Congress and the President have put forward their competing visions of fundamental tax reform. Representative Dave Camp (R-MI), the current Ways and Means Committee Chairman, introduced on February 26 his "Tax Reform Act of 2014." President Obama unveiled his $3.9 trillion budget for the 2015 Fiscal Year (October 1, 2014 - September 30, 2015) on March 4. In his Budget, the President called on Congress to immediately begin work on corporate tax reform that will close loopholes, lower the corporate tax rate, strengthen investment and not add to the deficit. The President's Budget contains a large number of tax proposals. These two tax bills, as well as another item of legislative interest, are discussed in detail below:
1. Representative Camp Releases His Tax Reform Plan Aimed at Strengthening the Economy and Making the Tax Code Simpler, Fairer and Flatter - On February 26, Representative Camp released the "Tax Reform Act of 2014" (the Act). Based on an analysis by the independent, non-partisan Joint Committee of Taxation, the Act would (i) create up to 1.8 million new private sector jobs, (ii) allow roughly 95% of taxpayers to get the lowest possible tax rate by simply claiming an increased standard deduction, (iii) strengthen the economy and increase Gross Domestic Product by up to $3.4 trillion, and (iv) reduce the annual federal income tax liability of the average middle-class family of four by $1,300.
The Act will accomplish the above by, among other things, providing the following:
Reaction to the Act was varied. The reaction among Representative Camp's own Republican Party has been lukewarm. Leading business tax professionals polled in a recent survey conducted by the Tax Policy Center felt there is very little chance of the Act becoming law this year, with slightly over 50% of the survey respondents assigning a zero probability for passage in 2014.
2. President Obama's Budget Contains Numerous Individual and Business Income Tax Provisions - On March 4, President Obama released his federal budget proposal for the Fiscal Year 2015. The President's Budget contains over 160 tax proposals, although only about 30 of these were not already included in the President's Fiscal Year 2014 Budget Proposal (which was not acted on by Congress). The Budget's tax proposals are far-reaching and impact businesses, international transactions, energy incentives, individuals, estate and gift taxation and tax administration.
Some of the more significant tax proposals contained in the Budget include the following:
3. House of Representatives Passes Legislation That Restricts the Power of the IRS in Auditing Taxpayers -
On February 25, the House of Representatives passed by voice vote the "Taxpayer Transparency and Efficient Audit Bill." Under this legislation, the IRS would be required to conclude any tax audit of an individual within one year after the commencement of the audit. At the same time, the House of Representatives also passed by voice vote the "Protecting Taxpayers From Intrusive IRS Requests Bill" which would prohibit the IRS from requesting that taxpayers provide to the IRS information regarding their religious, political or social beliefs.
For additional information regarding this topic, please contact your local UHY LLP professional.
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