Here’s a look at recent tax-related happenings on the Hill, including President-elect Donald Trump selecting Scott Bessent as Treasury secretary and a congressional hearing on the Tax Cuts and Jobs Act of 2017. From the Hill will not be published next week due to the Thanksgiving holiday.
Lately on the Hill
President-Elect Trump Nominates Bessent for Treasury
Scott Bessent has been announced to serve as secretary of the Treasury during the next presidential administration. In a statement from the president-elect, Donald Trump touts Bessent as “widely respected as one of the World’s foremost International Investors and Geopolitical and Economic Strategists.”1
Bessent has worked as a hedge fund manager and chief investment officer at Soros Fund Management before starting his own firm, Key Square Group.
According to the Wall Street Journal, “[Bessent] was motivated to step out from behind his desk and get involved with Trump's campaign in part because of a view that time is running out for the U.S. economy to grow its way out of excessive budget deficits and indebtedness.”2
Congressional Hearing on the TCJA Provides Different Points of View
Last week, the Joint Economic Committee (JEC) of Congress held a hearing titled "Building on the Success of TCJA: The 2025 Tax Policy Debate.”
Kevin Brady, former representative and chairman of both the House Committee on Ways and Means and the JEC during the original passage of the TCJA, made his case for why Congress should prevent the act’s provisions from expiring and build upon them.
“By dropping the [corporate tax] rate to 21% from 35%,” Brady explained, “Congress set off an economic boom. Coupled with a modern international tax code, the TCJA’s rate cuts drew more investment, research and intellectual property back to the U.S. Each dollar of corporate-tax reduction has been estimated to increase economic production by 44 cents.”
The drop in the corporate rate was a permanent provision of the act, unlike many others that expire at the end of 2025.
Speaking to the TCJA’s benefits on the international front, Brady asserted, “America’s multinational enterprises, employment, capital expenditures, total sales and R&D spending all grew faster within the United States than the respective levels abroad—leading to increases in the U.S. share of these activities relative to pre-tax reform. That increased share of U.S. activity represents 1 million more employees, $30 billion more in capital expenditures, $117 billion more in sales and $11.9 billion more R&D in the U.S. in 2022 compared to its share in 2017. There have been no major tax-driven corporate “inversions” from America to overseas since the enactment of TCJA, keeping jobs and revenue here in the U.S.”
Another panelist, Samantha Jacoby, deputy director of Federal Tax Policy, the Center on Budget and Policy Priorities, sees things from a different perspective.
“The tax cuts enacted in 2017 under President Trump benefited high-income households far more than households with low and moderate incomes. The 2017 tax law will boost the after-tax incomes of households in the top 1 percent by 2.9 percent in 2025, roughly three times the 0.9 percent gain for households in the bottom 60 percent, according to Tax Policy Center estimates. The tax cuts that year will average $61,090 for the top 1 percent—and $252,300 for the top one-tenth of 1 percent.”
Jacoby offered alternatives to the TCJA approach, encouraging “opportunities to work toward a tax code that raises more needed revenues and supports investments that make the economy work for everyone.” She pointed to the defunct Tax Relief for American Families and Workers Act’s attempt to expand the Child Tax Credit, claiming, “About 16 million children would have benefited from the proposal in the first year, and it would have lifted some 500,000 children above the poverty line when fully in effect.”
Jacoby also called for an adequate Earned Income Tax Credit, paid leave, and unemployment insurance program to help workers and their families.
Although Republicans will take the helm in drafting tax legislation during 2025, the slight majorities they hold in the House and Senate may require a broader inclusion of differing viewpoints and proposals to achieve enough votes for passage.
From the Treasury & IRS
Released Guidance
Notice 2024-85 has been released detailing transitionary threshold amounts for filers of Form 1099-K. Taxpayers who had business transactions amounting to more than $5,000 in 2024, $2,500 in 2025, and $600 in 2026 should expect to receive the forms from e-commerce providers. The announcement gradually implements a 2021 bill that reduced the filing threshold from $20,000 and 200 transactions to $600 that was set to begin in 2022. The IRS had delayed enforcement of the new threshold, expecting a massive increase in new filings and to address confusion from issuers and recipients of the forms.
IR-2024-296 announces an extension for payroll companies and third-party payers, such as certified professional employer organizations and professional employer organizations, to December 31, 2024 to take advantage of the consolidated claim process to resolve incorrect claims of the Employee Retention Credit. The process was originally set to close on November 22, 2024.
Final regulations (T.D. 10012) allow certain tax-exempt organizations wholly or partially owned by applicable entities to elect out of partnership status to help facilitate such organizations’ use of direct pay when claiming clean energy credits. The regulations finalize the proposed regulations issued in March and are effective January 19, 2025.
Proposed regulations (REG-116017-24) contain administrative requirements for tax-exempt organizations to be excluded from the partnership tax rules under the new final regulations.
Revenue Ruling 2024-25 announces interest rates for overpayments and underpayments of tax for the first quarter beginning January 1, 2025. The rates will decrease to 7% for overpayments (6% for corporations), 7% for underpayments, 9% for large corporate underpayments, and the rate of interest paid on corporate overpayments exceeding $10,000 will be 4.5%.
Notice 2024-84 extends the transition process for claiming the exception to the elective payment phaseouts of Notice 2024-9, Section 5.
The U.S. Department of the Treasury has released a Notice of Allocation Availability for the 2024-2025 allocation round of the New Markets Tax Credit.
Corrections to final regulations (T.D. 10009) have been released. The final regulations, originally released on October 23, 2024, implement the §48D and §50 advanced manufacturing investment tax credit provided under the CHIPS Act of 2022.
Corrections to final regulations (T.D. 10010) have been released. The final regulations, originally released on October 28, 2024, implement the §45X advanced manufacturing production credit provided under the Inflation Reduction Act of 2022.
The IRS has published the 2025 tier 2 tax rates on railroad employees, employers, and employee representatives under the Railroad Retirement Act.
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.