Tax Policy/News:

May 31: IRS developments to keep an eye on

Exploring a new free filing system: One of the provisions of the Inflation Reduction Act required the IRS to conduct a study looking into the viability of providing a free tax filing solution directly to taxpayers, and the agency has begun reaching out to advocacy groups on the system that it aims to begin testing early next year.

IRS guidance defines terms for clean vehicle credit: The clean vehicle credit in the Inflation Reduction Act of 2022 will provide a much-needed boost for drivers of qualifying electric vehicles.

New rules for R&D expensing: Organizations are now required to amortize research and development expenses over a five-year period instead of immediately deducting them, in line with the Tax Cuts and Jobs Act of 2017. The provisions in the legislation came into effect at the beginning of 2022 but were deferred by lawmakers until the start of this year.

While an extension to the tax break was mooted in Congress, Republicans and Democrats could not find common ground on the issue. With the provisions now in effect, the IRS has issued new guidelines on the change.

Refunds for overpayment on unemployment comp: Millions of individuals who paid more tax than they should have on unemployment compensation in 2020 received an unexpected refund from the IRS in January this year.

An EITC reminder: 31 million taxpayers took advantage of the Earned Income Tax Credit last year to the tune of $64 billion, but numerous others failed to do so because they were unaware they could.  

May 31: Debt ceiling deal throws a wrench into IRS overhaul

The bipartisan deal to raise the debt ceiling would claw back billions of dollars meant to enable a large-scale refurbishment of the IRS, which has withered over the last decade due to budget cuts, outdated technology, and loss of staff.

No less than a quarter of the $80 billion in new funding awarded to the IRS in the Democrats' Inflation Reduction Act would be taken back from the agency in a deal struck by the White House and House Republicans over the weekend.

The debt ceiling deal puts extra stress on the regular appropriations bills for the IRS and rattles the foundation of its long-term restructuring.

IRS planners pledged in the April operating plan to hire more than 7,200 auditors and 3,800 operations specialists in 2024 at a cost of more than $5.8 billion.

The Congressional Budget Office estimated that the original $80 billion funding boost for the IRS would increase government revenues by around $200 billion over 10 years.

The debt ceiling deal's funding reduction for the IRS in the short term is not as serious a concern for the agency's advocates as the political target that the deal places upon the IRA funding in the future.

The IRS sent out $800 billion in stimulus checks through successive rounds of legislation from both the Trump and Biden administrations, effectively becoming a benefits-administering agency akin to Social Security or Medicare.

Economic News/Policy:

June 6: World Bank Brightens View of Global Growth This Year, Downgrades 2024

The World Bank sees better global economic growth than previously estimated in 2023, thanks to resilient U.S. consumer spending and China’s faster-than-expected reopening in the early part of the year.

The bank still expects slowing growth in the second half of this year and a muted expansion into next year, according to its forecast released Tuesday. It warned that stubbornly high inflation and interest-rate increases are weighing on economic activity around the world, particularly in developing countries.

The bank now projects the world’s economy will grow 2.1% this year, up from the 1.7% pace it forecast in January. The new estimate still marks a slowdown from last year’s 3.1% expansion.

June 1: House OKs debt ceiling bill to avoid default, sends Biden-McCarthy deal to Senate

Veering away from a default crisis, the House approved a debt ceiling and budget cuts package late Wednesday, as President Joe Biden and Speaker Kevin McCarthy assembled a bipartisan coalition of centrist Democrats and Republicans against fierce conservative blowback and progressive dissent.

Tensions ran high throughout the day as hard-right Republicans refused the deal, while Democrats said "Extremist" GOP views were risking a debt default as soon as next week.

The package makes some inroads in curbing the nation's debt as Republicans demanded, without rolling back Trump-era tax breaks as Biden wanted.

McCarthy worked to sell skeptical fellow Republicans, even fending off challenges to his leadership, in the rush to avert a potentially disastrous U.S. default.

House Democratic leader Hakeem Jeffries said it was up to McCarthy to turn out Republican votes in the 435-member House, where 218 votes are needed for approval.

"Once again, House Democrats to the rescue to avoid a dangerous default," said Jeffries, D-N.Y. "What does that say about this extreme MAGA Republican majority?" he said about the party aligned with Trump's "Make America Great Again" political movement.

The nonpartisan Congressional Budget Office said the spending restrictions in the package would reduce deficits by $1.5 trillion over the decade, a top goal for the Republicans trying to curb the debt load. In a surprise that complicated Republicans' support, the CBO said their drive to impose work requirements on older Americans receiving food stamps would end up boosting spending by $2.1 billion over the time period.

For Fun: 

June 5: Fungi may offer ‘jaw-dropping’ solution to climate change

As planet-warming carbon emissions rise, a major solution to climate change is growing beneath our feet. A study published Monday in Current Biology found that fungi gobble up more than a third of the world’s annual fossil fuel emissions.

As such, fungi “represent a blind spot in carbon modeling, conservation, and restoration,” coauthor Katie Field, a professor of biology at the University of Sheffield, said in a statement. Field's team found that fungi pulled down 36 percent of global fossil fuel emissions - enough to cancel out the yearly carbon pollution from China, the world's largest carbon emitter.

Fungi are the broad biological kingdom that produces mushrooms — the fruiting bodies of far larger organisms that sprawl beneath the surface.

While superficially plant-like because they move so slowly, fungi are far more similar to animals, with whom they share the need to find food and use chemicals to break it down - rather than fabricating nutrients from sunlight and carbon dioxide.

For nearly half a billion years, these “mycorrhizal fungi” — named for the combined Latin words for “fungus” and “root” — have provided plants with mineral nutrients like phosphorous in exchange for plant-manufactured sugars. Since those plants are making that sugar out of carbon dioxide from the air, that means that the fungi are in effect a growing subterranean "Carbon bank."