IRS Strategic Operating Plan, Global Corporate Tax, and Sustainable Aviation Fuel
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Tax Policy/News:
The IRS has released an update to its Strategic Operating Plan, which outlines a series of improvements and initiatives bolstered by the Inflation Reduction Act (IRA) funding.
This plan focuses on enhancing taxpayer services, enforcing tax compliance, and advancing technology modernization to better serve the nation.
Significant strides include a successful 2024 filing season with reduced call wait times, enhanced online tools, and expanded in-person taxpayer assistance.
The plan also details a substantial increase in audit rates for large corporations and wealthy individuals by 2026 while maintaining lower audit rates for small businesses and individuals earning under $400,000.
Furthermore, the IRS is implementing cutting-edge AI and analytics to improve audit selection processes.
However, challenges persist with ongoing funding needs; the IRS emphasizes the necessity of continued investment to sustain and expand these improvements into the future.
The administration's budget proposal for FY 2025 aims to secure IRA funding through 2034 to prevent service declines and support ongoing modernization and enforcement efforts.
During National Small Business Week, the IRS emphasized the importance of data security for small businesses, warning entrepreneurs against the rising tide of financial and identity theft scams.
The IRS highlighted common schemes like "phishing" and "spearphishing" that target small businesses, attempting to steal sensitive data such as W-2 information.
IRS Commissioner Danny Werfel stressed the serious financial consequences of falling victim to these cyberattacks and urged small business owners to implement robust data security measures and stay informed about the latest scams.
The IRS also encourages businesses to familiarize themselves with various scams listed in their "Dirty Dozen" report, which outlines prevalent fraudulent schemes and provides guidance on protecting against them.
Moreover, the IRS recommends adopting cybersecurity best practices, including updating software regularly, securing business files, using strong passwords, and training staff on data security.
Businesses are also advised to report any suspicious activities or identity theft instances to the IRS to help mitigate emerging threats and keep their operations secure.
April 30: Yellen defends global corporate minimum tax deal amid Republican criticism
Treasury Secretary Janet Yellen defended the 15% global minimum corporate tax, termed Pillar 2, during a lengthy U.S. House Ways and Means Committee hearing.
She argued that failure to adopt this measure, agreed by nearly 140 countries, would diminish U.S. leadership and expose American companies to additional taxes from other nations.
Yellen also highlighted ongoing negotiations to secure an exemption for the U.S. research and development tax credit to ensure it does not penalize American firms.
Despite criticism from Republicans, who cited potential revenue losses and opposed the tax's implementation, Yellen maintained that the agreement benefits both the U.S. and the global community, reinforcing U.S. competitiveness.
Additionally, she addressed the implications of different outcomes if the U.S. or other countries, like China, fail to implement the tax, and pledged to keep Congress updated on further negotiations, including those for the OECD Pillar 1 on taxing rights for large companies.
Technology:
May 6: Biden admin to fund $285M in development of digital twin semiconductors
The Biden administration announced that it will allocate approximately $285 million through the CHIPS for America Program to support the development and research of digital twins in the semiconductor industry.
This funding, aimed at boosting U.S. semiconductor production, will facilitate the creation of a new CHIPS Manufacturing USA Institute dedicated to digital twin technology.
Digital twins, which can be hosted in the cloud, enhance chip design by integrating AI, speeding up innovation, and reducing R&D costs.
Commerce Secretary Gina Raimondo emphasized that this initiative would position the U.S. as a leader in this emerging technology, and also focus on training American workers and researchers.
NIST Director Laurie E. Locascio highlighted that digital twin technology would transform the industry and underscored the role of the CHIPS program in fostering public-private partnerships to bolster U.S. competitiveness in semiconductor technology. A hybrid meeting for potential funding applicants is scheduled for next Thursday.
Energy and Environmental Policy/News:
May 6: Senators angle for energy, enviro amendments in FAA bill
This week, Congress is under pressure to pass a reauthorization of the Federal Aviation Administration (FAA) before the May 10 deadline, amidst negotiations that could include a slew of amendments, notably a significant nuclear energy package.
The "FAA Reauthorization Act of 2024" aims to address various aviation-related issues, including environmental reviews and energy-efficient aviation fuels.
However, the inclusion of numerous amendments, such as those focusing on sustainable aviation fuels, the "Tax Relief for American Families and Workers Act," and a comprehensive nuclear energy package, could complicate the bill's passage.
Senator Josh Hawley and others have threatened to delay the vote unless their amendments are considered, potentially impacting the bill's timely approval.
Simultaneously, the House seeks alternative legislative routes to advance the nuclear package, demonstrating the intricate balancing act of legislative priorities and procedural challenges in Congress.
May 3: Biden administration grants flexibility for automakers in EV tax credit rule
On Friday, the Biden administration issued final guidance under the 2022 Inflation Reduction Act that provides some flexibility for automakers in qualifying for electric vehicle (EV) tax credits.
This guidance includes a two-year exemption for sourcing low-value battery minerals from countries like China, Russia, Iran, and North Korea, and specifically extends this to graphite, commonly sourced from China.
While the decision has been criticized by Senator Joe Manchin, a principal architect of the law, it was praised by the Alliance for Automotive Innovation for promoting investment and EV adoption.
Additionally, energy security advocates called for a clear strategy to reduce dependency on adversarial nations.
The new rules also allow consumers to claim tax credits at the point of purchase rather than waiting to file tax returns. This is part of a broader initiative to increase EV usage to combat climate change and alter the composition of future car sales.
April 30: Biden administration details how producers of sustainable aviation fuel will get tax credits
The Biden administration recently outlined tax break guidelines to encourage the production of sustainable aviation fuel (SAF) to reduce emissions from commercial aviation, which is responsible for 2% of U.S. carbon emissions.
These guidelines will allow for tax credits ranging from $1.25 to $1.75 per gallon for fuels that reduce greenhouse gas emissions by at least 50% compared to conventional jet fuel.
While the ethanol industry welcomed these measures, environmental groups expressed concerns, particularly about the inclusion of corn-based ethanol, which must adhere to specific "climate-smart" agricultural practices to qualify for the credits.
Critics fear that too much emphasis on ethanol could detract from developing cleaner alternatives.
The initiative is part of a broader effort by President Biden to achieve a 20% reduction in aviation emissions by 2030 towards a goal of net-zero emissions by 2050. Despite these ambitious targets and growing investments in SAF, it currently represents less than 0.1% of the fuel used by major U.S. airlines.
For Fun:
May 2: A wild orangutan used a medicinal plant to treat a wound, scientists say
Scientists recently observed an orangutan named Rakus in Indonesia's Gunung Leuser National Park using a medicinal plant to treat a wound on his cheek, demonstrating a form of self-medication.
Rakus plucked and chewed leaves of a plant known in Southeast Asia for its pain-relieving and anti-inflammatory properties, then applied the juice to his injury and covered it with the chewed leaves, acting as a makeshift bandage.
This behavior, reported in a new study in Scientific Reports, is particularly notable as it's the first time such direct application of a potent medicinal plant to a wound has been documented in wild animals.
The wound reportedly healed within a month, supporting theories of self-medication among primates, a practice observed in other species such as chimpanzees and gorillas using plants for health purposes.