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House Democrats Tee Up Tax Bill Debate and Nix GOP Amendments – Doug Sword and Alexander Rifaat, Tax Notes ($).
The House of Representatives will vote on the Senate-passed Inflation Reduction Act on Friday.
The House Rules Committee will launch debate at 9 a.m. that day on a rule that rejects all 83 amendments proposed by Republicans. That should put the House on schedule to start final debate on the long-awaited reconciliation measure, called the Inflation Reduction Act of 2022 (H.R. 5376), perhaps by late morning.
‘If we amend this, it basically derails this bill,’ House Rules Committee Chair James P. McGovern, D-Mass., explained. ‘This is the end of a process.’
Spoiler Alert: Passage is highly likely and enactment is in the cards.
Yesterday's blog includes details on the bill and a link to it is here.
Partnership Rules Likely at Root of Corporate Minimum Tax Fight – Kristen Parillo, Tax Notes ($). “The language deleted from the corporate minimum tax proposal after intense industry lobbying had likely been added by Democrats to ensure that private equity partnerships wouldn't be excluded from the aggregation rule.”
This provision was a whole-thing on Sunday.
A battle over the corporate minimum tax erupted August 6 after the Senate Finance Committee released a final version of the Inflation Reduction Act of 2022 (H.R. 5376) ahead of the debate and process of offering amendments known as ‘vote-a-rama.’
… The private equity industry immediately objected to the proposed modifications of the aggregation rules, arguing that they would result in thousands of small and medium-sized portfolio companies under the common ownership of an investment fund or partnership being subjected to the corporate minimum tax.
In response to industry warnings that the language would put thousands of businesses at risk of new taxes, Republican lawmakers and even some Democrats — including Sen. Kyrsten Sinema of Arizona — supported an amendment by Finance Committee member John Thune, R-S.D., to remove it from the bill.
Wyden introduces bill to double tax on excess oil profits – Zack Budryk, The Hill:
Legislation introduced by Sen. Ron Wyden (D-Ore.) would double excess-profit taxes on oil companies making over $1 billion a year.
The bill, the Taxing Big Oil Profits Act, would impose a 21 percent tax on the excess profits of oil and gas companies making more than $1 billion annually. Excess profits are determined by current profits minus a normal 10 percent return on investment.
For this bill to become law it needs a legislative track that leads to the White House. At this point, it is unclear what that track is.
Chemical Group Urges Shifting Superfund Tax Deposit to Quarterly – Erin Slowey, Bloomberg ($). “The National Association of Chemical Distributors called on the IRS to exempt Superfund chemical excise taxes from semimonthly deposits a month into the tax going into effect, in a comment letter released Wednesday. The Superfund tax, a levy on certain chemicals and imported substances, went into effect July 1, requiring qualifying taxpayers to make semimonthly deposits.”
This provision was enacted in the Infrastructure Investment and Jobs Act that President Biden signed into law on November 15, 2021. The Superfund tax in the Inflation Reduction Act has yet to be enacted (but give it a couple days).
Summers Decries Tax Compromises by Democrats to Pass New Bill - Christopher Anstey, Bloomberg ($). “Former Treasury Secretary Lawrence Summers decried the stripping of a global corporate minimum tax from the Democrats’ recent tax-and-climate change bill, a move that he said threatens a historic international agreement.”
‘It’s very sad how much special-interest lobbyists were able to stop things that are clearly in the public interest,’ Summers said Wednesday on Bloomberg Television’s ‘Wall Street Week’ with David Westin. ‘I am pretty offended by what’s happened here’ with regard to businesses fighting against tax provisions in the legislation, he said.
Summers also blasted the removal of a proposal to scale back the so-called carried-interest tax break, which lets investment managers use a lower rate than for regular income, an advantage Summers called ‘outrageous.’
Summers also bemoaned the fact that the 15% global minimum tax is absent from the bill and predicted the provisision's death.
'That’s probably going to collapse now, or may well collapse, because Congress wouldn’t pass the enabling legislation by going after tax havens,' Summers said of the deal that involved nearly 140 nations.
IRS Eyes Hurdles, Prepares to Spend $80 Billion Funding Increase – Naomi Jagoda, Bloomberg ($):
The IRS is on the cusp of realizing a long-held dream: a significant increase in funds that it can use over nearly a decade.
The agency, however, will face challenges as it spends the money.
The IRS will have to recruit and train thousands of employees who have the necessary skills to audit high-income taxpayers and corporations, as well as those who are able to upgrade the agency’s technology. The agency also will need to be careful to be responsible and transparent with the funds, or it risks further damage to its already-challenged public perception.
Democrats Play Whack-a-Mole as GOP Rages Against IRS Funding – Jonathan Curry, Tax Notes ($):
On August 9 more than a dozen members of Congress tweeted or put out releases about the supposed 87,000 revenue agents coming to audit Americans, and the bicameral beatdown continued August 10 as the reconciliation bill was being readied for its House Rules Committee hearing.
Rep. Steve Chabot, R-Ohio, warned his constituents in a release that ‘the IRS is coming for you’; Senate Republican Conference Chair John Barrasso of Wyoming put out a release on the 87,000; Senate Republican Whip John Thune of South Dakota told Fox viewers that ‘the IRS is coming to a neighborhood near you.’
But supporters of the reconciliation bill countered that the proposed enforcement spending would be used to target wealthy taxpayers and large corporations, and that the spending on new hires would actually improve taxpayers’ interactions with the IRS.
Treasury Secretary Janet Yellen letter to IRS Commissioner Charles P. Rettig on supporting IRS funding in Inflation Act is here.
AICPA demands IRS pick up the phone faster for tax pros – Michael Cohn, Accounting Today.
The American Institute of CPAs wants the Internal Revenue Service to pick up the phone faster on its so-called Practitioner Priority Service for tax professionals and make other fixes, pointing to a "plummeting" level of service in recent years.
Taxpayers and tax pros alike have long complained about the difficulty of reaching the IRS over the phone and those complaints have mounted during the COVID-19 pandemic.
IRS Seeks SFOX Customer Information in Cryptocurrency Tax Push - Bob Van Voris, Bloomberg ($). “The Internal Revenue Service is seeking to identify customers of cryptocurrency prime dealer SFOX Inc. as part of its efforts to force crypto investors to pay taxes on their holdings.”
Ban on False Liens Protects Former Treasury, IRS Heads - Aysha Bagchi, Bloomberg ($). “A law prohibiting filing false liens against the property of US officers or employees because of their official work applies to both current and former federal workers, an appeals court ruled Wednesday.”
IRS Extends Tax Relief to Missouri Storm Victims to November 15 – Bloomberg ($):
Storm victims in parts of Missouri will have until Nov. 15 to file certain individual and business tax returns and make tax payments, according to an IRS release Wednesday.
The relief covers certain tax filing and payment deadlines that occurred starting July 25, giving affected individuals and businesses until Nov. 15 to file returns and pay taxes originally due during that time, the IRS said.
The IRS release is here.
Missouri Supreme Court Finds Property Tax Exemption for Solar Energy Systems Not for Resale Unconstitutional – Bloomberg ($). “The Missouri Supreme Court Aug. 9 found the statutory provision under which Taxpayer, a limited liability corporation, sought a property tax exemption for its solar energy system was unconstitutional.”
States Win Early Battles Over Pandemic Funds but War Isn’t Over - Perry Cooper, Bloomberg ($):
States challenging federal restrictions on nearly $200 billion in Covid-19 aid have come out ahead so far in court on their right to sue, notching wins in five of the six cases. But the cases are still in early stages, and pending appeals court decisions on the merits of the aid limits could upset that lead.
The suits filed by states or groups of states challenge the American Rescue Plan Act’s ‘offset provision,’ which says states can’t use the federal money to either directly or indirectly offset a reduction in net tax revenue.
Arkansas Lawmakers Approve $736 Million in Relief For Taxpayers – Michael Bologna, Bloomberg ($). “Arkansas will cut burdens on individual and business taxpayers by $736 million over three years under legislation that accelerates an earlier tax-cutting measure and grants $150 tax credits to low- and middle-income filers.”
Abrams, Kemp Duel Over Budget Surplus in Georgia Governor’s Race - Margaret Newkirk, Bloomberg ($):
In a speech at an Atlanta brewery Tuesday night, [Georgia Democratic gubernatorial candidate Stacey] Abrams said Georgia has a ‘once-in-a-generation’ opportunity to invest in itself. The money -- $5 billion in surplus plus another $2.3 billion in federal Covid-19 relief funds -- should be invested in education, infrastructure, law enforcement, small business opportunities and rural communities, she said. Georgia also has a $4.3 billion rainy day fund.
Meanwhile:
In a statement, Kemp’s campaign press secretary, Tate Mitchell, called the speech ‘an hour of hot air and empty words from a desperate candidate’ whose plans would cost billions. ‘She’s coming for your wallet to pay for it all,’ Mitchell said.
Kemp has used some of the state’s budget windfall to cut checks to Georgians and plans to do it again this week.
Colorado’s Cannabis Industry Contracting, Hurting Tax Revenue - Vincent Del Giudice, Bloomberg ($):
The pot business is going from green to red in Colorado and dispensaries are closing.
Its first-in-the-nation statewide recreational cannabis industry is contracting amid competition from other states, the Colorado Sun reports.
Aggravating the situation is a saturated retail market as Colorado continues to issue new sales licenses.
Cos. May Face Headaches Whatever Global Tax Plan's Fate – Natalie Olivo, Law360 Tax Authority. “Multinational corporations awaiting the outcome of a massive global tax rewrite can likely expect either new profit allocation rules or a patchwork of unilateral measures designed to increase the tax take for market countries — and compliance headaches under each alternative.”
Tax Court Poses Pointed Questions to IRS and Caymans Partnership – Chandra Wallace, Tax Notes ($). “A Cayman Islands investment partnership’s challenge to IRS adjustments, dormant for more than a year after trial and extensive briefing, is set for an August 31 hearing on detailed questions posed by the Tax Court.”
It’s National Presidential Joke Day. But it’s not about presidents telling jokes. The day is about them being the joke.
Examples from National Day Calendar:
Awkwardness that was nationally televised:
In 1968, President Richard Nixon joined the set of Rowan & Martin’s Laugh-In. While lacking sketch comedy ability, Nixon did give the nation a new catchphrase: ‘Sock it to me!’
Not doing what you said:
George H. W. Bush pledged in 1988, ‘Read my lips: no new taxes.’ Two years later, Bush raised taxes.
Spelling challenged, again, nationally televised:
At a Trenton, New Jersey spelling bee in 1992, Vice President Dan Quayle misspelled the word potato.