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Antsy Democrats warn of infrastructure time crunch – Jordain Carney, The Hill. “Democrats are itching to get going on infrastructure as they see an increasingly condensed legislative calendar in the months ahead. Almost six months into the Biden administration, Democrats know they have only a matter of weeks to get a major spending package to the president’s desk unless they punt infrastructure to the fall, setting the stage for a potential end-of-year train wreck. That new sense of urgency is pushing Senate Democrats toward a decision point, one way or another, with Democratic Whip Dick Durbin (Ill.) urging his colleagues to ‘get cooking.’”
‘Listen, the whip has to count the votes and look at the calendar. I look at the calendar, I see two more weeks in June, three weeks in July and one in August and then we’re in the middle of September. I mean, zoom. It’s gone,’ Durbin said.
Democrats wary of emerging bipartisan infrastructure deal – Alexander Bolton, The Hill. “Progressive Democrats are wary of an emerging deal on infrastructure being negotiated by five Republican and five Democratic senators, fearing it could make it tougher to get prized priorities to President Biden’s desk.”
The progressives are specifically worried that passing a bipartisan infrastructure package consisting of the most popular infrastructure spending priorities — such as funding for roads, bridges, rail, public transport, airports and rural broadband internet — will make it tougher to marshal support for a bigger reconciliation package down the road. That bigger package could include many progressive prizes, such as climate change legislation, $400 billion for long-term home care and language to lower the cost of prescription drugs.
Senators Eye ‘Targeted’ Infrastructure Deal – Colleen Murphy and Patrick Ambrosio, Bloomberg ($). “A $1.2 trillion infrastructure proposal developed by a bipartisan group of 10 senators doesn’t include a roll back of the 2017 tax law or a gas tax increase, according to Sen. Susan Collins. Collins (R-Maine) suggested Sunday that a ‘targeted’ infrastructure plan could be paid for by three different options: an infrastructure financing authority, re-purposing already approved pandemic aid funds, and charging electric vehicle drivers ‘their fair share’ for use of roads and bridges.”
Collins, during an interview on CBS’s 'Face the Nation,' said infrastructure talks should focus on repairing roads and bridges, rather than elder care and some of the other issues highlighted in Biden’s economic proposals.
Senate Minority Leader Mitch McConnell (R-Ky.) is lukewarm about the deal.
What will Senate Minority Leader Mitch McConnell do? – Punchbowl News. “McConnell wasn’t enthusiastic about the deal when he was briefed on it last week by his GOP colleagues, but the Kentucky Republican also said he’d keep an open mind. If McConnell comes out against it, then that’s that. However, McConnell will want to see what his rank-and-file Republicans say. So he will evaluate how things break inside his conference.”
Pelosi Faces Restive Caucus as Senate Infrastructure Talks Drag – Billy House and Erik Wasson, Bloomberg ($). “Addressing the demands of progressive Democrats to go it alone will be a major challenge for Speaker Nancy Pelosi and her top lieutenants in the coming weeks. She’ll need to keep an eye as well on moderate Democrats, who are leery about any solo package in the absence of the party having enough Senate votes to power it through."
Tensions have risen in the run-up to White House acting budget director Shalanda Young and Biden counselor Steve Ricchetti’s Tuesday meeting with House Democrats to discuss Biden’s proposed programs. That will mark the caucus’s first in-person get-together since the pandemic erupted. A key challenge is that the fast-track budget process that progressives want to use -- the same one deployed for the $1.9 trillion March pandemic-relief bill -- will only be available if all 50 in the Senate Democratic caucus agree to take that step.
Schumer Navigates Legislative Potholes in Tight Summer Schedule – Nancy Ognanovich, Bloomberg ($). “Deadlines to keep the government funded and prevent a default on the national debt are looming over Senate Majority Leader Chuck Schumer‘s pursuit of a full slate of legislative priorities. The oncoming battles will help define the summer on Capitol Hill and could limit the ambitions of the New York Democrat, who hopes to shepherd President Joe Biden’s agenda within the confines of a razor-thin majority, internal party divisions, and aggressive Republican opposition.”
Senate Finance Republicans Want ProPublica Probe by IRS Watchdog – Meg Shreve, Bloomberg ($). “Senate Finance Republicans on Friday called for an investigation by the Treasury Inspector General for Tax Administration into the source of an anonymous leak containing years of tax data on America’s billionaires to ProPublica.”
‘These revelations make me sick’ — Cramer suggests a billionaire surtax after ProPublica bombshell – Matthew Belvedere, CNBC. “CNBC’s Jim Cramer on Friday suggested the U.S. impose a surtax on billionaires following this week’s ProPublica report on how some of the richest people on the planet are avoiding taxes. In recent years, billionaires including Amazon CEO Jeff Bezos, Tesla CEO Elon Musk, and businessman Michael Bloomberg, investors Carl Icahn and George Soros paid little to no federal income taxes, according to the report from ProPublica, which cited confidential IRS data it obtained."
‘They obviously are able to avoid paying income tax. Not evade. But avoid. And I know avoid is legal and the government says you can do everything you can to avoid. I think that has to be changed,’ the ‘Mad Money’ host said on ‘Squawk Box,’ citing the wealth inequalities that divide the nation.
Mark Cuban: ProPublica 'not being honest' about taxes on wealthy – Thomas Moore, The Hill. “Mark Cuban, the billionaire owner of the NBA’s Dallas Mavericks, argued that a bombshell report from ProPublica this week did not honestly examine what would happen if the wealthiest Americans were forced to pay taxes on their investments.”
‘Do you tax net worth or do you only tax income?’ Cuban asked. ‘Because net worth is fleeting. If you go back to the internet stock days, there are a lot of people who were billionaires who aren’t even close anymore and working regular jobs.’
In addition to the challenges of taxing the changing value of investments, many people would have to sell assets to pay their taxes if they were based on investments instead of income, Cuban argued. For example, he said, some homeowners might have to sell their homes if local real estate values suddenly jumped. ‘The only way you’re going to benefit from that financially is if you sell it,’ Cuban said. ‘Should you have to sell your house in order to pay your taxes?’
Plan to Revive I.R.S. ‘Wealth Squad’ Puts the Richest on Notice – Paul Sullivan, New York Times. “Many legal tax strategies that the wealthy have long used to minimize their taxes are likely to come under new scrutiny by the Internal Revenue Service. And as a first step in dealing with the new attention, tax experts agreed, the wealthy and slightly-less-wealthy should keep better records."
President Biden has proposed adding $80 billion to the Internal Revenue Service budget and giving the agency more authority to crack down on tax evasion by high-earners and large corporations. And that was before the reports of how little in taxes the richest Americans paid from 2014 to 2018, which have intensified interest in Congress in the tax code.
Private Inequity: How a Powerful Industry Conquered the Tax System – Jesse Druckger and Danny Hakim, New York Times. “While intensive examinations of large multinational companies are common, the I.R.S. rarely conducts detailed audits of private equity firms, according to current and former agency officials. Such audits are ‘almost nonexistent,’ said Michael Desmond, who stepped down this year as the I.R.S.’s chief counsel. The agency ‘just doesn’t have the resources and expertise.’”
New FAQs available to aid families and small business under the American Rescue Plan – IRS. “The Internal Revenue Service today posted two new, separate sets of frequently-asked-questions (FAQs) to assist families and small and mid-sized employers in claiming credits under the American Rescue Plan (ARP). Both the child and dependent care credit as well as the paid sick and family leave credit were enhanced under the ARP, enacted in March to assist families and small businesses with the fallout of the COVID-19 pandemic and recovery underway. The two sets of FAQs provide information on eligibility, computing the credit amounts, and how to claim these important tax benefits.”
IRS offers guidance on American Rescue Plan tax credits – Michael Cohn, Accounting Today. “The guidance provides helpful information to both taxpayers and tax professionals about how the tax credits have been expanded for this year. The Biden administration has also proposed an American Families Plan that would extend the expanded child and childcare tax credits beyond this year.”
Tax refunds and stimulus checks delayed by identity fraud crossfire – Greg Iacurci, CNBC:
- The IRS flagged 5.2 million tax refunds for fraud last year, a nearly 50% increase over 2019, according to the Taxpayer Advocate Service. Of those, about 1.9 million were tagged for identity screening.
- In 2019, 63% of the refunds vetted for identity theft turned out to be legitimate, according to the organization. About 18% of flagged refunds took longer than 120 days to arrive.
- The IRS protected $2.5 billion in losses due to its identity-theft filters in 2019.
When Tax Return Preparers Are Not the Source of the Tax Fraud - Prof. James Edward Maule, MauledAgain. “Someone reading this blog might think that tax return preparers are the chief cause of tax noncompliance. They would get that impression from the many posts I have written about tax return preparers who have been indicted or charged or whose businesses have been shut down by authorities… Though there are tax return preparers whose antics contribute to tax noncompliance and thus the tax gap, most do not behave in that manner and most tax noncompliance occurs beyond the reach of tax return preparers.”
CPAs tell New Jersey clients it’s time to move to lower-tax states, survey finds – Lorie Konish, CNBC. “Certified public accountants have a message for New Jersey-based clients: It’s time to move to a lower-cost state. That’s according to a recent survey from the New Jersey Society of CPAs, which found that 70% of professionals surveyed who have clients in the state have advised them to move due to the high cost of living. Meanwhile, 53% of accountants surveyed said they have told business clients in the Garden State to relocate due to the high cost of doing business.”
More States Exempting PPP Loans from Taxes as Budgets Improve – Sam McQuillan, Blomberg ($). “New Hampshire has become the latest state to exempt forgiven Paycheck Protection Program loans from corporate taxes, thanks in part to a recent federal aid package. Federal law allows for most loans to eventually be forgiven and deducted from corporate taxes—a move designed to juice the economy during the pandemic-driven economic downturn."
New Hampshire became the 11th state to excuse the loans, after Gov. Chris Sununu (R) signed a state Senate bill (S.B. 3) Thursday. It follows Vermont, which passed a bill conforming to federal law in April, just before Treasury allowed states to cover the cost using the $350 billion sent to them in a recent relief law.
Texas High Court Deems Property Leased by School Taxable – Aysha Bagchi, Bloomberg ($). “A Texas public charter school must pay taxes on the property it leases because it doesn’t hold the kind of property title that would provide an exemption, the Texas Supreme Court ruled.”
Alaska Court Rejects Exxon Mobil Challenge to Oil Tax Guidance – Laura Mahoney, Bloomberg ($). “Exxon Mobil Corp. can’t challenge an advisory bulletin from the Alaska Department of Revenue interpreting the oil tax code because it isn’t a regulation and the company isn’t facing a tax assessment based on the bulletin, the Supreme Court of Alaska said Friday.”
Amazon Sellers’ Suit Prompts Pennsylvania to Extend Tax Amnesty – Tripp Baltz and Michael Bologna, Bloomberg ($). “Pennsylvania’s voluntary compliance program for remote sellers with “inventory nexus” in the state has been extended indefinitely in response to an escalating legal dispute with independent Amazon sellers affiliated with the Online Merchants Guild.”
Iowa Governor Signs Law Concerning Filing Requirements for Business Property Tax Credit – Bloomberg ($). “The Iowa Governor June 8 signed a law concerning the filing requirements for the Business Property Tax Credit. The law includes measures clarifying that when all or a portion of a parcel or property unit is sold, transferred, or ownership changes, the buyer, transferee, or new owner wishing to receive the credit must refile the credit claim. The law took effect June 8. [H.F. 865, enacted 06/08/21]”
$1.4 Billion Medtronic Dispute Tests Taxation of Multinationals – Aysha Bagchi, Bloomberg ($). “A major tax dispute involving medical device manufacturer Medtronic heads to trial Monday at the U.S. Tax Court, presenting a test of the methods used to tax multinational companies that shift assets overseas.”
The case centers on Medtronic’s allocation of profits for tax purposes between its U.S. parent company, U.S. distributor, and Puerto Rican device manufacturer. While the IRS argued that the company owed nearly $1.4 billion in taxes, the U.S. Tax Court found in a 2016 opinion that it had underpaid by just about $14 million. In 2018, though, the U.S. Court of Appeals for the Eighth Circuit sent the case back, ordering the Tax Court to make numerous additional findings.
An effective and politically viable option for corporate tax reform – Robert Pozen, The Hill. “Last weekend the finance ministers of the G-7 announced an agreement on a minimum corporate tax rate of at least 15 percent. This agreement will put a lot of pressure on the Biden administration to pass its recently proposed corporate tax reforms… Congress should pass a 25 percent corporate tax rate with a 15 percent minimum tax on foreign profits of U.S. multinationals — calculated on a country by country basis without any deduction for returns on foreign tangible capital.”
Papering Over SHIELD – Lee Sheppard, Tax Notes ($). “Lee A. Sheppard considers the tax data that governments would need to mandate be created in order to implement the OECD’s pillar 2 and the Biden administration’s stopping harmful inversions and ending low-tax developments proposal.”
CARBIS BAY G7 SUMMIT COMMUNIQUÉ – the White House. “We need a tax system that is fair across the world. We endorse the historic commitment made by the G7 on 5 June. We will now continue the discussion to reach consensus on a global agreement on an equitable solution on the allocation of taxing rights and an ambitious global minimum tax of at least 15 per cent on a country-by-country basis, through the G20/OECD inclusive framework and look forward to reaching an agreement at the July meeting of G20 Finance Ministers and Central Bank Governors. With this, we have taken a significant step towards creating a fairer tax system fit for the 21st century, and reversing a 40-year race to the bottom. Our collaboration will create a stronger level playing field, and it will help raise more tax revenue to support investment and it will crack down on tax avoidance.”
The United States Army is 246 years old today! Happy Birthday! Perhaps a coincidence, it is also National Flag Day! Additionally, it is International Bath Day – whether you need one every year or not!