Tax News & Views The Jive In 2025 Roundup

It’s 2024, But Taxwriters Are Thinking 2025 – Doug Sword and Cady Stanton, Tax Notes ($). The individual tax breaks included in the Tax Cuts and Jobs Act expire next year. Extending them next year will be a paramount priority on Capitol Hill.

At a Senate Budget Committee hearing January 17, Senate Finance Committee Chair Ron Wyden, D-Ore., made clear that the looming pressure of the 2025 expirations is one of the major considerations for this year’s deal.

“What we’re trying to do is use this year to the greatest extent possible for helping people, and then to tee up 2025,” Wyden said. “We are looking at a three-year bill.”

The impact of any tax bill on the expected 2025 talks — whether it increases or decreases the estimated $3.7 trillion price tag of fully extending the TCJA and how it affects the prospects for individual provisions — permeates the current political landscape.

“Everything is about 2025,” said a source familiar with negotiations on the smaller tax bill who spoke on condition of anonymity.

About that "smaller tax bill":

Lobbyists See Tax Bill as Appetizer for Meatier Debate in 2025 - Kate Ackley, Bloomberg ($):

Business lobbyists pushing for a bipartisan tax deal this year see a lot more on the line than just the fate of the package itself.

The National Association of Manufacturers, the Business Roundtable, and the US Chamber of Commerce are among the lobbying groups pushing for the $80 billion bipartisan deal that Senate Finance Chairman Ron Wyden (D-Ore.) and Ways and Means Chairman Jason Smith (R-Mo.) worked out to renew a slate of business tax breaks,, including one for domestic research and development, as well as to expand the child tax credit.

This tax fight will test the muscle of a mostly unified business community and may offer guidance about what strategies and pressure points work on lawmakers, with the caveat that the November elections could significantly shake up control of Congress.

W&M Dems Keep Pushing for Child Tax Credit Boost on Markup’s Eve – Cady Stanton and Doug Sword, Tax Notes ($):

House taxwriters are set to mark up a tax deal marketed as a bipartisan compromise while half their committee is still pushing to expand its tax provisions for families...

The bill is vehemently opposed by some Democrats, including Ways and Means member Lloyd Doggett of Texas, who has called “totally unacceptable” what he sees as a small boost in CTC refundability. While Doggett and many Ways and Means Democrats want a more generous increase, Republicans criticize the bill because they say the more generous payments to households without enough income to owe taxes and the ability to use one year’s income to qualify for a refund over two years undermine the work requirement.

Rep. Bob Good, R-Va., chair of the House Freedom Caucus, said he expects conservatives to oppose the legislation because of that expansion of the CTC.

There is a saying on Capitol Hill that is apropos for this bill: “Don’t believe what lawmakers say, believe what they do.”

Plenty of lawmakers have complained about this bill, but most important is how they vote on it. History is full of examples where lawmakers publicly denounced a bill and then voted to support it.   

The House tax-writing committee is scheduled to debate and possibly amend the bill today. If the measure passes the committee, its next stop could be a vote on the House floor. 

Tax Break Legislation Would Cost $77.5B, JCT Says – Asha Glover, Law360 Tax Authority ($):

The family and business tax breaks, affordable housing provisions and disaster relief proposals included in the tax bill that the House Ways and Means Committee is scheduled to consider Friday would cost about $77.5 billion, the Joint Committee on Taxation said in a report released Thursday…

The bill's business provisions, including allowing taxpayers to immediately expense domestic research and experimentation costs paid or incurred in 2022 through 2025 rather than requiring them to be deducted over multiple years, would cost $32.8 billion over a decade, the report said. The bill's other business proposals would restore 100% bonus depreciation under Internal Revenue Code Section 168(k)  and loosen the cap on deductible interest expenses under Section 163(j) .

The bill also modifies the Child Tax Credit, which is projected to cost $33.4 billion.

These costs are covered through modifications to the Employee Retention Tax Credit (ERTC), which is projected to raise $78.6 billion.

Below is a partial description of the modifications to the ERTC as described by the Joint Committee on Taxation, which is the group that provides revenue projections and tax policy descriptions to lawmakers:

For an ERTC promoter, the assessable penalty for aiding and abetting understatement of a tax liability is increased to the greater of $200,000 ($10,000 in the case of an ERTC promoter that is a natural person) or 75 percent of the gross income of the ERTC promoter from providing aid, assistance, or advice with respect to a return or claim for ERTC refund or a document relating to the return or claim…

The proposal also provides that no credit or refund of the ERTC shall be allowed or made after January 31, 2024, unless the claim for the refund or credit is filed on or before that date.

The document is here.

Experts Laud Affordable Housing Credits In Tax Proposal – Grace Dixon, Law360 Tax Authority ($):

Changes to the nation's largest affordable housing subsidy, which are tucked into a bipartisan tax package scheduled for markup Friday by a U.S. House committee, could add more than 200,000 affordable rental units in two years.

The House Ways and Means Committee is on track to weigh the Tax Relief for American Families and Workers Act of 2024, legislation that would expand the low-income housing tax credit program, alongside other changes increasing tax breaks for research and development costs as well as child tax credits.

House Bill Seeks To Repeal Estate Tax – Jared Serre, Law360 Tax Authority ($):

A bill introduced Thursday in the U.S. House of Representatives would repeal the federal estate tax.

The Death Tax Repeal Act, introduced by Rep. Randy Feenstra, R-Iowa, would permanently eliminate the federal estate tax, a tax paid on the transfer of a decedent's assets.

The only way this bill will become law is if a certain political party controls the White House, is the majority party in the House and enjoys a super majority in the Senate. Currently, this political set-up does not exist. 

Treasury’s ‘Revolving Door’ Report Pushed to February – Alexander Rifaat, Tax Notes ($):

A report by the Treasury Office of Inspector General examining potential conflict of interest violations by department personnel will be released in late February, according to an official.

The audit is expected to be completed and published by February 21, the Treasury official told Tax Notes on January 17.

IRS Issues Finalized Rules on Pension Plan Value Requirements - Caleb Harshberger, Bloomberg ($). “The IRS issued final regulations Thursday on minimum present value requirements for certain defined benefit pension plans. The rules (RIN 1545-BK95) provide guidance on changes the Pension Protection Act of 2006 made to prescribed interest rate and mortality tables and rules on pre-retirement mortality discounts and Social Security level income options.”

IRS System Upgrades Pause E-Filing for Some Tax-Exempt Forms - Caleb Harshberger, Bloomberg ($):

A limited group of tax-exempt organizations are unable to electronically file forms Exempt Organization Business Income Tax Return or US Income Tax Return for Certain Political Organizations until March 17 due to system upgrades, according to a Thursday IRS alert.

The updates impact Forms 990-T and 1120-POL—including returns on extension—with due dates from Jan. 15 to March 15, the agency said in a release. Taxpayers with due dates on April 15 and after will be able to e-file.

DOJ Appeals FBAR Dual Residency Loss – Andrew Velarde, Tax Notes ($):

The government is not done fighting a decision holding that a dual resident with treaty foreign residency is not required to file foreign bank account reports.

The Justice Department filed its notice of appeal to the Ninth Circuit in Aroeste v. United States on January 18, hoping to overturn a decision that could have major implications for FBAR nonfilers and expatriation.

From “The Dog Made Me Do It” file:

IRS Contractor Says 'Moral Belief' Led Him To Leak Tax Info – Anna Scott Farrell, Law360 Tax Authority ($):

The IRS contractor who stole the tax returns of thousands of wealthy people, including former President Donald Trump, and leaked them to the media told a D.C. federal court he should serve perhaps less than a year in prison because he acted "out of a deep, moral belief."

Charles Littlejohn, 38, balked at federal prosecutors' request that he serve the maximum five years, saying Wednesday that it was an extreme recommendation six times higher than the maximum recommended by the U.S. Sentencing Commission and too heavily weighted toward the goal of deterring similar crimes.

"He committed this offense out of a deep, moral belief that the American people had a right to know the information and sharing it was the only way to effect change," Littlejohn's lawyers said in a sentencing memo. "He did what he thought was right at the time, but now fully acknowledges that he was wrong."

For those unfamiliar with the dog reference, it refers to a stream of crimes that occurred in the late 1970s by a perpetrator who said a dog made him do them. The phrase became a thing for people wanting to blame their actions on something else.  By the way, the perp is still in jail.

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