Restoring the extenders. The bipartisan leadership of the Senate Finance Committee has proposed retroactively extending 29 expired tax provisions through 2019. Many of the business and individual tax breaks expired at the end of 2017 need to be restored in time to be included on tax returns that normally are filed by April 15. Absent a quick agreement, taxpayers will likely request extensions or have to file amended returns. Most economists think subsidies for activities that occurred in 2018 is nothing but a windfall.
Refunds starting to look more normal. The latest IRS data released yesterday shows refunds are looking more like the 2018 filing season. The number of refunds still is down by about 4 percent but the average refund size is up a bit. The IRS still has received and processed fewer returns than at this time last year.
Economic growth has slowed. The Commerce Department said yesterday that Gross Domestic Product grew at a 2.6 percent annual rate in the fourth quarter of 2018. That’s slower than earlier in the year, when the Tax Cuts and Jobs Act may have helped contribute to growth that surpassed 4 percent in the second quarter. Many economists expect growth to fall below 2 percent in the first quarter of 2019.
House Ways & Means Democrats ask again for new tax form usability survey. Chairman Richard Neal and Oversight Subcommittee Chair John Lewis asked Treasury for the information ten days ago and received no response. They made a second request yesterday, asking why the IRS deleted from its website information about a Form 1040 usability survey, when it was removed, and who at Treasury was responsible. They want a response by March 7.
Taxpayer advocate heads to the Hill. National Taxpayer Advocate Nina Olson may help answer questions about the usability of the new 1040, the filing season so far, and other tax administration issues when she testifies to the House Ways and Means Oversight Subcommittee on March 7. Treasury Secretary Steven Mnuchin says he finally will make his long-delayed maiden appearance before the full Ways & Means panel as well, but no date has been set.
Some unredacted, SALTy weekend reading. Neal also released an unredacted version of a Treasury Inspector General for Tax Administration (TIGTA) report on the process IRS and Treasury used to issue guidance limiting the ability of states to develop a work-around to the TCJA’s cap on the state and local tax (SALT) deduction. TIGTA released a heavily redacted version earlier this week. The complete version describes how Treasury and IRS fast-tracked the guidance. Neal said “We also now know that the Treasury Secretary and other high-level administration officials were involved in the review of the IRS notice… which is unusual for sub-regulatory notices,” he said.
A federal tax credit for school choice? Those SALT regs had the effect of curbing long-standing tax subsidies for individual donations to scholarship programs for private schools. Now, the White House wants Congress to adopt a 100 percent federal credit for contributions to any state-sanctioned scholarship fund. The maximum credit would equal 10 percent of an individual’s adjusted gross income or 5 percent of a business’s net taxable income. The tax break would cost $5 billion-a-year but supporters have said nothing about how the federal government would cover the cost of the credit. Urban Institute researchers share four things to know about tax credit scholarship programs here.
For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). 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.