Small but bipartisan tax bills. Tomorrow the House Ways & Means Committee will mark up the Taxpayer First Act of 2019 and the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. The SECURE Act gives employers a $500 credit to help offset the cost of setting up retirement plans, allows those older than 70 1/2 to continue to contribute to traditional IRAs, and allows people to delay taking required distributions from retirement plans from 70 1/2 to 72. People could also take penalty-free withdrawals from retirement accounts to pay for birth or adoption costs. The Taxpayer First Act includes some modest taxpayer protections and asks the IRS to “thoughtfully consider” a reorganization but mandates no structural changes.
Tomorrow: How about linking tax filing to voter registration? TPC’s Vanessa Williamson looked at what would happen if people could get voter registration information when they file their taxes, much like they do when they renew their driver’s licenses. Her research suggests that providing these materials can substantially increase registration rates, especially for those less likely to vote. She’ll release the results at an event tomorrow at Brookings. You can register here.
Taxpayers are very, very confused. TPC’s Mark Mazur writes for The Atlantic that taxpayers have been filing their returns a bit more slowly than last year and visiting the IRS website 11 percent more. In media interviews and online, taxpayers have been complaining about smaller-than-expected refunds and unexpected balances due, which means they may be incorrectly confusing their refunds with their total tax liability. While the Tax Cuts and Jobs Act did deliver promised tax cuts and simplified tax filing for many, it also created confusion.
What’s wrong with the federal tax exemption for nonprofit organizations? TPC’s Howard Gleckman takes a look at four recent stories and wonders about the ability of the IRS to manage Section 501(c) of the tax code—and whether the special privileges of tax-exemption are worth keeping. Policymakers could give the IRS more resources to police the tax-exempt sector. They could proscribe how tax-exempt funds are used by, for instance, limiting the amount that goes to athletic department salaries. Or they could limit tax-exempt status to public charities only. But one thing is clear: The current model is not working.
The IRS has new SALT guidance. The IRS has issued new guidance to help taxpayers understand how they should treat state and local tax refunds in the wake of the TCJA’s $10,000 cap on state and local tax (SALT) deductions. The interpretation does not affect state tax refunds received in 2018 for federal eturns currently being filed.
A proposed tax on luxury second homes in New York City died a quick death. State lawmakers had proposed the tax to help pay for public transit improvements. But the real estate industry wasted no time killing it. Now, lawmakers are talking about a one-time fee on all real-estate transactions over $3 million.
Another presidential candidate releases his tax returns. Democratic Governor Jay Inslee of Washington State released 12 years (2007-2018) of tax returns on Friday, and called on President Trump to do the same. Inslee also supports a state senate-passed bill to require presidential candidates to release at least five years of tax returns before they can be listed on a ballot.
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