Both chambers of Congress are back in session this week and are expected to remain in Washington through March 22, as they grapple with a number of legislative priorities including government funding for the remainder of the fiscal year.
Bipartisan tax bill stalled
Hope that the Senate can pass the bipartisan tax bill has been waning, as the Senate Finance Committee’s top Republican, Mike Crapo (R–ID), continues to express his desire to make changes to the existing framework. Alterations to the bill could put existing support for the deal at risk. Additionally, time is of the essence to pass the bill in its current form, as it contains provisions that are retroactive to the 2022 and 2023 tax years.
For a more detailed discussion of the status of the potential tax bill, please see our article, "Bipartisan tax bill remains stalled."
Government funding
On March 1, the president signed the fourth continuing resolution of this fiscal year. The agreement extended six of the twelve appropriations bills through March 8 and the additional six through March 22. On March 5 the House of Representatives approved a minibus package comprised of the first six bills, sending the package to the Senate, where it is expected to pass.
The remaining six bills, which are currently funded through March 22, will collectively cost more than double the current minibus package and include some of the more politically controversial matters.
Additionally, the debate over the $95 billion Senate-passed foreign aid bill, which would provide support for Ukraine, Israel and Taiwan, remains unsettled. House Speaker Mike Johnson (R – LA) has yet to bring the bill to the House floor for a vote, publicly stating that providing funding for Ukraine is not a current priority.
IRS Chief Counsel role filled
After remaining vacant for over three years, the IRS Chief Counsel role has finally been filled. Last week, the Senate voted 56-41 to confirm Marjorie Rollinson, a tax attorney and former IRS Associate Chief Counsel. Marjorie, who is coming out of retirement to take on the role, is the first woman to hold this position.
IRS enforcement efforts
Over the last few weeks, the IRS has unveiled two new enforcement campaigns. These initiatives are the latest in a recent effort by the agency to reduce the tax gap by focusing on large corporations, large partnerships, and high-income taxpayers, who the IRS believes are the leading cause of tax underpayments.
- High-income nonfilers – The IRS has begun issuing notices to high-income taxpayers who have failed to file federal tax returns. The agency’s initial inquiry will focus on over 125,000 instances of non-filing between 2017 and 2021. Approximately 20% of cases will focus on taxpayers with income over $1 million, while the other 80% will target taxpayers with income between $400,000 and $1 million.
- Business aircraft – The IRS plans to conduct dozens of audits related to business aircraft owned by large companies. These audits, which will be using advanced analytics, will focus on personal use of company aircraft by officers, executives, employees, owners and other key stakeholders. For more information on this campaign, please read our article “Don’t count on flying under the radar.”
Employee Retention Credit Voluntary Disclosure Program deadline approaching
The IRS’s Voluntary Disclosure Program for taxpayers who believe they have received erroneous Employee Retention Credit claims is coming to a close on Friday, March 22, 2024. This taxpayer-favorable program allows eligible taxpayers to proactively deal with invalid claims by returning the credit at a discounted rate and avoiding penalties and interest.
For more details on the program, read our article, “Deadline approaching for Employee Retention Credit Voluntary Disclosure Program.”
Beneficial ownership information reporting
Late last week, the U.S. District Court for the Northern District of Alabama ruled the beneficial ownership information (BOI) reporting provision included in the Corporate Transparency Act of 2021 to be unconstitutional. The court’s final judgment prohibited the government from enforcing reporting obligations against the plaintiffs, including members of the National Small Business Association (as of March 1, 2024).
It's expected that the government will appeal the decision; however, that process could take months or years. At this time, Baker Tilly suggests entities subject to BOI reporting continue to comply with Financial Crimes Enforcement Network (FinCEN’s) filing requirements. For more on this topic, please see our article “U.S. District Court declares Corporate Transparency Act Unconstitutional”.
Tax Trends webinar
Please join us on March 28 for our inaugural Tax Trends webinar. A panel of our experienced tax professionals will conduct a roundtable discussion exploring current tax challenges and opportunities. You can register here for the Tax Trends: Quarterly tax roundtable.
You can also view our 2024 Tax Strategy Playbook for access to relevant, insightful information to assist with tax strategies and their impact on business decisions.
Questions?
Reach out to your Baker Tilly advisor to discuss the impact of our tax policy updates.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments. Baker Tilly US, LLP does not practice law, nor does it give legal advice, and makes no representations regarding questions of legal interpretation.
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