After a marathon vote-a-rama, the Senate passed a revised version of the Inflation Reduction Act of 2022 on a partisan vote of 51 to 50 with Vice President Harris casting the deciding vote. The bill now moves to the House, which is anticipated to pass it this Friday, August 12, clearing it for President Biden's signature.

The climate change, health care and deficit reduction package is financed primarily by a handful of targeted tax increases. As originally agreed to by Senate Majority Leader Chuck Schumer (D-NY) and Senator Joe Manchin (D-WV), the tax increases consisted of (i) the 15 percent book income minimum tax, (ii) an increase in the taxation of carried interests, and (iii) Internal Revenue Service (IRS) enforcement funding. However, in order to secure Senator Kyrsten Sinema's (D-AZ) support, the tax increases were modified (i) to provide adjustments to the 15 percent book income minimum tax for depreciation and certain qualified wireless spectrum amortization, (ii) removal of the carried interest provision, and (iii) inclusion of the one percent stock buyback excise tax previously passed by the House as part of the Build Back Better Act. Both the 15 percent book income minimum tax and the one percent stock buyback excise tax are effective for taxable years beginning after December 31, 2022. In addition, a last-minute floor amendment added a two-year extension of the section 461(l) excess business loss limitation rules.

President Biden's signature of the bill into law will kick off a fury of regulatory activity as taxpayers and the IRS will need to quickly turn to implementing the new legislation for next year. In particular, the 15 percent book income minimum tax includes a broad grant of regulatory authority so impacted taxpayers should quickly assess any areas in need of guidance. #TaxTake

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