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This week (September 30-October 4)

Congress: The House and Senate are out of session. Both chambers September 25 approved, and President Biden subsequently signed, a continuing resolution (CR) to extend government funding through December 20. Passage of the government funding measure mostly concluded Congress' business until after the elections, the outcome of which will have a major effect on how a longer-term government funding measure and other matters are handled during an expected lame-duck session in November/December and the end of 2025 TCJA tax cliff next year. The Senate is adjourned until Tuesday, November 12, which is also the date the House is slated to return to session.

Wednesday, October 2 (1 p.m.) is the EY Webcast, "Corporate alternative minimum tax: what the proposed regulations could mean for companies."

Last week (September 23-27)

Election: Both Democratic presidential candidate Vice President Kamala Harris and Republican candidate Former President Trump elaborated on their tax plans in dueling economic speeches this week, in Pittsburgh, PA and Savannah, GA respectively. VP Harris September 25 expressed support for the international tax proposals put forward by the Biden administration, in the context of paying for the New Way Forward to Build American Industrial Strength plan, which includes America Forward tax credits for emerging industries. A press release said Investments in American Innovation will cost approximately $100 billion and "will be paid for by a portion of the proceeds of international tax reform, which seeks to prevent a global race to the bottom and to discourage inversions, outsourcing, or international tax strategies designed by corporations to avoid paying their fair share to the United States." More generally, the Harris campaign's 82-page document on economic plans released on September 25, "A New Way Forward for the Middle Class," said the plan to make the tax system fairer and promote fiscal responsibility will "reform the international tax system so that corporations can no longer get big rewards for shifting jobs and profits overseas."

VP Harris said in Pittsburgh September 25, "I will recommit the nation to global leadership in the sectors that will define the next century. We will invest in biomanufacturing and aerospace, remain dominant in A.I. and quantum computing, blockchain and other emerging technologies. Expand our lead in clean energy, innovation and manufacturing. So, the next generation of breakthroughs, from advanced batteries to geothermal to advanced nuclear are not just invented but built here in America by American workers." The "America Forward" plan is a continuation of the approach taken in the Bipartisan Infrastructure Law, the CHIPS and Science Act, and the Inflation Reduction Act (IRA), using industrial policy to bolster investments in target areas and linked to the treatment of workers, including union organization, and supporting investments in longstanding manufacturing, energy, and agricultural communities. The release said Harris wants to foster strategic industries essential to economic growth and national security like biotechnology to help "produce critical medicines," AI, expanding clean energy manufacturing and innovation, revitalizing the semiconductor industry, investing in aerospace and automobiles, and industrial tools and machines. It also said she wants to reform tax laws to let workers share in a company's success, including broad-based employee stock ownership and profit-sharing plans.

The newly announced approach competes with Republican candidate Former President Donald Trump's tax and tariff proposals that he restated this week. These include a 15% "Made in America" tax rate for companies that make products in America and, for those that make products elsewhere, "a very substantial tariff when you send your product into the United States." Tariffs were previously described to be 10%-20% or 60% for products from foreign adversaries, and Trump said 100% or 200% could apply to foreign automobiles. In his September 24 speech, Former President Trump said he wants companies that have left the US "to be filled with regret and come sprinting back to our shores," and promised manufacturers, "I will give you the lowest taxes, the lowest energy costs, the lowest regulatory burden, and free access to the best and biggest market on the planet, but only if you make your product here in America." He previously announced the preferential corporate tax rate, drawing comparisons to the Section 199 domestic production activities deduction repealed under the TCJA. The Former President was sharply critical of Democratic presidential candidate Vice President Kamala Harris' tax plans, including "how Kamala treats the American manufacturers: They can all leave — whatever is left of them and there's not that much, they've gotten rid of so much — but if instead you ship production overseas, then she will give you a tax break. So, if you build your product, make your product overseas, she's offering a tax break to make it overseas." He promised expanded R&D tax credits and 100% bonus depreciation/expensing.

Revenue offsets: A particular focus as the two candidates have rolled out their tax proposals is how much they will cost and if and how they will be paid for. Former President Trump has said economic growth would cover the cost of end-of-2025 TCJA expirations and has called for tariffs and terminating Inflation Reduction Act (IRA) funds. VP Harris continues to call for "fair share" tax increases on corporations and high-income individuals. Asked during a September 25 MSNBC interview where revenue will come from for priorities like a Child Tax Credit (CTC) expansion or assistance for first-time homebuyers if corporate taxes can't be raised because of a GOP-controlled Senate, Harris said, "We're going to have to raise corporate taxes. We're going to have to make sure that the biggest corporations and billionaires pay their fair share." She further said, "I work with a lot of CEOs, I have spent a lot of time with CEOs," and they "agree that people should pay their fair share." Further, Harris said, "Part of my plan for the economy is investing in new industries in a way that we have active partnership with the private sector. I have worked with the private sector my entire career."

An op-ed in the September 24 Wall Street Journal, "A U.S. National Debt Crisis Is Coming," said: "Over the past half-century, interest payments on the federal debt averaged 2.1% of GDP, compared with 3.1% this year. If current trends continue, the annual interest payment will reach $1.7 trillion — 4.1% of GDP — by 2034. The CBO is required to base its estimates on current law, which includes a planned termination of many of the 2017 tax cuts next year. Extending those tax cuts would make the deficit and debt projections even worse. The budget office projects that defense spending, which has averaged 4.2% of GDP over the past 50 years, will shrink to 2.8% by 2034. The growing burden of interest payments, including to foreign creditors, makes it harder to afford the national security we need."

Tax Court: The Senate September 23 confirmed by a 69-17 vote the nomination of Rose Jenkins to be a U.S. Tax Court judge. This was the third Tax Court nomination approved by the Senate, with the other two approved in July. Another three nominations were approved by the Finance Committee in July and await floor votes.

Remote sales tax: During the September 25 Senate Finance Fiscal Responsibility and Economic Growth Subcommittee hearing, "Providing Small Business Relief from Remote Sales Tax Collection," Subcommittee Chair Maggie Hassan (D-NH) asked about protections for small business in the wake of the Wayfair decision, which are reflected in a discussion draft she is releasing. She said sales tax collection has hit small businesses especially hard in states that don't have sales taxes like New Hampshire and, "It is past time for Congress to take steps to alleviate these burdens and lower costs for small businesses." Senator Hassan said Congress should: require out-of-state governments to increase the simplicity and consistency of sales tax laws for remote sellers; ensure that out-of-state sales tax paperwork is as simple as possible; and require state governments to provide small businesses with no-cost compliance services. Ranking Member Chuck Grassley (R-IA) raised concerns about states that aren't Streamlined Sales and Use Tax Agreement (SSUTA) members not enacting reforms to limit burdens on interstate commerce and businesses ignoring their obligation to collect and remit sales tax, making a case for adoption of simplification requirements. Full Committee Chairman Ron Wyden (D-OR) said, "small businesses in Oregon have been just tied up in a sea of red tape since the decision in Wayfair allowed other states to require them to collect sales taxes on online purchases. You almost have to be an accounting Einstein to collect taxes for 10,000 different jurisdictions." As Politico noted, it isn't clear whether the remote sales tax issue can be taken up next year when Congress will be faced with other pressing tax issues with the expiration of some TCJA provisions.

Partnerships: During the September 25 Hamilton Project and Tax Law Center at NYU Law Webinar, "Taking on tax: Modernizing partnership taxation," Chairman Wyden said the partnership rules were written years ago and, with Congress expected to look at issues driving activity in the private sector around tax next year, it would be "legislative malpractice" to ignore partnerships. Chairman Wyden proposed partnership tax changes in a 2021 discussion draft. A Hamilton Project-NYU Tax Law Center policy proposal made recommendations including supplementing related party basis shifting regulation with additional legislation.

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

CAMT

• September 12, 2024 - Proposed regulations (REG-112129-23) on the application of the 15% corporate alternative minimum tax (CAMT) on the adjusted financial statement income (AFSI) of large corporations generally incorporating interim guidance previously issued by Treasury and the IRS in notices over the past two years
• Penalty relief (Notice 2024-66) for corporations that fail to pay estimated taxes with respect to CAMT liabilities for tax years that begin after December 31, 2023, and before January 1, 2025

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
• June 28, 2024 — Final regulations (TD 10002) regarding the reporting and payment of the excise tax on repurchases of corporate stock

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

30 Alternative Fuel Vehicle Refueling Property Credit

• September 18, 2024 — Proposed regulations (REG-118269-23) on credit up to 30% for installing alternative fuel vehicle refueling property, such as chargers and hydrogen refueling property

45Q carbon sequestration credit

• July 24 — Notice 2024-60 provides initial guidance, describing information that must be included in a written report known as the lifecycle analysis (LCA) report and provides the procedures a taxpayer must follow to submit the report along with required supporting information to the IRS and the Department of Energy for review

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

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

45Y, 48E clean electricity credits

• May 29, 2024 - Proposed regulations (REG-119283-23) on greenhouse gas emission rates

45Z Clean Fuel Production Credit

• May 31, 2024 — Notice 2024-49 on registration requirements

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
• May 22, 2024 — IR-2024-144 announced that the DOE Qualified Advanced Energy Project Credit Program Applicant Portal (48C Portal) is open for any applicants to register for a new round of allocations

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

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

• June 18, 2024 — Final regulations (TD 9998) providing employers and workers with more clarity on what's required for recordkeeping, and employers to adopt worker-centric practices like project labor agreements

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
• June 7, 2024 — Notice 2024-48 publishes lists of information that taxpayers may use to determine whether they meet certain requirements under the Statistical Area Category or the Coal Closure Category as described for purposes of qualifying for energy community bonus credit amounts or rates under IRC Sections 45, 45Y, 48, and 48E

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 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