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Key Takeaways
- Tax deal announcement
- Government shutdown looming
- More BOI FAQs from FinCEN
- Pension-linked emergency savings accounts (PLESAs) guidance
- IRS millionaire taxpayer crackdown
- Know your debtors
- IRS to explore AI
- Clean energy manufacturing
- Chevron doctrine
- National Nothing Day
Wyden, Smith Unveil $78 Billion Deal on Expensing, Child Credits - Doug Sword and Cady Stanton, Tax Notes ($):
Top congressional taxwriters announced a framework to sweeten the child tax credit for low-income households, roll back the tightening of a trio of tax changes for businesses, and an array of other tax provisions.
The announcement came early January 16 that Senate Finance Committee Chair Ron Wyden, D-Ore., and House Ways and Means Chair Jason Smith, R-Mo., had reached the deal centered on a staggered boosting of the partially refundable portion of the child tax credit and enhancing the formula for multi-children families that claim the credit. The framework also proposes retroactive rollbacks of the Tax Cuts and Job Act’s tightening of research and development expensing, bonus depreciation, and net interest expensing.
Negotiators have a $78B tax deal – Punchbowl:
Breaking news: House and Senate negotiators have agreed on a roughly $78 billion framework for a package of tax benefits aimed at businesses and low-income families, according to a source familiar with the negotiations.
The two sides expect to roll it out this morning.
US Economy Set for Another Cash Boost If Congress Backs Tax Deal – Enda Curran, Bloomberg Tax ($):
The US economy is set for an unexpected fiscal boost if lawmakers back a potential deal for $70 billion worth of tax breaks for businesses and families.
Congressional negotiators are locked in talks over renewing expired business tax breaks and boosting the child tax credit, evenly split between both. The proposal will need to pass through a Congress that is deeply divided over the nation’s fiscal trajectory, as some Republican lawmakers push for deep spending cuts as a condition for averting another government shutdown on Jan. 19 and Feb. 2, when temporary funding expires.
US Congress Unveils Temporary Spending Bill to Avert Shutdown – Erik Wasson, Bloomberg Tax ($):
The temporary spending bill would extend funds for some agencies that face a Jan. 20 deadline through March 1 and for others that face a Feb. 2 deadline through March. 8. The Senate will begin procedural votes on the bill, known as a continuing resolution, on Tuesday and will require cooperation among the 100 senators to pass it before the deadline.
“To avoid a shutdown, it will take bipartisan cooperation in the Senate and the House to quickly pass the CR and send it to the President’s desk before Friday’s funding deadline,” Senate Majority Leader Chuck Schumer said in a statement.
Werfel: Shutdown During Filing Season Could Be ‘Very Disruptive’ – Jonathan Curry, Tax Notes ($):
The filing season is set to kick off January 29. In the meantime, Congress is still negotiating a budget deal to avert a government shutdown that would accelerate the rescission of a quarter of the IRS’s nearly $80 billion in extra Inflation Reduction Act funding.
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That being said, the IRS is “no stranger to these types of late-breaking changes to the code,” Werfel added. “As we’ve done in previous years, we’ll review the legislation, roll up sleeves, and get the job done.”
FinCEN Adds to FAQs to Aid Compliance with Ownership-Info Rules – Michael Rapoport, Bloomberg Tax ($). “A Treasury Department unit added to its list of questions and answers Friday addressing issues about what companies should do to comply with new requirements to disclose more about who owns them.”
IRS provides initial guidance to employers setting up emergency savings accounts for their employees – irs.gov.
The Internal Revenue Service today issued initial guidance to help employers with implementation of pension-linked emergency savings accounts (PLESAs).
Authorized under the SECURE 2.0 Act of 2022, PLESAs are individual accounts in defined contribution plans and are designed to permit and encourage employees to save for financial emergencies.
Observers Cheer IRS’s ‘Impressive’ Win on Millionaire Crackdown – Jonathan Curry, Tax Notes ($):
The latest update from the IRS on its transformation efforts revealed remarkable progress in collecting taxes owed by high-income individuals, while the agency’s other enforcement initiatives are plodding along more modestly.
Observers say that the challenge with the IRS’s quarterly transformation updates is that many of its efforts, particularly the enforcement-related initiatives, could take years to conclude, making it difficult if not impossible to evaluate their progress. The lone exception to that is the IRS’s initiative to collect taxes owed by millionaires.
Unexplained Debt Owed Company Could Terminate Stock Plan – Erin McManus, Tax Notes ($):
The IRS requested but hasn’t received any explanation or documentation for the $4.24 million note receivable that appeared on a corporation’s balance sheet as an apparently worthless debt.
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The IRS said in its deficiency notice that it decided to take a protective position to prevent the loss of tax once it made a determination based on all the facts.
The agency whipsawed the amount of the worthless assets as cancellation of debt to both shareholders of the operating entity at 100 percent each because of the lack of substantiation.
IRS Reveals New Details About AI Platform Procurement - Lauren Loricchio, Tax Notes ($). “The IRS says it may release a request for proposals this spring to procure an artificial intelligence operations platform for use by its Office of Research, Applied Analytics, and Statistics that could support dozens of projects a year.”
Tax Bonus Rules Create A Clean Energy Contracting Crunch – Keith Goldberg, Law360 ($):
Labor and U.S. manufacturing requirements in the Inflation Reduction Act have inserted another pressure point into deals between clean energy developers and the firms they hire to build their projects given how significantly those requirements can boost, or reduce, the value of their projects' tax credits.
Armed with U.S. Department of the Treasury guidance on how to satisfy both requirements, project developers are ramping up negotiations with their engineering, procurement and construction firms and other contractors about ensuring compliance, according to attorneys who work on clean energy project development.
Challenges to IRS Tax Rule Authority Hinge on Court Fishing Case – Erin Slowey, Bloomberg Tax ($):
How the US Supreme Court rules on a fishing legal dispute could limit the IRS’s ability to issue regulations aimed at answering key questions that go unaddressed in legislation, and threatens to bring on a slew of taxpayer challenges to administrative action.
The 40-year-old principle that says federal courts should defer to agency interpretations where the law is unclear—also known as Chevron doctrine—is in limbo as the Supreme Court hears arguments in Loper Bright Enterprises v. Raimondo Wednesday.
National Nothing Day, not a lot to say about this day!