January 19, 2024
Report on recent US international tax developments - 19 January 2024
US House Ways and Means Committee Chairman Jason Smith (R-MO) and Senate Finance Committee Chairman Ron Wyden (D-OR) on 16 January released the $78 billion Tax Relief for American Families and Workers Act of 2024 (H.R. 7024) after lengthy negotiations. The bill addresses TCJA pre-cliffs and the Child Tax Credit plus the add-ons that were expected, including the United States-Taiwan Expedited Double-Tax Relief Act (H.R. 5988), disaster relief and affordable housing provisions. The Taiwan portion of the bill would provide double tax relief under the Internal Revenue Code and, separately, authorize the President to negotiate and enter into a tax agreement with Taiwan. The Joint Committee on Taxation released a description and revenue estimate of H.R. 7024.
Restoring Section 174 expensing for domestic research and development (R&D) and the prior Section 163(j) interest deductibility parameters are proposed to be retroactive to 2022 and extended through 2025. The bill summary says the provision delays the date when taxpayers must begin deducting their domestic R&D costs over a five-year period until taxable years beginning after 31 December 2025, and indicates it does not address the requirement that R&D conducted outside of the United States be deducted over a 15-year period.
The Ways and Means Committee will hold a bill markup today (19 January). Chairman Smith said he will work to pass the bill in the House in the coming weeks (the House is scheduled to be out next week). Senate Finance Committee Ranking Member Mike Crapo (R-ID) released a statement saying in part that the proposal is a "thoughtful starting point for the House to begin the process." He was later reported as saying he and other Republicans would seek changes to the bill, which they believe should be marked up by the Finance Committee.
The legislative path for the bill is unclear although it could move through Congress attached to a long-term appropriations bill. Lawmakers have indicated, however, that they would like to complete consideration of the bill before the start of tax filing season, now slated for 29 January.
Also this week, the House and Senate approved a continuing resolution (CR) to extend government funding beyond the 19 January and 2 February deadlines, until 1 March and 8 March 8, respectively. Appropriators now have until March to agree to the full slate of 12 appropriations bills.
The Senate Budget Committee held a hearing on 17 January titled, "The Great Tax Escape: Closing Corporate Loopholes that Reward Offshoring Jobs and Profits," offered differing views of the international and other provisions of the 2017 TCJA, comparisons of the TCJA with laws enacted during the Biden Administration, and perspectives on how the tax system should be changed in conjunction with the expiration of TCJA provisions for individuals and small businesses in 2025. A WCEY Alert provides details.
The IRS in Announcement 2024-4 clarified this week that "at this time, digital assets are not required to be included when determining whether cash received in a single transaction (or two or more related transactions) meets the reporting threshold." Consequently, cryptocurrency transactions covered by Section 6050I will not have to be reported until regulations are issued.
And a Treasury official this week was quoted as saying that proposed regulations for both the corporate alternative minimum tax (CAMT) and the stock buyback excise tax will be released soon, "in the government sense." The official offered that it would not be accurate to characterize the timing of the CAMT regulations as imminent.