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This Week (May 20 - 24)

Congress: Both chambers are in session this week prior to a recess the week of Memorial Day (May 27). House business includes planned consideration of the Federal Disaster Tax Relief Act (H.R. 5863).

Hearings scheduled for this week include:

• Monday, May 20 at 4 p.m., Ways & Means Tax Subcommittee, Field Hearing in Erie, PA on "Creating More Opportunity and Prosperity in the American Rust Belt"
• Tuesday, May 21 at 10 a.m., Senate Finance Committee, "Child Savings Accounts and Other Tax-Advantaged Accounts Benefiting American Children"
• Tuesday, May 21 at 2:30 p.m., Senate Finance Subcommittee on International Trade, Customs, and Global Competitiveness, "Examining Trade Enforcement and Entry of Merchandise at U.S. Ports"
• Wednesday, May 22 at 10 a.m., Senate Finance Committee, "The Family First Prevention Services Act: Successes, Roadblocks, and Opportunities for Improvement"
• Thursday, May 23 at 9 a.m., Ways & Means Health Subcommittee, "The Collapse of Private Practice: Examining the Challenges Facing Independent Medicine"
• Thursday, May 23 at 10 a.m., Senate Finance Committee, "Front Lines of the Fentanyl Crisis: Supporting Communities and Combating Addiction through Prevention and Treatment"

Last Week (May 13 - 17)

Tax bill: Finance Committee Chairman Ron Wyden (D-OR) said May 16 that he is still working with Majority Leader Chuck Schumer (D-NY) to get a time schedule to bring to the Senate floor the House-passed Tax Relief for American Families and Workers Act (H.R. 7024) child tax credit and TCJA pre-cliffs bill, after his amendment to add the package to the FAA reauthorization and taxes bill languished (along with all other FAA amendments). Speaking at a Tax Council Policy Institute (TCPI) conference fireside chat with WCEY's Evan Giesemann, Wyden said the treatment of the bill, which hasn't been embraced by Senate Republicans for a variety of stated reasons, has implications for next year's TCJA individual provisions cliff, as it's "hard to build confidence" for a significant bill in 2025 if you can't get a smaller, broadly supported, and paid-for bill done in 2024. Chairman Wyden said the recent Congressional Budget Office (CBO) increase in the cost estimate for extending TCJA provisions was a blow to those who just want to re-up the tax cuts and continue current policies. He also said international tax and Pillar Two of the OECD-led agreement will be an important part of the 2025 debate. Chairman Wyden also said he would need to protect energy tax credits — Republicans have already targeted the repeal of some credits to raise revenue — and mentioned proposals on grantor retained annuity trusts (GRATs) and life insurance products that are viewed as geared exclusively for the wealthy.

On one proposal that is folded into H.R. 7024, Punchbowl News reported May 16 that Ways & Means member Greg Steube (R-FL) has 218 signatures for a discharge petition on disaster relief that could be used to bring the measure to the floor. The bill, the Federal Disaster Tax Relief Act (H.R. 5863), would extend rules for the treatment of certain disaster-related personal casualty losses and provide tax relief for losses due to wildfires and the 2023 train derailment in East Palestine, Ohio. It is set to come to a vote in the House next week.

Tax exempts: The House Ways & Means Committee May 15 approved a series of bills on tax-exempt issues and disclosure of taxpayer information, some of which had bipartisan support and others that revived debates over the handling of the 2020 elections and the pandemic. The bills that were bipartisan were:

• H.R. 8290, the Foreign Grant Reporting Act by Rep. Lloyd Smucker (R-PA), would require public disclosure of grants made by tax-exempt organizations to foreign entities and was approved 38-0.
• H.R. 8314, the No Foreign Election Interference Act by Rep. Nicole Malliotakis (R-NY), would impose penalties with respect to contributions to political committees from certain tax-exempt organizations that receive contributions from foreign nationals and was approved 39-1.
• H.R. 8292, the Taxpayer Data Protection Act by Chairman Jason Smith (R-MO), would increase penalties for unauthorized disclosure of taxpayer information and was approved 40-1.

H.R. 8291, Rep. Claudia Tenney's (R-NY) bill to prohibit certain tax-exempt organizations from providing funding for election administration, was approved 23-17. Republicans highlighted a case of what they say was a high-profile individual channeling funds through a nonprofit to local election boards during the 2020 election. Democrats criticized Republicans for sowing doubt about election integrity, and said additional funding allowed safe and efficient Election Day administration, like 24-hour voting for night-shift workers and drop boxes. H.R. 8293, the American Donor Privacy and Foreign Funding Transparency Act by Rep. Dave Schweikert (R-AZ), would provide for the public reporting of data on certain contributions received by tax-exempt organizations from foreign sources and increase penalties for disclosure of US donor information and was approved 23-16. Some of the issues addressed in the bills were raised during a December 2023 Ways & Means Oversight Subcommittee hearing that aired concerns about wealthy individuals, including foreign nationals, donating to tax-exempt organizations that influence US elections.

In a related development, Senate Finance Committee members Todd Young (R-IN) and James Lankford (R-OK) introduced the Protecting Charitable Giving Act to increase the penalty for willful disclosure of the identities of donors to tax-exempt organizations from no more than $5,000 to between $10,000 and $250,000. A release said that in order to verify the legitimacy of tax-exempt organizations, the IRS requires them to collect the names and addresses of all major donors, but not to disclose them. Both Senators emphasized the importance of anonymous giving.

Tax Court: Chairman Wyden was cited by the Bloomberg Daily Tax Report (DTR) as saying the Finance Committee would hold a hearing in early summer on the three U.S. Tax Court judge nominations put forward by the Biden administration February 1, including Kashi Way, Legislation Counsel at the Joint Committee on Taxation. Three additional Tax Court nominations were announced May 9, including Jeffrey Arbeit, also Legislation Counsel with the staff of the Joint Committee on Taxation.

EVs: Reps. Carol Miller (R-WV) and Jared Golden (D-ME), and Senators Joe Manchin (D-WV) and Deb Fischer (R-NE) introduced a Congressional Review Act (CRA) Resolution (H. J. Res. 148, S. J. Res. 87) that disapproves of the Clean Vehicle Credit rulemaking from the Department of Treasury. Senator Sherrod Brown (D-OH) announced he was joining in support of the resolution after expressing concern that the final rules permit the EV tax credit to go toward cars made using a key battery component from certain other nations. Press stories noted that the final May 3 regulations newly permit automakers to source graphite from entities of concern through 2026. "We created this tax credit for American-made cars and it needs to stay that way," Senator Brown said.

"The bipartisan backing for the CRA effort is a big deal. It would likely clear both chambers. Manchin and Brown's votes would be enough for success in the Senate as long as Republican senators are on board," Punchbowl News reported May 16. "Remember: CRA resolutions to overturn agency rulemakings get special treatment in the Senate. Supporters can force a floor vote even if leadership isn't on board."

Energy tax: Treasury/IRS May 16 released additional guidance on the Inflation Reduction Act's (IRA) domestic content bonus, which applies to facilities and projects built using the required amounts of domestically produced steel, iron, and manufactured products.

IRA guidance tracker: This list describes select IRS guidance related to the Inflation Reduction Act (IRA).

CAMT

• April 15, 2024 — Notice 2024-33 waived the penalty for a corporation's failure to pay estimated tax CAMT payments due on or before April 15, 2024, or May 15, 2024
• December 15, 2023 — Notice 2024-10 included rules for determining the adjusted financial statement income (AFSI) of a U.S. Shareholder when a controlled foreign corporation (CFC) pays a dividend to the US shareholder or another CFC
• September 12, 2023 — Notice 2023-64 included rules for consolidated groups and foreign corporations
• June 7, 2023 — Notice 2023-42 granted penalty relief for corporations that do not pay estimated tax in connection with the CAMT
• February 17, 2023 — Notice 2023-20 provided interim CAMT guidance for insurance companies
• December 27, 2022 — Notice 2023-7 addressed issues regarding IRC subchapters C and K, "troubled corporations," groups of corporations that file consolidated returns, depreciation of IRC Section 168 property, and the treatment of federal income tax credits under the CAMT

Stock buyback excise tax

• April 9, 2024 - Proposed regulations (REG-115710-22) that, among other things, would impose the excise tax on many ordinary course intercompany funding transactions, including distributions, between US subsidiaries and a foreign parent unless the taxpayer can assert the transactions did not have a principal purpose of funding a stock buyback by the foreign parent

Domestic Content Bonus

• May 16, 2024 — Notice 2024-41 expands list of Applicable Projects to include hydropower

EVs

• May 3, 2024 — Final rules (TD 9995) on clean vehicle credits under IRC Sections 25E and 30D, transfer of credits, critical minerals and battery components, and foreign entities of concern

Sustainable Aviation Fuel

• April 30, 2024 — Notice 2024-37 provides guidance and safe harbors using the 40BSAF-GREET 2024 model

Transferability

• April 25, 2024 — Final regulations (TD 9993) describing rules and definitions for the transfer of eligible credits in a taxable year, including specific rules for partnerships and S corporations

Direct pay

• March 5, 2024 — Final regulations (TD 9988) include rules for the elective payment of credit amounts, including definitions and special rules applicable to partnerships and S corporations and regarding repayment of excessive payments

Alternative Fuel Vehicle Refueling Property Credit

• January 19, 2024 — Notice 2024-20 provides guidance on eligible census tracts

IRC Section 45V clean hydrogen credit

• December 22, 2023 — Proposed regulations (REG-117631-23) include definitions of key terms in the statute, including lifecycle greenhouse gas emissions, qualified clean hydrogen, and qualified clean hydrogen production facility

IRC Section 45X Advanced Manufacturing Production Credit

• December 14, 2023 — Proposed regulations (REG-107423-23) clarifying definitions and confirm credit amounts for eligible components, including solar and wind energy components, inverters

Low-income Communities Bonus Credit

• August 10, 2023 — Final regulations (TD 9979) and Revenue Procedure 2023-27 provide guidance necessary to implement the Program, including, in relevant part, information an applicant must submit, the application review process, and the manner of obtaining an allocation

Advanced Energy Project Credit

• February 13, 2023 — Notice 2023-18, first allocation round (Round 1), which began on May 31, 2023, $4 billion of qualifying advanced energy project credits
• April 29, 2024 — Notice 2024-36 for owners of clean energy manufacturing and recycling projects, greenhouse gas emission reduction projects and critical material projects, announcing the second round of credit allocations for the program to allocate the remaining $6 billion credits

IRC Section 48 ITC

• November 17, 2023 — Proposed regulations (REG-132569-17) update types of energy property eligible for the energy credit, requirements and rules generally applicable to energy property

IRC Section 45L Energy Efficient Home Credit

• September 27, 2023 - Notice 2023-65 addresses: person eligible for the credit, determining the applicable credit amount, energy saving, certification and substantiation requirements

Wage and apprenticeship

• August 29, 2023 — Proposed regulations (REG-100908-23) provide details on satisfying the requirements and how taxpayers can cure their initial failure to comply with the requirements by making correction payments to workers and paying penalties to IRS

Energy Community Bonus Credit

• June 15, 2023 — Notice 2023-45, guidance for purposes of the production tax credit (PTC) under IRC Sections 45 and 45Y and the investment tax credit (ITC) under IRC Sections 48 and 48E for electricity facilities

IRC Section 45J Nuclear Credit

• March 9, 2023 — Notice 2023-24 provides guidance for computing credit, amount of unutilized NMCL, apply for and allocating unutilized NMCL, and transfer to "eligible project partner"

CHIPS Act IRC Section 48D Advanced Manufacturing Investment Credit

• March 21, 2023 — Proposed regulations (REG-120653-22) address the eligibility requirements, including defining what constitutes an eligible taxpayer, qualified property and an advanced manufacturing facility
• March 5, 2024 — Final regulations (TD 9989) on direct pay