SALT Cap Repeal Pitched by Lawmakers From High-Tax States - Samantha Handler, Bloomberg ($):
Lawmakers from high-tax states are pitching their latest legislation—a full repeal of the $10,000 limit—to give relief from the state and local tax deduction cap imposed by the 2017 tax law.
New Jersey Democrats Rep. Rob Menendez and Rep. Josh Gottheimer unveiled a new bipartisan repeal bill Thursday. The cap has been a target of New York-area and California lawmakers since its passage in 2017, though any attempts to repeal or raise the limit will be difficult to gain traction this Congress.
Folks are getting fed-up with the cap.
Reps. Andrew Garbarino (R-N.Y.) is the sponsor, and Reps. Anna Eshoo (D-Calif.), Young Kim (R-Calif.), and Gottheimer are the co-leads on the bill, which has 45 total cosponsors.
‘This injustice has gone on long enough and, with this bipartisan legislation, we can finally right that wrong and provide much needed tax relief to millions of Americans,’ Garbarino said.
Blue-state lawmakers flex muscles on state and local deductions – Laura Weiss, Roll Call:
Lawmakers pressing to restore full federal deductions for state and local taxes are letting Speaker Kevin McCarthy know he doesn’t have the votes to extend the current $10,000 limit.
True that!
The 2017 Tax Cuts and Jobs Act created the $10,000 SALT cap. McCarthy might have to votes to increase the cap to $20,000 for joint filers - and make it permanent.
Here's the skinny: The fact that some Republicans are now calling to modify the cap adds momentum to the issue. Full repeal is unlikely. More likely is capping the cap at $20,000 for joint filers. Also, if Republicans control either chamber of Congress after the SALT cap expires at the end of 2025, expect them to extend it further, according to congressional staffers. In other words, the SALT cap (at some level) could be with us for a long time.
Where the debt ceiling debate and tax policy intersect:
GOP debt limit plans begin to take shape in House – Lindsey McPherson, Paul Krawzak and Aidan Quigley, Roll Call:
Repeal of energy tax provisions from last year's budget reconciliation package are also in play. House Ways and Means is holding a hearing next week on that topic, which is getting renewed attention now that several independent analyses argue initial cost estimates could balloon due to high demand.
The current plan: Republicans want to repeal or scale-back the energy tax credits included in the Inflation Reduction Act. They would sell this move as a “revenue generator” because the credits would be gone, or smaller, and cost less when compared to current law. Good luck getting this through the Democratically controlled Senate.
GOP Taxwriter Prioritizes Oversight This Congress (Podcast) - Samantha Handler, Bloomberg ($). The reporter spoke with Rep. Mike Kelly (R-Penn.), who chairs the House Ways and Means Subcommittee on Tax.
Kelly took over the subcommittee that oversees tax policy after Republicans gained control of the House this year. He has introduced legislation that would impose new reporting requirements on the IRS’s use of the $80 billion in funding it received from the Inflation Reduction Act, as well as other bills that similarly target the IRS.
Kelly didn’t really say that he would use his subcommittee to vet the $80 billion going to the IRS. He did specifically say that his panel would examine LIFO and how it could be modified to meet current needs.
Speaking of oversight:
GAO Official Previews Plans to Scrutinize IRS Funding – Lauren Loricchio, Tax Notes ($).
A government watchdog may examine how the IRS’s new strategic operating plan fits into other plans developed by the agency, according to an official.
Speaking April 13 during a web event hosted by the Center for Taxpayer Rights, Jessica Lucas-Judy of the Government Accountability Office said the office will probably look at how the plan fits ‘into the other plans that the IRS has developed in the past, whether it be for IT modernization or . . . in response to the Taxpayer First Act.’
Based upon what the GAO finds, Christmas could come early for lawmakers seeking to repeal the $80 billion IRS funding provision that became law in the Inflation Reduction Act.
Tax Day Brings Wrinkles for Crypto Investors: Bloomberg Crypto - Erin Slowey, Bloomberg ($):
US taxes are due next week, and the frenzy to file brings extra wrinkles and some potential tricky situations for crypto holders — many of whom were hurt by last year’s price slump or entangled in the series of blowups that occurred.
First off, filers will notice that the Internal Revenue Service made adjustments to its 1040 income tax form to be more explicit about what counts as crypto holdings. Filing instructions include new wording for these investments, calling them 'digital assets' instead of 'virtual currency' — a way of clarifying that these include nonfungible tokens, or NFTs. Prior to the update, taxpayers did not know if they were required to report NFTs. Now they know.
Speaking of crypto:
Arizona Governor Vetoes Bill Barring Taxes on Bitcoin Mining - Michael Bologna, Bloomberg ($). “Arizona Gov. Katie Hobbs vetoed legislation barring municipalities from taxing residential cryptocurrency mining operations, saying the measure seeks to tie the hands of local stakeholders.”
Arkansas Governor Signs Law Reducing Income Tax Rates for Individuals, Trusts, Estates, Corporations – Bloomberg ($):
The Arkansas Governor April 10 signed a law reducing income tax rates for individuals, trusts, estates, and corporations for corporate income, individual income, and trust income tax purposes.
Tax Atty Group Urges Justices To Review NC Sales Tax Ruling – Maria Koklanaris, Law360 Tax Authority ($). “Leaving in place the North Carolina Supreme Court decision allowing the state's application of sales tax on a Wisconsin-based printing company imposes confusion and uncertainty and the U.S. Supreme Court should review it, a group of top tax lawyers said Thursday.”
Think Tanks, 9 States Urge Justices To Hear Ohio's ARPA Case – Paul Williams, Law360 Tax Authority ($):
Nine states and two limited-government advocacy groups pressed the U.S. Supreme Court on Thursday to hear Ohio's challenge to the American Rescue Plan Act's prohibition against using pandemic aid to offset tax cuts, pointing out that lower courts have issued conflicting rulings on the matter.
In separate amicus briefs, the group of states — led by Texas — the Buckeye Institute and the Goldwater Institute told the justices that they should step in to clarify whether ARPA unconstitutionally infringes on states' ability to set their own tax policies. The Sixth Circuit threw out Ohio's challenge to the law but also blocked the offset law's provision from being enforced against Tennessee in a different case.
ND Creates Tax Break For Some Feedstock Refinery Materials – Jared Serre, Law360 Tax Authority ($). “North Dakota will exempt the cost of materials used in construction projects of renewable feedstock refineries from sales and use taxes under a bill signed by the governor.”
Foreign Tax Credit Questions Linger Under Extended Timeline – Natalie Olivo, Law360 Tax Authority ($):
U.S. companies have some breathing room now that the IRS has given extra time to amend documents needed to qualify for certain foreign tax credits under proposed rules, but questions remain about how to clear logistical hurdles under the guidance.
The extension of the May 17 deadline to execute intangible property license agreements, which the Internal Revenue Service announced in early April, offered some relief to companies that still must figure out how to meet an exception under proposed foreign tax credit rules. Companies now have 180 days after the finalization date of the guidance, proposed in November, to meet an exception to existing regulations, finalized in 2021, that would otherwise deny credits for overseas withholding taxes on certain royalty payments.
From the “How was Your Day” file:
8th Circ. Affirms Man's Convictions In $11M Tax Fraud Scheme – Theresa Schliep, Law360 Tax Authority ($):
In a published opinion, an Eighth Circuit panel affirmed Jeffrey Allan Kock's convictions for failing to file a tax return, money laundering, wire fraud, making false claims and concealing an asset. There was enough evidence indicating he committed a tax evasion scheme that included requesting and receiving false refunds exceeding $10.9 million from the Internal Revenue Service, the panel found, rejecting his challenges to the sufficiency of the evidence.
Tax Notes reports that Jeffrey Allan Kock “described receiving money from the government as ‘a game of monopoly.’"
The day did not go well for Jeffrey.
Choices! Want to dig in the dirt? Happy Gardening Day! Want to lay in the dirt and space out? Happy Look Up At The Sky Day!
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