There is a lot going on regarding taxes these days.
For starters, Democrats are still trying to pass a smaller version of Build Back Better (BBB), the legislation that stalled in Congress last year. Senate Majority Leader Chuck Schumer and Senator Joe Manchin from West Virginia are leading the discussions because Sen. Manchin’s buy-in will be essential to passage of any tax legislation. Recall that Sen. Manchin was able to single-handedly hold up passage of BBB because Democrats have only 50 seats in the Senate and every Democratic vote is necessary if they are to pass a Reconciliation Bill.
The current negotiations include significant tax increases on corporations and wealthy Americans – defined as those earning more than $400,000 per year, but details have not yet been released. The bill also would include climate initiatives and lower prices for prescription drugs, and Sen. Manchin is requiring that half of any new tax revenue be used for deficit reduction. To further complicate things, House Democrats from NJ, NY, and CA have pledged to hold up any legislation that does not include an expansion of the $10,000 SALT deduction limitation. As stated by Rep. Josh Gottheimer from NJ, “No SALT, no dice.” As you can see, Democrats have a lot of work ahead of them if they hope to pass any legislation before the midterm elections in November.
Separately, the Senate Finance Committee voted on June 22, 2022 to add a provision to the EARN Act (which will be included in the SECURE Act 2.0) that would limit the tax deduction for syndicated conservation easement contributions. It also approved unanimously its version of the SECURE Act 2.0, which moves the bipartisan retirement bill closer to enactment. Generally, the bill would “increase participation in retirement plans, strengthen and encourage private retirement savings, and make it easier for employers to offer retirement plans.”
The IRS announced that it is forming a new interdepartmental task force to address abusive tax transactions. Despite its nondescript name, the Joint Strategic Emerging Issues Team, the task force aims to take a more aggressive and preventative approach to tax enforcement. It will harness the IRS’s expertise on specific issues and transactions in a way that “bring[s] together all of [its] skill sets, all [of its] specialties, and all [of its] tools into one place to consider potentially abusive transactions.” We can expect the task force to start with the abusive transactions listed in the Dirty Dozen (e.g., syndicated conservation easements, abusive micro-captive insurance arrangements, Maltese Pension Arrangements, and Monetized Installment Transactions) and then expand outward from there.
Last, for fans of the reality show Chrisley Knows Best, your beloved stars Todd and Julie Chrisley are likely going to jail. They were convicted earlier this month for various crimes including tax evasion, and their sentencing is scheduled for October 6, 2022. They face up to 30 years in prison. Apparently, they failed to file tax returns and to pay taxes for four years starting in 2013, despite allegedly earning millions from their TV show and other ventures.