IRS Direct File Pilot Program, the Child Tax Credit, and Semiconductor R&D Facilities
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Tax Policy/News:
During the 2024 tax season, the IRS saw significant improvements in service levels due to funding from the Inflation Reduction Act, with service levels not witnessed in over a decade.
Compared to the previous year, the IRS answered over 1 million more taxpayer phone calls, assisted over 170,000 more people in-person, and witnessed a surge of 75 million more visits to IRS.gov, partly fueled by the expanded Where’s My Refund? tool.
The IRS commissioner, Danny Werfel, emphasized the positive impact of increased funding and resources on taxpayer service, highlighting a notable increase in the level of phone service and a significant decrease in wait times.
Additionally, the IRS extended hours at Taxpayer Assistance Centers, offered more callback options, and provided additional assistance at volunteer sites, resulting in more taxpayers filing for free and higher usage of IRS.gov services.
Despite the approaching April deadline, the IRS continues to offer last-minute assistance options for taxpayers.
April 10: Facing Opposition: Senate Members Poised to Block Child Tax Credit Legislation
Senate Republicans are increasingly opposing a bipartisan bill aimed at expanding the child tax credit and providing business breaks, presenting a series of demands that could disrupt the coalition supporting the legislation.
The $78 billion bill, which passed the Republican-led House with strong bipartisan support, has stalled in the Senate, where key Republicans have indicated they will block it unless significant revisions are made.
The bill, negotiated by House Ways and Means Committee Chair Jason Smith and Senate Finance Committee Chair Ron Wyden, faces challenges in the Senate, where Democrats hold 51 seats and need 60 votes to overcome a filibuster.
While Democrats are eager to pass the bill, which would benefit approximately 16 million children in low-income households, some Republicans have openly expressed their intention to oppose it.
Senate Minority Leader Mitch McConnell and Finance Committee ranking Republican Mike Crapo are among those deferring to Crapo on the path forward, with Crapo raising concerns about the bill's provisions and calling for spending cuts to fund the child tax credit expansion.
The demands from Senate Republicans pose a significant obstacle to the bill's passage, with potential revisions risking fractures within the bipartisan coalition that supported it in the House.
Despite ongoing negotiations, there is uncertainty about the bill's fate, with Senate Majority Leader Chuck Schumer indicating that a floor vote will depend on whether there are enough votes to move it forward.
April 10: IRS Lacks Sufficient Cost Estimates for Direct File, GAO Says
The Government Accountability Office (GAO) raised concerns about the IRS's lack of comprehensive cost estimates for its direct-file pilot program, which allows eligible taxpayers in 12 states to file their federal returns directly through the agency.
The IRS's initial estimates to Congress lacked crucial data on start-up costs, training expenses, software updates, and integration of state returns into the new system.
Without accurate estimates, it's challenging to evaluate the program's viability and potential benefits, such as reducing paper returns and errors.
The GAO recommended that the IRS apply best practices in estimating costs and benefits and use data from the pilot to inform future decisions.
While IRS Commissioner Daniel Werfel agreed with the recommendations, doubts linger about the agency's commitment to enhancing its estimates, especially considering the short timeframe before the program's fate is decided.
Economic News/Policy:
April 10: To support manufacturers, US tax policy must evolve: NAM CEO
The US manufacturing sector is showing signs of growth as the government allocates $39 billion in Chips Act grants to the semiconductor industry, with Taiwan Semiconductor Manufacturing Co. (TSM) receiving $11.6 billion to build chip factories in Arizona.
National Association of Manufacturers (NAM) CEO Jay Timmons views this investment positively, highlighting the importance of semiconductor chips in modern manufacturing.
However, he raises concerns about future challenges, including regulatory burdens, tax policies, and the expiration of innovation and investment incentives.
Timmons emphasizes the need for government action to support manufacturing growth and competitiveness, particularly regarding tax policy alignment with innovation goals.
While he acknowledges President Biden's commitment to manufacturing, he calls for a more comprehensive approach to address industry concerns.
Regarding pending deals like Nippon Steel's attempt to acquire US Steel, Timmons emphasizes the importance of policies that strengthen the domestic manufacturing workforce.
Technology:
April 1: California Democrats urge Biden not to scrap chips R&D funding
Governor Gavin Newsom and Senator Alex Padilla, both Democrats from California, have called on the Biden administration to reverse its decision to cancel a subsidy program for semiconductor research and development facilities.
The decision by the U.S. Commerce Department to scrap plans for funding from the Chips and Science Act is attributed to overwhelming demand for funding awards to support chip production.
Amidst concerns about reliance on foreign competitors, Newsom and Padilla emphasize the importance of robust support for commercial R&D in maintaining global leadership in the semiconductor industry.
The Commerce Department, while facing numerous demands for chip funding, is urged to reconsider its decision and prioritize investment in commercial R&D through the CHIPS Act.
Despite recent allocations for chip production facilities, concerns remain about the adequacy of funding for research and development, with Newsom and Padilla highlighting the need for direct commercial investments.
Energy and Environmental Policy/News:
April 11: US bets on climate friendly farming; experts doubt it is climate friendly enough
President Biden's administration is incentivizing farmers to adopt soil carbon storage practices as part of its climate change mitigation efforts, aiming to reduce agriculture's greenhouse gas emissions by 10% and pursue net-zero emissions by 2050.
However, doubts persist among soil science experts regarding the effectiveness of these techniques in permanently sequestering atmospheric carbon.
While some experts acknowledge the environmental benefits of practices like planting cover crops and reducing tilling, others question tying climate policy and public funding to these methods.
The USDA has allocated significant financial assistance for such practices since 2014, but experts suggest more aggressive strategies may be necessary to effectively combat climate change.
Adoption rates for these practices vary, and their climate benefits depend on factors like soil type and management practices.
Additionally, the ethanol industry is eyeing these practices to qualify for tax credits for sustainable aviation fuel, with the Treasury Department expected to finalize details soon.
The Treasury Department and Internal Revenue Service have released guidance outlining procedures for taxpayers to request emissions values from the Department of Energy (DOE) to petition for a provisional emissions rate (PER).
This guidance supplements proposed regulations issued on December 26, 2023, concerning credits for clean hydrogen production. It requires completion of a front-end engineering and design (FEED) study or similar project maturity indicator determined by the DOE before requesting an emissions value.
Applicants must submit specific sections of the FEED study and a completed Emissions Value Request Form to the DOE for evaluation. Comments are solicited on the DOE's process, including additional procedures and information collection. Once approved, the emissions value request process will be detailed in the Federal Register.
The guidance falls under the Paperwork Reduction Act, with the DOE providing administrative services for the process, likely affecting businesses, individuals, and tax-exempt organizations. Comments on the proposed information collection are welcomed until May 13, 2024.
The guidance also addresses regulatory flexibility, unfunded mandates, and federalism implications, asserting no substantial direct compliance costs on State and local governments or preemption of State law.
For Fun:
April 15: The Most Powerful Space Explosion Ever Seen Reveals a Surprise Twist
In October 2022, astronomers detected an unprecedented gamma-ray burst, nicknamed GRB 221009A or the BOAT (Brightest of All Time), originating 2.4 billion light-years away, marking the birth of a black hole from the death of a massive star.
Despite its extraordinary gamma-ray energy, subsequent analysis revealed that the explosion was surprisingly ordinary in terms of its supernova characteristics.
This discovery challenges previous assumptions about the correlation between gamma-ray bursts (GRBs) and the production of heavy elements in the Universe.
While GRBs were thought to contribute to the creation of heavy elements, such as those observed after neutron star collisions, the absence of these elements in the aftermath of the BOAT suggests that extremely energetic GRBs may not be significant producers of heavy elements.
Further research is needed to identify alternative sources of heavy element production in the cosmos.