TAX TAKE: What's Going On (in September)?
The effort to find bipartisan compromise on legislation that would marry a collection of business tax extensions with a potential expansion of the child tax credit (CTC) saw renewed interest last week as the Census Bureau reported that child poverty more than doubled in 2022, following the expiration of pandemic-era CTC enhancements.
Although little progress has been reported on a possible compromise, the issue is raised frequently in congressional events on Capitol Hill, including last week's Senate Finance Committee markup of Taiwan tax legislation. Senator Todd Young (R-IN) made the case for reinstating the deduction for research and development (R&D) expenses as a priority for American companies competing with China. "I'm all in on that," Chairman Ron Wyden (D-OR) said, adding, "[w]e saw the census figures, just recently, five million children in poverty, we very much need to address both of these issues." The Taiwan tax bill, which would provide treaty-equivalent tax treatment to U.S.-Taiwan cross-border activities, sailed through committee with a commitment to resolve differences with a competing proposal from the Senate Foreign Relations Committee.
Representatives Andy Barr (R-KY) and Dan Meuser (R-PA) also urged action on the R&D expenses issue at a House Ways and Means Committee hearing last week. The need to fix the section 163(j) interest expense deduction limitation calculation to take into account earnings before interest, taxes, depreciation, and amortization (EBITDA) was also raised at the same hearing by Rep. Marilyn Strickland (D-WA), and by other lawmakers at a Small Business Committee hearing last week. Sens. Kyrsten Sinema (I-AZ) and Shelley Moore Capito (R-WV) also hosted an event last week to raise awareness for the section 163(j) legislative fix.
All this activity on tax policy takes place in the shadow of a potential government shutdown at the end of the month. Of course, Internal Revenue Service (IRS) funding levels are at stake in the emerging stand-off between House Republican leadership and the White House over government funding for fiscal year 2024. A shutdown would likely sidetrack, albeit temporarily, the agency's recently announced efforts to entirely reshape its compliance and enforcement regime focused on "high-income earners, partnerships, large corporations, and promoters abusing the nation's tax laws," as well as further delay IRS efforts to manage an onslaught of fraudulent claims for the Employee Retention Credit. If past is prologue, it could go down to wire on September 30, 2023. #TaxTake
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.
In the News
In Tax Notes, Marc commented on the upcoming release of JCT's Bluebook saying the expedited passage of many of the tax provisions last Congress has made the Bluebook more highly anticipated this year. "The Bluebook, once it's out, will deﬁnitely inﬂuence how that guidance kind of progresses through the system," Marc said.
The information contained in this communication is not intended as legal advice or as an opinion on specific facts. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. For more information, please contact one of the senders or your existing Miller & Chevalier lawyer contact. The invitation to contact the firm and its lawyers is not to be construed as a solicitation for legal work. Any new lawyer-client relationship will be confirmed in writing.
This, and related communications, are protected by copyright laws and treaties. You may make a single copy for personal use. You may make copies for others, but not for commercial purposes. If you give a copy to anyone else, it must be in its original, unmodified form, and must include all attributions of authorship, copyright notices, and republication notices. Except as described above, it is unlawful to copy, republish, redistribute, and/or alter this presentation without prior written consent of the copyright holder.