Tax vote this week? Uncertain. Filing season open? Definitely

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Jan 29, 2024 View in browser   By Bernie Becker and Benjamin Guggenheim Presented by WELCOME BACK: The House returns to Washington today, after a week away — and, no, it’s not clear whether the chamber will vote on the bipartisan tax bill in the coming days. The official House schedule still has the measure that would expand the Child Tax Credit and offer more generous tax incentives to businesses listed as something that might be considered this week. In other words, Speaker Mike Johnson continues to proceed with extreme caution when it comes to this tax bill, which was negotiated by Senate Finance Chair Ron Wyden (D-Ore.) and House Ways and Means Chair Jason Smith (R-Mo.). He has reasons for that, mind you — the tax bill might have sailed through Smith’s committee by a vote of 40-3, overcoming concerns from Democrats that the child credit expansion wasn’t charitable enough. But since then, Johnson has gotten increased static from lawmakers on opposite sides of his conference — both from the generally more moderate Republicans from blue states, who want the tax bill to offer relief from the $10,000 cap on state and local deductions, and the conservative flank that recently started raising objections about undocumented immigrants with American-born children being able to claim the CTC expansion. Supporters of the tax bill on the right keep noting that this proposal doesn’t change any eligibility requirements for the child credit, and that the GOP’s 2017 tax law even tightened the conditions needed to claim the CTC by requiring that a child has a Social Security number. But multiple House conservatives have now pointed to this immigration angle as a reason not to back the bill. MORE ON THAT IN A BIT, but first thanks for joining us at what is a very busy time for tax policy and administration. Hopefully, you all had some good rest and recuperation over the weekend. No mistake on the laker here: Today marks an even century since a Cleveland man named Carl Rutherford Taylor received a patent for his machine for rolling ice cream cones. Send us some sweet scoops. Email: bbecker@politico.com, bfaler@politico.com, bguggenheim@politico.com and teckert@politico.com. You can also reach us on Twitter at @berniebecker3, @tobyeckert, @brian_faler, @ben_guggenheim, @POLITICOPro and @Morning_Tax.   A message from Intuit, serving more than 100 million customers worldwide, and its flagship TurboTax, Credit Karma, QuickBooks, and Mailchimp products: Intuit believes taxes should be more transparent, simple, and fair. We think this is important, so taxpayers can get their best tax outcome and make the most of their finances. We are committed to providing individuals with the tools to quickly and efficiently navigate the tax return process, and want to make taxes better for all Americans regardless of how they file. Learn more.   TIME OF THE ESSENCE? As you might recall, top tax writers had hoped to finish off the tax bill by today, which is the start of the new tax filing season. That was always quite ambitious, but lawmakers also tamped down some of the urgency by updating the tax bill to give the IRS the authority to amend returns to give taxpayers who already filed any extra child credit benefits they might deserve. Still, it’s easy to see the timing on this tax bill slipping, even if Johnson does end up putting it up for a vote this week. The Senate starts its two-week recess on Feb. 12, and GOP tax writers there have been pushing for their own mark-up for the Wyden-Smith plan. The tax bill’s major champions, like Wyden, believe that a big bipartisan vote in a historically gridlocked House could spur new momentum in the Senate. And what’s interesting is there seems to be little doubt that the package could clear the House without too much trouble, even under a procedure that requires a two-thirds vote. But one of the big questions, as it’s been since these tax talks intensified three weeks ago, is whether Johnson — a speaker still gaining his sea legs — sees this bill as worth the effort, particularly with the louder grumbling within his conference. ABOUT THAT FILING SEASON: IRS chief Danny Werfel is advising taxpayers not to wait until Congress might or might not act on that bill before filing their taxes — in no small part because of that increased authority that we noted above. “Taxpayers should file when they’re ready to file,” Werfel said in a Friday call with reporters. “If there is a change to the law that means, for example, they would get an additional or an increased credit, we will handle that at the IRS.” Now, how much that new authority affects the timeline on the Hill — like if it makes Senate supporters more open to a markup, if the bill does indeed pass the House — remains to be seen. Another tax bill issue: Heard about “Biden bucks?” That’s another growing concern among some on the right about this tax bill — that it would allow the Biden administration to send out new benefits to voters right before the president is up for re-election in November, as Joseph Zeballos-Roig of Semafor  first reported last week. Experts from across the political spectrum have sought to refute those rumors, which might have started swirling after Erin Collins, the national taxpayer advocate, estimated that it might take the IRS up to six months to update its software and send out CTC refunds. Not so, according to Werfel: “We have communicated based on the latest versions of the bill that have been published that we can and will implement these tax provisions within weeks after they’re enacted,” he said. WE GOT THIS: Werfel made all those comments as he was also predicting that the extra funding that Democrats gave to the agency back in 2022 will make life easier for taxpayers. That new money, Werfel says, is going toward better customer service, expanded hours at taxpayer assistance centers and the digitization of IRS notices and communications. “The difference a well-funded IRS makes for taxpayers is like night and day,” the commissioner said on the call. Taxpayers can now file 20 tax forms completely online, including common business returns, the Treasury Department said in a release on the 2024 filing season. The IRS’s “Where’s My Refund” tool has gotten new updates as well, and the agency is now doing a much better job answering the telephone — though the national taxpayer advocate, an in-house watchdog, has said that the 85 percent success rate that the Biden administration and the IRS has been bragging about is overstated. ABOUT THAT ELECTION…: President Joe Biden is poised to make those 2017 GOP tax cuts more of a campaign issue as he gears up for a likely rematch with Donald Trump, our Adam Cancryn reports this morning. The Tax Cuts and Jobs Act has never been that popular, and the president’s campaign appears ready to try to contrast the TCJA with what’s become known as “Bidenomics.” That’s a sign of multiple things — that many voters still have their doubts about the current state of the economy, despite all the recent good news about it, and that Biden and his team believe that highlighting the corporate tax cuts in the 2017 tax law might help them tamp down the populist appeal of Trump. It might further help that Trump himself reportedly keeps bringing up that he wants to further cut the corporate rate, even as his advisers want him to emphasize the possibility of extending TCJA’s individual tax cuts, which expire at the end of next year. But even people within the Biden camp acknowledge that it might be difficult to make the campaign a choice on the economy rather than a referendum on the incumbent — in no small part because Trump can be “a little more slippery” on concrete policy matters, as one progressive analyst put it.   JOIN 1/31 FOR A TALK ON THE RACE TO SOLVE ALZHEIMER’S: Breakthrough drugs and treatments are giving new hope for slowing neurodegenerative diseases like Alzheimer’s disease and ALS. But if that progress slows, the societal and economic cost to the U.S. could be high. Join POLITICO, alongside lawmakers, official and experts, on Jan. 31 to discuss a path forward for better collaboration among health systems, industry and government. REGISTER HERE.     Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You’ll also receive daily policy news and other intelligence you need to act on the day’s biggest stories. Around the World Reuters: “Australia PM vows to introduce bill to reshape tax cuts within weeks.” Some more from Reuters: “Argentina pension, tax reforms scrapped from legislation to ease passage.” Bloomberg: “Kenya Courts Quash Housing Tax, Haiti Deployment in Blow to Ruto.”   A message from Intuit, serving more than 100 million customers worldwide, and its flagship TurboTax, Credit Karma, QuickBooks, and Mailchimp products:   Around the Nation Associated Press: “Kansas governor vetoes tax cuts she says would favor ‘super wealthy.’” New Orleans Time-Picayune: “Jeff Landry transition committee calls for phasing out corporate and personal income taxes.” Nebraska Examiner: “Caregivers say tax credit would help them afford care of loved ones and reduce state costs.”   DON’T MISS POLITICO’S GOVERNORS SUMMIT: Join POLITICO on Feb. 22 to dive into how Governors are wielding immense power. While Washington remains gridlocked, governors are at the center of landmark decisions in AI and tech, economic development, infrastructure, housing, reproductive health and energy. How are they setting the stage for the future of American politics, policies and priorities? How are they confronting major challenges? Explore these questions and more at the 2024 Governors Summit. REGISTER HERE.     Also Worth Your Time Wall Street Journal: “Investigators Sought Jeff Bezos’ Tax-Return Leaker; They Stumbled Upon Donald Trump’s.” Fortune: “Jamie Dimon says lower-income people need more help and he’d ‘pay for it by taxing the wealthy a little bit more.’” The Verge: “Spotify accuses Apple of ‘extortion’ with new App Store tax.” Did you know? Cleveland was chosen as the site for the Rock and Roll Hall of Fame over Cincinnati, Detroit, Memphis, New York and Philadelphia.   A message from Intuit, serving more than 100 million customers worldwide, and its flagship TurboTax, Credit Karma, QuickBooks, and Mailchimp products: With more than 6,000 pages of federal and state tax law, how can any single person figure it all out? Intuit TurboTax’s services are engineered to make the process transparent so taxpayers file with confidence. Greater transparency also allows more families to understand—and take advantage of—the valuable credits and deductions they’ve earned. Douglas, a TurboTax Live Business Lead from West Virginia, says, “Something that should be as simple as determining if a child is a dependent can end up being a complex issue. Challenges like this can then have a domino effect and compound other issues around deductibles and credits.” At Intuit, working to make the tax filing process more transparent helps ensure that millions of taxpayers do not leave money on the table because the forms to claim critical tax credits are too complex or time consuming to complete. Learn more.     Follow us on Twitter Toby Eckert @tobyeckert Bernie Becker @berniebecker3 Brian Faler @brian_faler Benjamin Guggenheim @ben_guggenheim   Follow us

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