As we head toward midterm elections, congressional Democratic leaders have indicated they only have until the end of June to enact any tax legislation before November. At this time, two possible paths to legislation are on the horizon. While neither is assured to become law, the following considerations should be on your radar.
The House and Senate have each passed separate pieces of legislation intended to revitalize the U.S. semiconductor industry. Both House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer have said they want to move this legislation during the five-week work period between April 24 and May 27. This will involve setting up a large conference committee to work out the differences between each chamber’s version. This legislation is generally bipartisan and congressional leadership is expected to allow few tax provisions, if any, to be attached.
Tax provisions with a chance of being included in this legislation are:
Restructured Build Back Better Act
The BBB legislation imploded in late December when Democratic Sen. Joe Manchin of West Virginia refused to support it. In recent months, informal discussions have been conducted to explore ways to revive the more widely supported elements of the original package. Conversations have centered around lowering prescription drug prices and energy provisions, with possible corporate and individual rate increases to pay for the new programs and reduce the federal deficit. Sen. Manchin is likely to require that half of any new revenues raised under the bill go toward deficit reduction, greatly reducing the spending provisions contained in the original BBB. At this point, conversations have not advanced to formal talks.
While passage of a restructured BBB bill is far from certain, let alone knowing which provisions would ultimately be included, the following are relevant tax proposals you should be aware of:
Due to the slim Democratic majority in the House and the 50-50 split in the Senate, passage of any bill is far from certain. We believe the greatest chance of passage lies with the semiconductor legislation where there is bipartisan desire to incentivize U.S. manufacturing in this area. It remains unclear which tax provisions would ultimately be attached.
Any additional tax bill would likely need to be included in budget reconciliation in order to avoid the Senate filibuster rules. While chances of a compromise among Democrats between now and the end of June may not be good, taxpayers should monitor the above provisions just in case a bill gains traction before Congress recesses for the summer and election season gets into full swing.
Please reach out to your Baker Tilly advisor if you have questions regarding your tax position. We will continue to monitor developments on the Hill and issue additional alerts as warranted.
We encourage you to connect with your Baker Tilly advisor regarding how any of the above may affect your tax situation.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.