TAX TAKE: After the Fire – Could Another Tax Vehicle Emerge After the House Leadership Crisis?
The anticipated government shutdown was avoided by the surprise bipartisan continuing resolution (CR), the Continuing Appropriations Act, 2024 and Other Extensions Act, funding the government through November 17, 2023. The CR cost Representative Kevin McCarthy (R-CA) his position as Speaker of the House in a historic vote to remove him. Right now, Rep. Patrick McHenry (R-NC) is serving the interim role of Speaker pro tempore until a successor is chosen.
The appropriations process will now be further delayed, as the House must select a new Speaker from a number of emerging candidates, including House Committee on Ways and Means Member Kevin Hern (R-OK). Once a Speaker is elected, hopefully a path forward will emerge to fund the federal government for fiscal year 2024, although another CR is likely and the threat of a government shutdown remains high. With the appropriations process at a standstill and the House and Senate far apart on funding levels, policy riders, Ukraine aid, and border security, the prospects of a year-end tax bill may be dimming given that an omnibus appropriations bill is viewed as the most likely vehicle for tax legislation. A number of House Republicans oppose even the idea of a year-end omnibus bill and may demand votes on individual appropriations bills from the next Speaker.
While an omnibus appropriations bill would be the most likely vehicle for a year-end tax package, there are some other potential legislative vehicles to keep an eye out for.
U.S.-Taiwan Tax Treaty Legislation. On September 14, 2023, the Senate Committee on Finance unanimously approved the United States-Taiwan Expedited Double-Tax Relief Act, legislation that would provide tax treaty-type benefits on investment between the U.S. and Taiwan. Given the fact that the legislation was developed on a bipartisan basis by Senate Committee on Finance and House Committee on Ways and Means leadership, in consultation with the Treasury Department, there is significant interest in moving the legislation forward – particularly given the importance of Taiwan as a trading partner and as a global leader in the semiconductor sector. Once the "conceptual markup" approved by the Finance Committee is developed into legislative language and jurisdictional issues are resolved with the Senate Committee on Foreign Relations, the legislation should be primed for consideration by the House Committee on Ways and Means and potential enactment later this year.
Federal Aviation Administration (FAA) Reauthorization. The CR currently funding the government included an extension of FAA programs and activities through December 31, 2023. It also extended the fuel taxes and ticket fees that fund the Airport and Airway Trust Fund. These FAA-related taxes need to be extended before the end of the year.
Proponents of a year-end tax bill, including those supporters of an extension of the "Big Three" Tax Cuts and Jobs Act (TCJA)-related provisions (research and development (R&D) amortization, section 163(j), and bonus depreciation), should monitor not only the status of the appropriations process but also these other potential alternative legislative vehicles. #TaxTake
In the News
Discussing the potential of a government shutdown in November and the impact on the IRS in Politico Pro Morning Tax, Jorge said, "The closer we get to the end of year, the more challenging it will become for the IRS and the upcoming filing season. That said, I think if we are looking at a government shutdown in November, that could change Treasury's outlook on whether to utilize IRA funding in order for the IRS to stay fully operational or close to it."
Upcoming Speaking Engagements and Events
On October 30, Loren will speak at the IBA Annual Conference on a panel titled, "How Do the OECD and the U.N. Address International Tax Issues (Past, Present, and Future)?"
Also on October 30, Marc will present a tax legislative outlook at the 58th Annual Southern Federal Tax Institute.
Marc will present at the 2023 Blue Cross Blue Shield National Tax Conference in Austin on November 29.
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