
IN CASE YOU MISSED IT
Related to the IRA & CHIPS Act
- The IRS issued proposed regulations on elective payments and transfers of certain credits under the IRA. The IRS additionally released a new frequently asked questions, describing the rules for applicable entities that earn certain clean energy credits and chose to elect either of the aforementioned tax treatments.
- Temporary regulations also were issued, providing rules that relate to a mandatory IRS pre-filing registration process, which will be through an electronic portal. The pre-filing registration process must be completed—and a registration number received—prior to making an elective payment election or an election to transfer eligible credits.
- Proposed regulations were issued regarding elective payments and the Advanced Manufacturing Investment Credit specifically.
- The IRS has issued Notice 2023-45 to clarify prior guidance (Notice 2023-29) that addressed the rules taxpayers must follow to qualify for the energy community bonus credit under §§45, 45Y, 48, and 48E. Notice 2023-45 also references a prior modification to Notice 2023-29 that was made by an unannounced online update, specifying that the special rule for beginning of construction applies to any energy community project, the construction of which begins on or after January 1, 2023, consistent with the effective date of the energy community bonus credit provisions under the IRA. Notice 2023-45 calls attention to that update “to ensure public awareness.”
- The IRS has issued Notice 2023-47, which provides information taxpayers may use to determine whether they meet certain requirements under the statistical area or coal closure categories (but not the brownfield category) described in prior guidance (Notice 2023-29) for purposes of qualifying for energy community bonus credit amounts or rates under §§45, 45Y, 48, and 48E.
Other Updates
- The IRS has issued Revenue Procedure (Rev. Proc.) 2023-24, a list of automatic changes in the methods of accounting to which the automatic change procedures in Rev. Proc. 2015-13 apply. Rev. Proc. 2023-24 are effective immediately for Forms 3115, Application for Change in Accounting Method, filed on or after June 15, 2023 for a tax year change ending on or after October 31, 2022.
- Sens. Elizabeth Warren (D-MA) and Chris Van Hollen (D-MD) wrote to Attorney General Merrick Garland demanding an immediate federal investigation against Binance Holdings Ltd. The crypto platform is accused of making false statements to both Warren and two other U.S. senators. Warren’s words closely follow the SEC lawsuit against Binance, in which Binance stands accused of mishandling customer funds, misleading investors and regulators, and breaking securities rules.
- The Joint Committee on Taxation published a report (JCX-32-23) describing a substitute amendment to the Build It in America Act that would modify the effective dates of the repeal of clean vehicle tax credits, replace a word in paragraph (c) of §305, and correct conforming amendments in sections on repealing the clean electricity production and investment credits and §305.
- The Joint Committee on Taxation published a report (JCX-31-23) describing a substitute amendment to the Small Business Jobs Act that would replace the word “paragraph” with “subsection” in the definitions provision in the section on Opportunity Zone and rural Opportunity Zone data reporting.
- The Joint Committee on Taxation published a report (JCX-30-23) describing a substitute amendment to the Tax Cuts for Working Families Act that would modify the bonus guaranteed deduction amount, clarify eligibility, and modify a word in the effective date provision. The Joint Committee on Taxation said in a June 12 report that the bill would cost $96.4 billion from 2023 to 2033.
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.