Rettig faces questions over audits of Trump critics

Jul 25, 2022

AND WE'RE BACK: IRS Commissioner Charles Rettig is slated to meet this week with Senate Finance Committee members about that New York Times report that two prominent critics of former President Donald Trump were subjected to intensive tax audits. Hanging over that convo will be the question of whether Rettig should get another term as commissioner. The news broke just as the administration and lawmakers were discussing whether to renominate Rettig, whose terms ends in November. Democrats have a lot of questions about the report and Rettig did not assuage concerns of many Ways and Means Democrats when he met with them earlier this month.

MORE ABOUT THAT IN A BIT but first thank you for coming to the it's-almost-August-recess installment of Weekly Tax. I'm filling in for Bernie, who is away. Happy Shark Week to all those who celebrate. Can you believe Shark Week has been going on since 1988? It's older than the Simpsons. Anyway, Throw some chum our way. We're at bbecker@politico.com , bfaler@politico.com and teckert@politico.com . You can also reach us on Twitter at @brian_faler , @tobyeckert , @berniebecker3 , @POLITICOPro and @Morning_Tax .

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SO, ABOUT RETTIG: Sen. Sherrod Brown (D-Ohio) had been perfectly happy with Rettig until the targeting story came out. Now, he says he doesn't know what to think. "I would have said 'yes' a month ago [to renominating him]," he said. "With enforcement and the child tax credit and other things, he's been very good." But "I don't know yet what to think about what happened with those super audits," he said. "Until we know that, I don't really have a position." Others, particularly in the House, have made up their minds, with Ways and Means oversight subcommittee Chair Bill Pascrell repeatedly calling for Rettig's ouster.

Renominating him would be unusual in some ways. He was a Trump appointee, and Democrats generally aren't keen on those. And should he win another term, Rettig could quickly vault up the list of longest-ever serving tax commissioners. There's only a handful who have served more than five years (Rettig is now in his fourth). The record, which a renominated Rettig could approach, is 10 years, four months, held by Guy Helvering, who was Franklin Roosevelt's guy.

As for the Finance meeting this week, don't be surprised if Rettig tells that panel what he told Ways and Means: That there was nothing political about the audits of Comey and McCabe and that the odds of both of them being selected for a special research audit program are not as long as it might seem.

SEE YOU IN DECEMBER? The Senate aims to wrap up work this week on a new investment tax credit for semiconductor companies, that's part of what's been a rapidly expanding spending bill in the Senate. But what may be most notable for the tax community is what's getting left out of the package: Something dealing with those research and development provisions.

The business community had been pushing hard for lawmakers to include provisions that would overturn new rules for this year that make it a lot harder for tech, pharmaceutical and other businesses that spend big on research to deduct those costs of their taxes. Those now look to be left behind amid opposition from progressives who didn't want to be seen helping businesses with their tax issues when their slate of family-friendly tax breaks were getting left behind (though they didn't have the same issue with that semiconductor credit). It's hardly the end of the road though for those concerned about the R&D provisions, which now look to be added to the growing list of tax items people will want Congress to deal with in a post-election lame duck session of Congress. So, see you in December.

A NEW FOCUS ON INFLATION INDEXING: The tax code can be pretty random when it comes to which provisions are indexed for inflation. Most are pegged to rising prices, but many are not, and some that aren't haven't been touched in decades. The issue has never really gotten much sustained attention from lawmakers though that could be changing amid the current bout with rising prices. Sen. Charles Grassley (R-Iowa), a senior tax writer, has been out in front of this issue, and he has a new proposal that would index some of the most popular credits, including the child credit, the dependent care break and the American Opportunity Tax Credit. He previously proposed indexing the Net Investment Income Tax credit as well. Grassley calls it "commonsense policies that will help Americans weather this soaring inflation."

Around the World

OPPORTUNITY ZONES FOR BRITAIN? The leading candidate to replace Boris Johnson as Britain's prime minster is proposing something that sounds a bit like our Opportunity Zones, the controversial program Republicans launched as part of their 2017 tax cuts as a way of stimulating economic development in designated areas. Liz Truss is calling for creating "low-tax, light-regulation investment zones across the U.K. to spur economic growth," Bloomberg News reports . "Tax-cutting and more government borrowing have been key features of her campaign."

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Around the Nation

HERE COME MORE REBATE CHECKS: Massachusetts is joining the seemingly ever-growing list of states (a dozen and counting) that are distributing one-time rebate checks this year. That has come with some controversy in the Bay State because the state is not sending them to the lowest earners, because they were the focus of a previous round of payments approved last year. Says MassLive : "Single filers earning $38,000 to $100,000 can expect to receive the stimulus checks by the end of September. Married taxpayers filing joint returns with a maximum income of $150,000 will see $500 rebates."

Quick Links

— Larry Summers: Raise taxes on fight inflation

— House approves IRS budget as part of massive annual spending bill

— The Washington Examiner on changes at the Tax Foundation

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