Lately on the Hill
Here’s a look at the latest tax-related happenings on the Hill, including activity regarding the Employee Retention Tax Credit (ERTC) and airline regulation bills.
- News on the ERTC. The IRS has issued a Generic Legal Advice Memorandum on whether (under the scenarios described in the memo) the operation of an employer’s trade or business was fully or partially suspended during a calendar quarter due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to the coronavirus disease 2019 (COVID-19). The examples provided in the memorandum deal with supply chain disruptions and whether an employer’s trade or business was fully or partially suspended as a result of the disruptions.
- House Committee on Ways and Means Chair Jason Smith (R-MO) and Oversight Subcommittee Chair David Schweikert (R-AZ) announced on July 20 that the Subcommittee on Oversight will hold a hearing on the backlog of the ERTC processing, IRS response to inquiries about ERTC credits, and the impact of fraud on those legitimately trying to claim the credit. The hearing will take place on Thursday, July 27, 2023, at 2 p.m. ET in the Sam Johnson Room in the 2020 Rayburn House Office Building.
- Forvis Mazars has a variety of helpful FORsights articles and webinars concerning the ERTC.
- Regulation is “in the air.” Recently, massive airline disruptions, long wait times, and surprise cancellations have been adversely affecting thousands of fliers. Earlier this year, Sens. Edward J. Markey (D-MA) and Richard Blumenthal (D-CT) led the introduction of the Airline Passengers’ Bill of Rights and Forbidding Airlines from Imposing Ridiculous (FAIR) Fees Act, which are bills to expand protections for air travelers. In the past week, several bipartisan bills have been introduced in an effort to regulate air travel for the better:
- H.R. 3935, the Securing Growth and Robust Leadership in American Aviation Act, would raise $100 billion in excise taxes related to air travel from 2024 to 2028, the Congressional Budget said in a July 17 report.
- The AAM Tax Exemption Parity Act, as an amendment to the above, would help ensure that “powered lift aircraft have the same tax exemptions as fixed-wing aircraft and helicopters,” according to House Ways and Means Committee member Jimmy Panetta (D-CA) and Rep. Jay Obernolte (R-CA).
- Proponents of the program state that the amendment could modernize the U.S. tax code to better support innovative and emerging powered-lift aircrafts.
- H.R. 3935, the Securing Growth and Robust Leadership in American Aviation Act, would raise $100 billion in excise taxes related to air travel from 2024 to 2028, the Congressional Budget said in a July 17 report.
- New bills and proposals introduced. Here is a roundup of some of the latest tax-related bills and proposals introduced in Congress:
- The Child Care Investment Act would expand three existing tax incentives “to support childcare affordability and reflect the realities of childcare today,” and was unveiled by Reps. Salud O. Carbajal (D-CA) and Lori Chavez-DeRemer (R-OR).
- The Unfair Tax Prevention Act would accelerate the scheduled base erosion and anti-abuse tax rate increase and tax credit changes for foreign entities, and was introduced by the House Ways and Means Committee Chair Jason Smith (R-MO) and committee member Ron Estes (R-KS).
IN CASE YOU MISSED IT
- The IRS has given notice of the conduct of the data loss prevention computer matching program, which helps the agency detect security policy violations. The notice of the matching program was last published at 85 FR 79562–79563 (December 10, 2020).
- The IRS provided a notice for Agency Information Collection Activities; Proposals, Submissions, and Approvals; Employment Tax Returns and Related Forms.
- The IRS has issued Revenue Ruling 2023-13, which details the applicable federal interest rates for August.
- The IRS has issued new guidance and announced transition relief related to increases in the required minimum distribution age in legislation that became law at the end of 2022.
- The IRS has released Publication 5708, “Creating a Written Information Security Plan for your Tax & Accounting Practice,” which provides “critical steps tax and accounting practices can take to develop security plans that comply with the law and protect their businesses and clients.”
- The National Taxpayers Union recommended various IRS improvements, including more oversight into paperwork burdens, more transparency on out-of-pocket expenses for forms, and a new pause in the Form 1099-K reporting threshold in a July 18 letter to the IRS in advance of a public meeting of the IRS Advisory Council.1
- An unofficial transcript is available of a July 19 IRS hearing on proposed regulations (REG-109309-22) on microcaptive listed transactions and microcaptive transactions of interest.
- The Committee on Small Business and Entrepreneurship will hold a business meeting to consider pending business of the committee. Topics include but are not limited to issues concerning several acts: Small Business Childcare Act, Veteran Entrepreneurship Training Act, SECURE Small Business Act, and more.
- The New York State Bar Association Tax Section has given a report on proposed regulations (REG-124064-19) under Section 367(d) on the repatriation of intangible property, recommending modifications to enhance the ability of the regulations to achieve their intended goal.
Related to the Inflation Reduction Act (IRA) & CHIPS Act
- The Biden administration has unveiled a report intended to promote the president’s decision to pursue a series of tax credits to spur a clean energy transformation in the American economy.
- The Insured Retirement Institute,2 having requested effective date relief in the SECURE 2.0 Act of 2022, has asked for added guidance and relief on provisions that address the required minimum distribution rules, the offer of de minimis financial incentives to encourage plan participation, and Roth catch-up contributions.
International Tax
- The IRS has released Notice 2023-55, which announces temporary relief for taxpayers in determining whether a foreign tax is eligible for a foreign tax credit under §901 and §903 of the Internal Revenue Code.
- The Joint Committee on Taxation in a July 17 report (JCX-35-23) examined the legal and economic background of the U.S. taxation of multinational enterprises, including an introduction to the basic principles of international taxation.
- Treasury hopes to have a complete OECD (Organisation for Economic Co-operation and Development) Pillar One package shortly and would like to work with Congress on implementing Pillar Two to improve the tax system, said Michael Plowgian, Treasury deputy assistant secretary for international tax affairs, at a July 19 House Ways and Means Tax Subcommittee hearing.
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.