The House and Senate this week returned from the Thanksgiving break for the final stretch of the congressional lame-duck session with much uncertainty, including how to extend government funding beyond 16 December. There have been negotiations on an omnibus appropriations measure to extend funding through the end of the fiscal year ending 30 September 2023, which could possibly include tax, retirement, and health items. A lack of progress will increase the possibility that Congress will instead pass a continuing resolution (CR) to fund the Government until 23 December (if an omnibus bill is on the horizon), or a CR extending into the next year at which point there will be a new Republican House majority.
Congressional leaders of both parties this week reportedly agreed to try and craft an omnibus spending bill before the end of the year. Senate Majority Leader Chuck Schumer was quoted as saying on 29 November: “We have agreed — the four leaders and the four heads of the Appropriations committees — to sit down very shortly and begin thrashing out how we can come together and get an omnibus done.” In addition to the Senate Majority Leader, the four leaders include House Speaker Nancy Pelosi, Senate Minority Leader Mitch McConnell and House Minority Leader Kevin McCarthy.
If a deal can be reached on an omnibus spending bill, inclusion of a tax package with business tax provisions – addressing the Internal Revenue Code1 Sections 174 research and development and 163(j) interest deduction Tax Cuts and Jobs Act cliffs, tax extenders, and other items – could come down to whether the parties can agree on some expansion of the Child Tax Credit, which Democrats have insisted must accompany any business tax measures.
A Treasury official this week did not rule out the possibility that the Government may issue some form of guidance for the new corporate alternative minimum tax (CAMT), enacted as part of the Inflation Reduction Act (IRA), before the end of the year. The official confirmed that any initial guidance would address critical issues but declined to say what that would include or the form of that guidance. He further was quoted as saying that while guidance for the CAMT and the stock buyback provisions are a high priority, in Treasury’s eyes they take a backseat to the IRA’s green energy incentives, although he noted these are different work streams and any prioritization would take place during the clearance process.
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLP (United States), International Tax and Transaction Services, Washington, DC
- Arlene Fitzpatrick
- Joshua Ruland
For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.
