The government shutdown could soon hit taxpayers’ bank accounts. Millions of Americans may not receive their tax refunds as soon as they expected. The Treasury Department and the IRS are largely unstaffed, hobbling their ability to complete core functions. A senior Trump administration official tells The Washington Post that if the shutdown drags on into February tax refunds would likely be delayed. “It would be a huge political and economic hit for people who are expecting their $2,500 or $3,000 refund to not be able to get that money,” said TPC’s Mark Mazur. Prior to the shutdown, filing season was set to open in late January or early February.
House Ways & Means Chairman seeks answers on shutdown’s impact on tax filing season. Rep. Richard Neal on Friday asked Treasury Secretary Steven Mnuchin and IRS Commissioner Charles Rettig to fully define Treasury’s “current capabilities and anticipated challenges.” By this time last year, the IRS had announced it would start tax filing season on January 29.
House Democrats plan to approve a separate Treasury/IRS spending bill this week. House Democrats think they have a fix to all this. With talks still at an impasse over President Trump’s demand for a southern border wall, they say they will pass separate spending bill for all the government agencies now shuttered. The first one would fund the Treasury and IRS. Its fate in the Senate is unclear.
And when filing season does start… Senior Senate Finance Committee Democrat Ron Wyden wants the IRS to waive underpayment penalties for the upcoming tax season. As many as 30 million taxpayers may have under-withheld taxes in 2018 due to the many changes in the TCJA.
Trump’s tariffs are hurting manufacturers. The New York Times reports on the plight of businesses in western Michigan. One family-owned company expects profits to be halved in 2019 because of Trump’s tariffs on imports of steel and aluminum, and may move production to Mexico. The company’s president voted for Trump, but says now, “I just feel so betrayed.” Another business owner calls the tariff policy, “A tax that comes right off the bottom line.”
Projecting fiscal policy for the 116th Congress. TPC’s Mark Mazur and Bill Gale consider how divided government could shape federal tax and budget policy this year. They conclude, "There is a good chance that tax and fiscal issues will simply get overshadowed by other issues and the larger context of political divisiveness."
Grassley picks his new top tax aide. Mark Warren, who has been the top tax staffer for Sen. John Thune, will be the new chief majority tax counsel for new Senate Finance Committee chair Chuck Grassley.
Google is not hurting when it comes to its tax bill. Bloomberg Tax reports that the company cut its worldwide tax bill by shifting $22.6 billion in profits to Bermuda in 2017. It did it through inter-company transactions with a shell company, Google Netherland Holdings that has no employees. The move is known as a “Double Irish with a Dutch Sandwich.”
Virginia’s GOP lawmakers counter Governor Northam’s plan for TCJA windfall. The Democratic governor wants to use the state’s $1.2 billion windfall from the Tax Cuts and Jobs Act to cut taxes for households earning less than $54,000 annually, to increase the state’s reserve fund, and to boost spending for schools and other programs. But House Republicans call that a tax hike on Virginia households earning between $125,000 and $150,000 a year. They’d allow residents to itemize on their state tax returns even if they take the federal standard deduction. They’d also increase the state standard deduction from $3,000 to $4,000 for individuals and from $6,000 to $8,000 for married couples. The GOP holds a bare majority in the state legislature.
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