Tax Cuts 2.0
With signs of a slowing economy, pundits in D.C. have been wondering if a new round of tax cuts might be in the making as an economic stimulus. For the second time this week, Treasury Secretary Mnuchin waded into the question and confirmed administration officials are considering another tax cut bill for consideration in 2020 prior to the November elections. His comments yesterday were a repeat of comments made Monday referencing Tax Cuts 2.0 even while insisting the economy is still strong. It is a fine line to walk—assuring investors and businesses that the economy is strong while offering up the possibility a stimulus type of tax cut bill. All of this follows the administration’s recent flirtation with a payroll tax cut and/or indexing capital gains, both of which have been since rejected. But it certainly indicates the White House has little appetite for tax battles this fall, even further dimming prospects for a tax bill catch-all (extenders, etc…) this year.
Oh, and P.S., let’s remember that all tax bills must originate in the House, which—spoiler alert—is currently run by the Dems.
Report Highlights Effects of Shutdown and Budget Cuts on IRS Enforcement
The Treasury IG for Tax Administration (TIGTA) issued a Trends in Compliance Report, which set out in stark terms the negative effects of both a government shutdown and a diminishing IRS budget. Some highlights (or lowlights if you’re so inclined) include:
The decline in resources raises many questions for members of Congress, utmost of which is with a nearly $1 trillion budget shortfall, why would Congress continue to allow for an erosion in compliance activity—both for its deterrent effects and for its revenue effects?
- Returns examined in the Wage and Investment (W&I) Division decreased 38 percent, and the amount of proposed tax assessments declined 45 percent in January 2019 compared to January 2018.
- The Small Business/Self-Employed (SB/SE) Division examined 22 percent fewer returns and proposed tax assessments were 9 percent less for the first five months of the fiscal year (October 2018 through January 2019) compared to the same period in FY 2018.
- Overall, the agency audited less than 1 percent of the 152 million individual and 11.4 million business income tax returns and forms filed in FY 2018.
- IRS examined a total of 991,000 returns, a decline of 28 percent since FY 2014, when 1.4 million were examined.
- From FY 2014 to FY 2018, the number of staff assigned to the IRS’s examination functions decreased 24 percent.
Small Business/Self-Employed Division Hires
IRS announced on Wednesday a number of new hires in the SB/SE Division, including Eric Hylton as the new commissioner of the division. Hylton has a strong enforcement background, including a long tenure in the Criminal Investigation Division—a combination that at least here at HQ raises some eyebrows. De Lon Harris has been selected as the Deputy Commissioner for Examination and Darren Guillot was selected as the Deputy Commissioner for Collection and Operations Support. Both Harris and Guillot come from compliance and collections backgrounds.
New Withholding Calculator Webinar
IRS is offering a free webinar (2 CE for tax profession more
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