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Republicans unveil tax agenda in trio of bills [1]

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Date: 2023-07

House Republicans advanced a trio of tax bills that outline their top tax priorities this year, including restoring important business tax provisions.

The legislation was approved by party-line vote in the Ways and Means Committee on June 13. Republicans have not announced a House vote. Democrats criticized the bills and they are not expected to be enacted in their current form, but they could be a starting point for negotiations with Democrats over a bipartisan tax package later in the year. They also give Republicans a messaging opportunity in front of the 2024 elections.

The provisions are divided into three separate bills:

The Build in America Act (H.R. 3938), which would:

Retroactively restore expensing of research and experimentation (R&E) costs under Section 174 Provide retroactive relief from the limit on interest deductions under Section 163(j) Extend 100% bonus depreciation through the end of 2025 Repeal the recently reinstated Superfund excise tax on crude oil Provide relief from recently finalized foreign tax credit (FTC) regulations Create a new excise tax for related to acquisitions of agricultural interests by foreign persons from certain countries of concern Repeal many of the changes to the electric vehicle credits made in the Inflation Reduction Act (IRA) and the technology neutral energy incentives scheduled to take effect in 2025



The Small Business Jobs Act (H.R. 3937), which would:

Increase the reporting thresholds for Forms 1099-NEC and 1099-MISC from $600 to $5,000 Restore the de minimis threshold for Form 1099-K reporting to 200 transactions and $20,000 Enhance the exclusion for qualified small business (QSB) gain, including by extending eligibility to S corporations Increase the Section 179 expensing thresholds Expand opportunity zone tax benefits for certain rural areas and require new reporting



The Tax Cuts and Working Families Act (H.R. 3936) which would rename the standard deduction the “guaranteed deduction” and increase it in 2024 and 2025

The tax cuts across the three bills would cost an estimated $236.3 billion, while the repeal of the energy credits would raise $216 billion. The tax provisions run the gamut from bipartisan appeal to pure partisan messaging. Proposals such as raising the de minimis threshold for Form 1099-K reporting enjoy widespread support in both parties and have a good chance of enactment this year. Other provisions, such as extending bonus depreciation, restoring R&E expensing under Section 174, and providing relief from the Section 163(j) limit on interest deductions, could gain traction as part of negotiations with Democrats over Democratic priorities. There also provisions Democrats are likely to unequivocally reject, such as a repeal of energy incentives.



The Republican bills omit several priorities that have been under consideration, such as relief from the $10,000 cap on the deduction for state and local taxes (SALT), the extension of the individual provisions from the Tax Cuts and Jobs Act (TCJA), relief for auto dealers on the last-in, first-out (LIFO) method of accounting during supply chain shortage, and technical corrections for retirement tax provisions in the SECURE Act 2.0.



Now that the debt limit has been resolved, there may be opportunities to move bipartisan tax legislation. Democrats and Republicans have repeatedly discussed trading business tax extenders for child tax credit relief, but substantive negotiations have been scarce and a deal has remained elusive. The best hope for a resolution may be in a year-end package.

The following discusses key proposals in more detail and their legislative outlook.

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[1] Url: https://www.grantthornton.com/insights/alerts/tax/2023/legislative-updates/republicans-unveil-tax-agenda-in-trio-of-bills

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