Tax News & Views

Tax News & Views Page 1 of 8 Copyright © 2022 Deloitte Development LLC February 18, 2022 All rights reserved. In this issue: Senate sends three-week funding measure to Biden’s desk as appropriators race to lock down larger spending deal ................................................................................................................................ 1 Finance Committee Republicans raise concerns over global tax pact .................................................................... 4 Budget issues dominate as Senate taxwriters consider IRS ‘customer service challenges’ ................................... 5 Senate sends three-week funding measure to Biden’s desk as appropriators race to lock down larger spending deal After voting down a handful of amendments demanded by certain Republicans, the Senate on February 17 cleared a short-term continuing resolution (CR) that will keep the government’s doors open past midnight on February 18 when the current stopgap appropriations measure funding government operations is otherwise set to lapse. The new CR—which will fund the government for three additional weeks through March 11—was approved on a bipartisan vote of 65-27. It cleared the House on February 9, also with bipartisan support. President Biden signed the measure into law on February 18, making it the third short-term appropriations patch enacted in fiscal year 2022, which began on October 1 of last year. Tax News & Views Capitol Hill briefing. February 18, 2022 Tax News & Views Page 2 of 8 Copyright © 2022 Deloitte Development LLC February 18, 2022 All rights reserved. Appropriators race to conclude ‘omnibus’ spending deal Passage of the stopgap—which has been widely expected and relatively noncontroversial (aside from a handful of GOP-demanded amendment votes touching on various issues such as vaccine mandates and a balanced federal budget, all of which were successfully turned away by Democrats)—comes as Democrats and Republicans on the Senate and House Appropriations Committees race to put the finishing touches on an “omnibus” package of 12 fully fleshed-out appropriations bills that would fund the government for the remainder of fiscal year 2022 (from March 12 through September 30, 2022) while also directing larger outlays to both domestic and defense-related programs during that period. While the top Democrat and Republican on each of those two spending committees (the so-called “four corners” negotiators) announced on February 9 that they had reached an agreement in principle on a “framework” for an omnibus funding measure, details of that framework—including the top-line spending level agreed to and the exact breakdown of that number among the 12 subcommittees charged with drafting detailed legislation—remained murky this week. (For prior coverage, see Tax News & Views, Vol. 23, No. 5, Feb. 11, 2022.) URL: https://dhub.blob.core.windows.net/dhub/Newsletters/Tax/2022/TNV/220211_1.html Still, negotiators remained confident that an omnibus package could be drafted and enacted in the next few weeks. “This gives us some time,” Senate Appropriations Committee ranking member Richard Shelby, R-Ala., said on February 16 of the three-week CR. “Within our framework, we’re moving. Nothing’s final until we get there. But we’re making good progress at the moment.” No tax provisions in CR, but what about the omnibus? While the short-term continuing resolution is free of any tax-related provisions, it has not been uncommon in recent years for lawmakers to include certain discrete tax changes within larger-scale spending packages, such as an omnibus funding bill. Section 174 delay in the mix?: It currently remains unclear whether policymakers will attempt to move any tax-related provisions in the omnibus spending package currently being negotiated, although certain stakeholders have expressed hope that Congress could act to reverse, at least temporarily, a change within tax code section 174—originally enacted as part of the 2017 Tax Cuts and Jobs Act (P.L. 115-97)—that, as of January 1 of this year, requires certain research expenditures to be amortized over a number of years rather than deducted currently. But even an effort to delay any required amortization under section 174, which has attracted bipartisan support in both the House and Senate, could face political headwinds in the context of an omnibus spending measure if it is perceived by enough congressional Democrats as a recognition that their broader tax-and-spending initiative—the Build Back Better Act—is foundering. The Build Back Better legislation (H.R. 5376), Tax News & Views Page 3 of 8 Copyright © 2022 Deloitte Development LLC February 18, 2022 All rights reserved. which cleared that House last November but remains stalled in the Senate, contains language that would delay section 174 amortization through 2025. (For additional discussion about the status of the legislation and its prospects for reaching th