The House and Senate are both in recess until September, but lawmakers continued last week to spar over Pillar 2 implementation, the prospects of a year-end tax package and IRS enforcement priorities.
Tax extenders
Democrats and Republicans each kept up their share of posturing over the ever-elusive deal to trade child tax credit enhancements for restoring research expensing under Section 174, reinstating 100% bonus depreciation, and providing relief for the Section 163(j) limit on interest deductions. A deal is not likely to come together before government funding is set to expire at the end of September. This will likely leave lawmakers with one-last ditch effort to reach a deal at year-end, well past the extended filing deadlines for calendar-year taxpayers.
All the ingredients remain in place for a compromise: Republicans have signaled they are open to child tax credit relief and Democrats have acknowledged this relief must be proportional to the business provisions. Despite this broad agreement on parameter, lawmakers appear no closer to a deal and still seem reluctant to engage in substantive discussions. The Committee for Responsible Budget tried to jumpstart discussion by unveiling an online tool allowing users to adjust the parameters of the child tax credit to achieve various revenue objectives. The response from lawmakers was muted as they continue to dance around the issue and trade barbs over the costs of each other’s priorities.
Pillar 2 criticism
Members of the House Ways and Means Committee have scheduled a trip to Paris at the end of the month to meet with members of the Organisation for Economic Co-operation and Development (OECD) to discuss the Pillar 2 global minimum tax rules. Committee Chair Jason Smith, R-Mo., has made criticizing the deal a major focus of the committee this year and 13 committee members recently sent a letter to Treasury Secretary Janet Yellen demanding more information on how the OECD agreements were negotiated and more consultation on how to move forward. Implementation abroad continues to advance and could have a significant impact on multinationals.
Large partnership attack
The Government Accountability Office released a report last week that found a large increase between 2002 and 2019 in the number of partnerships with $100 million in assets and 100 or more partners.
The report criticized the IRS for dropping IRS audit rates, and Senate Finance Committee Chair Ron Wyden, D-Ore., used the report to attack large partnerships as the “granddaddy of all tax loopholes.” Wyden has proposed sweeping partnership reform in the past, though the effort has so far failed to gain much traction. Partnership compliance, however, could be a major focus of the IRS as it puts its special $60 billion in funding to use.
Contact:
Tax professional standards statement
This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.
The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.
More tax hot topics
No Results Found. Please search again using different keywords and/or filters.