Lately on the Hill
Congress is wrapping up legislative business prior to midterm elections, with a few key items on the agenda:
- Senate Finance Committee Chair Ron Wyden and Senator Mike Crapo introduced the bipartisan retirement legislation, Enhancing American Retirement Now (EARN) Act, for a vote on the Senate floor. The bill passed unanimously in the Senate Committee back in June.
- As a reminder, this bill would provide a matching credit valued at 50% of contributions up to a maximum of $2,000 and phase out between $20,500 and $35,500 in annual income for single filers; allow penalty-free withdrawals from retirement accounts for victims of domestic abuse; and provide a government-matching contribution to retirement accounts for low- to moderate-income taxpayers.
- This bill also has a provision which would disallow charitable deductions for conservation contributions if the deduction is more than two and a half times the sum of each partner’s basis.
- Although the Senate has limited days left in session and their priority is to pass the government funding bill, due to the bipartisan support of the EARN Act thus far, this bill has a fighting chance to become law in the near future, perhaps as part of a tax extenders package. For context, the House passed similar retirement legislation with a vote of 414-5 (the Securing a Strong Retirement Act of 2022) last spring.
- A summary of the bill is available here and legislative text here.
- Congress also needs to pass a series of bills to fund the government for FY 2023 or pass a temporary resolution to fund the government until December.
- The funding bills are likely to include tax extenders, which would extend items like deductions for racehorses and tax credits for railroad track maintenance.
- The JCT has complied a complete list of expiring federal tax provisions, which includes items expiring 2021 that may be included in this tax extender legislation.
- But what everyone wants to know is if R&D expensing is going to be included, which is seen as the “last chance” for a legislative fix on this issue for tax year 2022. To learn more about the R&D issue, listen to this episode of Simply Tax.
- Although draft tax extender legislation is expected this month, it likely won’t be voted on until after mid-term elections.
- The Senate also is supposed to address circuit court judge nominations and codifying same-sex marriage into law.
Note, most of this is likely to happen in September. The Senate is scheduled to be in session in October, but few are expecting them to return to the Hill so close to elections.
IN CASE YOU MISSED IT
- The Treasury Department admitted that the IRS accidentally published on its website confidential data from Form 990-T, used to report certain information for retirement accounts. The information included data on approximately 120,000 individuals and non-profit taxpayers. The IRS will contact affected individuals soon.
- Indiana has announced that it will tax student loan forgiveness under Biden’s executive order. As a reminder, Notice 2022-1 doesn’t require lenders to issue Form 1099-C for forgiven student loans between 2021 and 2025, so debt forgiven under this executive order likely won’t be reported to the IRS or states.
- Idaho became the 24th state to move to a flat rate for state income taxes. Missouri and Oklahoma also are actively considering transitioning to a flat tax.
- The IRS is providing tax relief for victims of severe storms in Arizona occurring between July 17, 2022 and July 18, 2022.
- The IRS is beginning audits for recipients of the Employee Retention Credit. Items requested include proof of a government mandate causing full or partial suspension relied on to qualify for the credit, and proof that the portion of the business that was shut down was more than a nominal part of the business.
- Senate Finance Committee Chair Ron Wyden released results of the committee’s investigation involving the Foreign Account Tax Compliance Act. The report claims that the committee uncovered the “shell bank” loophole that allows banks offshore to accept funds from a U.S. person without reporting them to the IRS.
This newsletter features developing content that is subject to change at any time. It does not constitute legal or tax advice. Consult your professional advisors prior to acting on the information set forth herein.