IRS will waive underemployment penalties—for some. Members of Congress have been urging the IRS to hold harmless taxpayers who ended up underwithholding as they tried to get used to the many changes from the Tax Cuts and Jobs Act. In a statement yesterday, the agency said it would do that for taxpayers who paid at least 85 percent of their total tax liability during the year. The usual safe harbor threshold is 90 percent.
Grassley: No action on extenders before filing season. Senate Finance Committee Chair Chuck Grassley told reporters that taxpayers waiting for Congress to restore tax extenders shouldn’t hold their breaths. Many of the targeted tax breaks expired at the end of 2017 and filers hoped they could be resurrected in time for 218 filing season. "It's my goal to get extenders done. When you can get it done and under what conditions, I can't tell you now because I don't have a plan,” Grassely told reporters yesterday. He said Congress is too wrapped up in the shutdown to think about it,
Congress should make the EITC available to more older workers. TPC’s Elaine Maag explains that older workers who do not live with minor children lose their eligibility for the Earned Income Tax Credit once they turn 65. Congress could help this growing group of low-income, older workers make ends meet by allowing them to continue to claim the EITC until they reach the full retirement age of Social Security, currently set at 66.
One year after the TCJA, what did businesses do with their tax cuts? Bloomberg takes a close look at business activities in the wake of the 2017 tax cut’s corporate tax rate reduction. “The short answer: to buy back shares. The long answer is slightly more nuanced, but not by much.”
Democrats name Ways & Means subcommittee chairs. Mike Thompson of California will chair the Select Revenue Measures subcommittee, John Lewis of Georgia will head the oversight subcommittee, Lloyd Doggett of Texas will chair the health subcommittee, Earl Blumenauer of Oregon will head up the trade panel, John Larson of Connecticut will lead the Social Security panel, and Danny Davis of Illinois will chair the Worker and Family Support subcommittee.
The GOP names its Ways & Means members. House Republicans added three new members to the panel: Jodey Arrington of Texas, Drew Ferguson of Georgia, and Ron Estes of Kansas. Estes was an architect of former Kansas Governor Sam Brownback’s controversial—and now largely-repealed—tax cuts.
Signed, sealed, delivered? President Trump quietly signed a bill that promises to give back pay to furloughed federal workers—once the shutdown ends. Contractors got no such assurance. Meanwhile, a bipartisan group of senators wrote President Trump yesterday promising to consider his request for billions more in border security money if Trump agrees to reopen the government for three weeks. Trump has rejected such overtures in the past.
Can states tax trusts based on their beneficiaries’ in-state residency? The US Supreme Court will answer the question, announcing that it will hear North Carolina Department of Revenue v. the Kimberley Rice Kaestner 1992 Family Trust. As Forbes explains, North Carolina is trying to “tax the out-of-state trust on its undistributed income,” which would eventually go to the beneficiary. The case has implications for both states and trust beneficiaries, with hundreds of millions of dollars in annual tax revenue at stake.
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