December 23, 2022
What to expect in Washington (December 23)
The House is set to vote today on the $1.7 trillion omnibus appropriations bill and send it to the President for his signature, with many members voting by proxy. Yesterday, in the Senate's last vote of the 117th Congress, the bill was approved 68-29. Prior to the vote on passage, the Senate took votes on several amendments and approved some related to 9/11 health benefits and other issues. The bill includes:
The bill does not include tax items like relief from the IRC Section 174 R&D amortization requirement, modifications to IRC Section 163(j), tax extenders, or an expanded Child Tax Credit (CTC), which Democrats insisted on as a condition of supporting business tax provisions.
The staff of the Joint Committee on Taxation has prepared revenue estimates of the Code provisions included in H.R. 2617, the "Consolidated Appropriations Act," as passed by the Senate on December 22, 2022.
A Washington Post story, "Congress isn't extending four popular tax breaks in omnibus bill passage," focused on the CTC expansion, restoration of R&D expensing — noting that it was supported 90-5 in a nonbinding Senate vote in May — the bonus depreciation phase-out to begin next year, and the 163(j) interest deduction calculation. On the latter provision, the story said, "Companies that take on debt and then pay interest on that debt can treat those interest payments as a business expense and deduct them on their tax returns. But the 2017 law set a stricter cap, starting in 2022, on just how much of those interest expenses companies can deduct. The change could cost corporations billions of dollars, added up across all the companies that will be affected."
A New York Times story focused on relief from the third-party network transactions reporting threshold reduction to $600 under the American Rescue Plan Act, which was also discussed in relation to the omnibus but not addressed, said, "for millions of Americans, the new requirement means additional tax forms, potentially higher tax bills and a lot of confusion … Many taxpayers who run small businesses, or occasionally sell goods on the side, often mix their business and personal transactions. They could face messy fights with the I.R.S. if their tax forms erroneously show them making more income than they actually earned." The story said some believe the Treasury Department could potentially change or delay the measure on its own and cited a department spokeswoman as saying that "Treasury and the I.R.S. are laser-focused on quickly identifying a solution to address any challenges taxpayers may face this filing season."
Senator Joe Manchin (D-WV) said in a statement: "Yesterday I introduced an amendment to provide relief to West Virginia small business owners and individuals who sell goods online by delaying a burdensome 1099-K tax reporting requirement that is set to go into effect early next year. I urge the IRS to use their authority now to delay the implementation and allow Congress to continue working to find a lasting solution that prevents this harmful regulation from impacting small businesses."
Tax — CNN reported: "The House passed legislation Thursday that would reform the Internal Revenue Service's presidential audit process … The legislation, which passed 222-201, would require the IRS to conduct an audit of a president's tax returns, as well as the tax returns of a president's business entities, quickly after they are filed. The legislation would also require the IRS to release public updates on the status of the audit and release the tax returns within 90 days of filing."
In a new Fact Sheet (FS-2022-40), the IRS answers a series of frequently asked questions (FAQs) regarding energy efficient home improvements and residential clean energy property credits, as amended by the Inflation Reduction Act (IRA).
JCT staff has also prepared a report on tax expenditures for fiscal years 2022–2026, based on the provisions in Federal tax law enacted through August 16, 2022.
Global tax — Regarding the December 20 OECD releases of a new Pillar One consultation document relating to DSTs and similar measures, two consultations on Pillar Two addressing the GloBE tax return and dispute resolution, and a separate document on Pillar Two safe harbors:
Note: What to expect in Washington won't be published while Congress is away.