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Key Takeaways
- Offsetting TCJA cuts
- Remember that tax bill?
- Direct File is a thing.
- Court updates.
- Both Pillars.
- Gold, baby!
- To Smile or Not to Smile.
Tax Cut Extensions Cost 50% More – Committee for a Responsible Federal Budget:
Extending certain parts of the Tax Cuts & Jobs Act (TCJA) would cost $4 trillion through 2034, according to new estimates from the Joint Committee on Taxation (JCT) published by the Congressional Budget Office (CBO). These revenue loss estimates have increased dramatically compared to prior estimates.
Comparing the cost of extending major elements of the TCJA over common years, we estimate: The cost of extension has grown by roughly 50 percent since the first extension estimate back in 2018, the equivalent of $1.2 trillion through 2034.
The prospect is likely that TCJA provisions will be extended beyond 2025. And given their escalating cost that could be a daunting chore.
What is unclear is which of the TCJA provisions will be extended. The outcome of the 2024 elections will be a huge factor in determining which provisions stay and which go. But no matter which provisions are extended into 2026, the cost for doing so will likely be offset (or partially offset). And soaring costs means more offsets will be needed. This basically means that while some taxpayers will have their TCJA tax cuts extended, they might also be served with a tax increase to help pay for those extensions. One hand giveth, the other taketh away.
Talks have already begun on Capitol Hill about extending TCJA provisions:
Capitol Hill Recap: Tax Teams Announcement – Jay Heflin, Eide Bailly:
These groups will seek to figure out which of the expiring provisions from the Tax Cuts and Jobs Act (TCJA) should be extended, allowed to expire, or modified… The same set-up is happening in the House Ways and Means Committee, where committee Republicans have created groups to scrutinize TCJA provisions.
About that tax bill that passed the House in January and would allow for R&D expensing:
Summer Could Be Tax Package’s Last, Best Hope – Doug Sword, Tax Notes ($):
Jonathan Goldman, senior tax counsel to Finance Committee Democrats, arrived at that conclusion largely by discounting the chances of the $79 billion Tax Relief for American Families and Workers Act of 2024 (H.R. 7024) advancing in the Senate’s September and post-election sessions.
Don’t get your hopes up about the bill being enacted. The Senate approving the House-passed bill as-is won’t happen. And Senate modifications to the bill probably wouldn’t pass the House. Lawmakers have been calling this bill “dead" for about two weeks. And the further from the 2024 tax season we get, the deader this bill becomes.
Agency Updates
The agency is exploring ways to expand Direct File to make more taxpayers eligible in the 2025 filing season and beyond by examining options to broaden Direct File’s availability across the nation, including covering more tax situations and inviting all states to partner with Direct File next year.
The IRS plans to announce additional details on the 2025 expansion in the coming months.
IRS Starts Expansion of Government Alternative to Private Tax Software – Richard Rubin, Wall Street Journal ($):
“Direct File is an important component of a stronger comprehensive tax system that gives taxpayers electronic filing options that best suit their needs,” IRS Commissioner Danny Werfel told reporters Thursday.
Direct File is just one part of the plan:
IRS plans to make its free tax filing program permanent – Katie Lobosco, CNN:
Court Side
Tax Court Nixes $30M In Conservation Easement Deductions – Anna Scott Farrell, Law360 Tax Authority ($):
The court found that certain estimated property values forming the basis of the 2014 deductions in the test cases for the three Georgia partnerships — Excelsior Aggregates LLC, Alabama S&G LLC and Barnes-Escambia — were inflated based on inaccurate estimates of the land's potential for commercial sand and gravel mining, according to the opinion.
IRS’s Whistleblower Proceeds Do-Over Succeeds – Nathan Richman, Tax Notes ($):
While the failure of the petitioner in McCrory v. Commissioner to satisfy the $2 million proceeds requirement in section 7623(b) didn’t deprive the court of jurisdiction, it was enough of a threshold failure to prevent the case from proceeding after the IRS asserted it as an affirmative in its answer, Judge Emin Toro said in a May 30 memorandum opinion.
Tax Court Tosses Whistleblower Award Contest – Jack McLoone, Law360 Tax Authority ($):
The IRS was granted summary judgment by Judge Emin Toro because Suzanne Jean McCrory's reward does not meet the $2 million statutory threshold for nondiscretionary awards established by Internal Revenue Code Section 7623(b)(5) , according to the memorandum opinion. The court can generally review only claims related to such nondiscretionary awards, it said, therefore requiring it to grant the IRS' motion.
Black Business Owners Sue to Stop Corporate Transparency Act - Caleb Harshberger, Bloomberg ($). “A collection of Black-owned businesses and groups supporting Black entrepreneurs in Massachusetts have sued the US Treasury Department over the Corporate Transparency Act—alleging that the beneficial ownership requirements are unconstitutional and harm businesses.”
International Zone
Two Administrative Guidance Packages on Pillar 2 to Come in 2024 – Stephanie Soong, Tax Notes ($):
The package, which should be published soon, “will include certain administrative simplifications and also some key structural rules which should generally be favorable” to U.S. multinational enterprises, Brett Bloom, an attorney-adviser in Treasury’s Office of Tax Policy, said May 30 at a Federal Bar Association conference in Washington.
Later Pillar 1 Due Date Set For June As Tax Talks Wrap Up – Kevin Pinner, Law360 Tax Authority ($):
The multilateral treaty, nearly a decade in the making, will be signed as soon as it's practical, according to the statement by 126 jurisdictions that participated in meetings from Tuesday through Thursday as part ofthe Organization for Economic Cooperation and Development's inclusive framework group. The group, which now has 147 members, first endorsed outlines of what is known as Amount A, to link some taxing rights to economic presence instead of only physical presence, and Amount B, to simplify pricing transactions in countries that lack local comparable data, in 2021 under the collective title Pillar One.
From the “As good as gold” file
You Bought Gold at Costco. What Are the Taxes When You Sell It? - Laura Saunders, Wall Street Journal ($):
Many buyers don’t know or care about taxes on gold sales, because they see their hoard as a hedge against chaos instead of an asset like a stock. If they need to sell, goes the thinking, maybe there won’t even be an Internal Revenue Service.
The thought of not having an IRS is likely wishful thinking, so you better pay up.
What Day Is It?
It’s National Smile Day! Smile! If you don’t feel like it, make others smile!