Congress this week averted a prolonged government shutdown by passing a budget bill, the Treasury Department and IRS released guidance for the new tax law, and both parties continued gearing up for fast-approaching midterm elections.
The Senate has agreed on a two-year budget, raising government spending on defense and domestic programs by over $300 billion, The Hill reports. It passed the budget Friday shortly before 2 a.m., followed by the House around 5:30 a.m. President Trump tweeted on Friday morning that he had signed the bill, ending a roughly nine-hour government shutdown.
Despite a Democrat-led government shutdown over the Deferred Action For Childhood Arrivals program last month, the latest bill did not include any provisions for immigration reform, which the administration plans to address separately. The bill will raise defense spending by $80 billion in fiscal year 2018 and $85 billion in fiscal year 2019, while raising domestic spending by $63 billion in fiscal year 2018 and $68 billion in fiscal year 2019. The bill also includes:
- $90 billion in emergency appropriations for disaster-relief efforts in Puerto Rico, the U.S. Virgin Islands, Florida and Texas
- $6 billion to fight opioid and substance abuse through grants, prevention programs and law enforcement efforts
- $20 billion in new spending for infrastructure
- Cuts to the Affordable Care Act and structural reforms to Medicare
- A further extension of the Children’s Health Insurance Program by four years (it was previously extended for six years)
- An extension of various tax provisions that expired in 2016
- The continuation of funding for community health centers
Treasury and IRS Release Tax Implementation Priorities
The Treasury Department and Internal Revenue Service on Thursday released their priorities for implementation of the tax law, Politico reports. The guidance indicates that the agencies acknowledge the potential difficulty of enforcing the tax reform law’s pass-through provision, with a plan to create “computational, definitional, and anti-avoidance guidance.” (For a deep dive into the new pass-through deduction, see this BDO article on the subject.) The agencies will also address the transition to the territorial tax system for corporations outlined in the law.
On Jan. 28, the American Institute of CPAs sent the IRS a letter outlining 39 areas in the tax law that they consider in need of immediate guidance. It highlighted three particular areas of concern: the pass-through deduction, changes to accounting methods needed to comply with new rules, and penalty relief for underpayment of taxes needed due to provisions effective for 2017.
As the 2018 midterm battles gear up for action, the Democratic Congressional Campaign Committee is targeting the most seats (101) in a decade, Axios reports.
Midway to Midterms
As the 2018 midterm battles gear up for action, the Democratic Congressional Campaign Committee is targeting the most seats (101) in a decade, Axios reports. Having outperformed handsomely in special elections since Trump’s inauguration, and with a large number of Republicans stepping down to avoid facing difficult reelection campaigns, the Democratic party is trying to capitalize on its success, and it might well take back the House of Representatives. Should the House flip, many Republican priorities for 2018 will be significantly harder, if not impossible, to accomplish. Democrats will be able to pursue largely symbolic priorities on their bucket list, such as impeachment proceedings against the president. CNN is tracking key races here.
Ben Marsico is ACG Global’s manager of legislative and regulatory affairs.