When is a shutdown not a shutdown? The IRS announced that tax filing season will begin on Jan. 28. Reversing a long-standing legal position of past administrations, the Office of Management & Budget said yesterday that the IRS will process tax returns and issue refunds even if Congress has not approved funding for the agency. It would require IRS employees to return to work without pay, at least initially. It is not clear what it would mean for the thousands of temporary workers the agency must hire and train to answer taxpayer inquiries during filing season. Still, giving out refunds would ease pressure on President Trump to abandon his demand for a border wall.
And what’s next? Trump says he’ll deliver a speech tonight on border security and go to the Mexican border on Thursday. On Sunday, the White House asked Congress for $5.7 billion “for construction of a steel barrier for the Southwest border” and “an additional $800 million to address urgent humanitarian needs.” Meanwhile, Senate Democrats may try to block all floor action until the GOP leadership agrees to vote on spending bills aimed at funding the agencies that are now shut down.
The partial government shutdown could have been prevented with a simple rule. TPC’s Bill Gale explains how Congress and the President could agree to a rule that would prevent future shutdowns: If appropriations bills are not passed on time, Congress must automatically fund the government at the previous year’s levels, after adjusting for inflation.
New York lawmakers bring back bill to bring back the SALT deduction. Reps. Nita Lowey (D) and Peter King (R) will reintroduce the Securing Access to Lower Taxes by ensuring Deductibility Act of 2019, or SALT Deductibility Act. The measure would repeal the $10,000 limit on the SALT deduction. In New York, 35 percent of taxpayers deduct an average of more than $22,000 every year.
Massachusetts’ tax receipts in December are lower than expected—by over a half billion dollars. The state’s Revenue Commissioner said “We underestimated the shift of estimated payments from December into January. Early indications are that other states may be having a similar experience.” The miss leaves Massachusetts’ tax collections $108 million behind target midway through fiscal year 2019.
Could taxing opioid manufacturers combat addiction? Massachusetts state representative James O’Day proposed a bill to tax the legal purchase of opioids from manufacturers. Revenues would fund substance-abuse prevention and treatment programs. Patients with cancer or in hospice care would receive a rebate for higher tax-related prices but those with prescriptions for chronic pain from other conditions would pay more, assuming the manufacturers pass the tax on to consumers. O’Day, who initially proposed the measure last year, plans to refile it when the new legislative session begins this month.
Whistleblowers call out the Colorado Department of Revenue. A letter signed by “Concerned [Colorado Department of Revenue] Employees, Taxpayers & Citizens of Colorado” claims that the department is plagued by wasted resources, incompetence, and mismanagement. The letter also identifies problems with the department’s software system and staff leadership who, it says, lack sufficient tax administration experience or qualifications.
Say hello to a “sayanora tax” in Japan. International and Japanese travelers departing the country by plane or ship after a 24-hour stay will now pay a tax equal to about $9. The new departure tax goes into effect in advance of the Tokyo 2020 Olympics. Japan expects the tax to raise about $55.4 million in revenue in fiscal 2018 through March 2019, and $461.6 billion in fiscal 2019.
For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to have it delivered to your inbox each morning. We welcome tips on new research or other news. Email Renu Zaretsky at firstname.lastname@example.org.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
- © Urban Institute, Brookings Institution, and individual authors, 2020.