An ERC Moratorium, Tax Cut Legislation, And Court Cases
IRS puts an immediate stop to Employee Retention Credit processing. Given concerns about a surge of improper Employee Retention Credit claims, the IRS announced an immediate moratorium through at least the end of 2023 on processing new claims. IRS Commissioner Danny Werfel ordered the moratorium to prevent future abuse and protect businesses from predatory tactics. The agency is working with the US Department of Justice to pursue fraud fueled by aggressive marketing.
Sen. Tim Scott wants TCJA tax cuts to be permanent. The Republican senator from South Carolina and presidential contender says he believes “the Laffer Curve still works,” telling CNBC’s Squawk Box that he’d cut taxes and government spending and impose welfare reform requirements if elected President. Revenue losses from such tax cuts would be mitigated by spending cuts, he said. He’d work to repeal the Inflation Reduction Act and make permanent the tax cuts enacted under the Tax Cuts and Jobs Act.
Sen. Pete Ricketts proposes federal tax cut on Social Security income. The Republican from Nebraska unveiled the Social Security Check Tax Cut Act yesterday. The bill would phase out federal taxes on Social Security benefits, starting with a 10 percent cut in 2024 and making all Social Security income tax-free by 2033.
The US Supreme Court could use a fishing dispute to limit the ability of Treasury and IRS to make rules. TPC’s Howard Gleckman sheds light on a case the court will hear this fall concerning a dispute over the federal regulation of commercial fishing boats. The court’s ruling could end up reversing Chevron U.S.A., Inc. v. NRDC, which directs courts to recognize the expertise of regulatory agencies when statutes are ambiguous. That flexibility with deference to regulatory agencies is, Howard explains, especially important for tax law. Absent sufficient Treasury and IRS regulatory authority, ambiguities would remain, and paying taxes could become even more complicated and confusing.
As for Moore v The United States and the tax landscape, tune in next week. The case challenges the constitutionality of a one-time tax imposed by the 2017 Tax Cuts and Jobs Act on about $3 trillion in undistributed corporate earnings that had accumulated overseas. The plaintiffs argue that the 16th Amendment power to “lay and collect taxes on incomes, from whatever source derived,” does not authorize Congress to tax unrealized sums. If the court accepts these arguments, it could upend key parts of the tax code and cost significant revenue. TPC and the Tax Law Center at NYU Law are hosting a virtual event on Sept. 21 with leading tax policy and legal experts to examine the case’s potential ramifications. Learn more and register here.
A majority of Massachusetts residents favor a $600 state Child and Family Tax Credit. New polling data show support for the Child and Family Tax credit included in the Massachusetts House tax package. Seventy-seven percent of those surveyed by Mass Inc. (in collaboration with the Massachusetts Budget and Policy Center and Economic Security Project) support a $600 credit. Legislation under consideration the state’s House and Senate would replace two smaller tax credits with a larger refundable Child and Family Tax Credit for all families caring for children under age 13, adults over age 65, or adults with disabilities.
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