A flurry of federal tax legislative and regulatory activity usually occurs each fall. During this time, policymakers are finalizing projects to implement their tax priorities before the end of the year. On the Hill, this usually means fine-tuning tax legislation and managing each chamber’s legislative calendar so tax legislation can be enacted before winter recess. At the U.S. Department of the Treasury and the IRS, it usually means finalizing guidance so it can be issued before the end of the year.
This fall, however, things are shaping up differently. Not many legislative days are left before the end of the year, and recent events provide little reason to believe that quick progress on moving tax legislation will be made in the near future. Immediate congressional priorities are funding the government and deciding what actions to take with respect to the Russia-Ukraine war and the Israel-Hamas war. Given the complexity of these issues and the time needed to come to agreement, little time remains to work on tax legislation this session.
Crowe observation
Tax legislative topics being discussed on the Hill include fixes for capitalization of research and experimental costs under Section 174; the limitation on business interest expenses under Section 163(j); bonus depreciation; the $10,000 limit on the deduction for state and local taxes; tax extenders; the Form 1099-K, “Payment Card and Third Party Network Transactions,” filing threshold; the child tax credit; low-income housing tax credits; tax technical corrections; and funding for Treasury and the IRS.
Government funding is another challenge in the federal tax policy outlook. Permanent funding for the government’s 2024 fiscal year that began Oct. 1 has not yet been enacted. The government currently is operating under funding authorized by a continuing resolution that is scheduled to expire on Nov. 17. The Senate has passed its appropriations bills, but the House has not. If fiscal year 2024 appropriations do not pass both chambers of Congress by Nov. 17, or if Congress does not pass another continuing resolution by that date, a government shutdown will occur, which could disrupt Treasury and IRS efforts to finish guidance intended to be published by year-end.
Looking ahead
Significant uncertainty exists regarding how the remainder of this fall’s legislative session will proceed. This uncertainty means major tax legislation is unlikely to be enacted in 2023. Enacting tax legislation will continue to be a challenge in 2024 given the fact that it is an election year.
Legislative uncertainty also means that a government shutdown is possible. While some limited Treasury and IRS functions that are deemed essential will continue if the government shuts down, it is likely that work on federal tax guidance will be paused.
