With government funding set to run out on Friday, House Speaker Mike Johnson (R-LA) unveiled a continuing resolution (CR) Tuesday night that, if passed, would avoid a partial shutdown.
Of note to tax practitioners, the CR would maintain a cut to the IRS’ enforcement budget, delay the Corporate Transparency Act reporting deadline by one year, and allow contractors to continue to access taxpayer information for child support enforcement purposes.
Continued IRS funding cut.
The 1,547-page CR would extend current funding levels through March 14 – incorporating a $20.2 billion cut to the IRS’ enforcement budget.
The original rescission – intended to be a one-time event – came about this March, when lawmakers were negotiating a fiscal year 2024 appropriations package (P.L. 118-47). Part of that agreed-on package was a claw back of $20.2 billion of the total $80 billion in 2022 Inflation Reduction Act (P.L. 117-169) funding for the IRS.
However, after the latest stopgap bill (P.L. 118-83) passed in September – funding the government until December 20 – Representative Linda Sánchez (D-CA) raised concerns that legislative language could “lead to an anomaly where $20 billion is continually cut from the IRS.” Simply extending the date through which the March 2024 appropriations package applies could “inadvertently rescind” additional sums from the IRS, said Sánchez.
Despite – or maybe in light of – these warnings, the latest CR makes no mention of the $20.2 billion rescission as being a one-time affair.
Corporate Transparency Act deadline.
The CR also would extend by one year the deadline for existing entities to report their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN), as required under the Corporate Transparency Act.
A recent Texas federal district court decision temporarily halted enforcement of the January 1, 2025, reporting deadline nationwide. However, it’s unclear what happens if that decision is overturned on appeal.
Corporate Transparency Act critics have raised concerns about FinCEN’s outreach on the requirements, the lack of clarity about report updates, and more – in addition to the constitutionality of the underlying law.
Taxpayer information for child support.
Tuesday’s CR contains a plethora of other provisions – including one that would allow child support enforcement contractors to access the same taxpayer information as state and local agencies.
The provision comes from the Strengthening State and Tribal Child Support Enforcement Act ( H.R. 7906 ), which passed out of the House Ways and Means Committee unanimously in July. Language from that bill was incorporated into a broader bill on child welfare ( H.R. 9076 ) that passed the House in September.
The Strengthening State and Tribal Child Support Enforcement Act was introduced after the IRS issued an alert calling on child support enforcement agencies to prepare plans to mitigate unauthorized disclosures of taxpayer information to contractors.
If the language remains in the approved CR, states would be able to continue to use third-party contractors for child support enforcement purposes. In addition, Tribal agencies would be able to access taxpayer information and collect past-due support from federal tax overpayments.
Next steps.
The CR has faced harsh criticisms from Department of Government Efficiency co-lead Elon Musk and some Republican lawmakers.
Representative Nicole Malliotakis (R-NY) said she thinks that a “clean CR” that just extended current funding “would have satisfied the majority of members.” With the incoming “Republican trifecta,” the goal should have been to “just get through with the basics to fund the government until January,” she added.
However, Johnson defended the bill Wednesday morning, saying it was necessary to avoid a shutdown. “We don’t normally like … a CR,” explained Johnson. “But in this case, it makes sense, because if we push it into the first quarter of next year … we’ll be able to have more say over the funding decisions for 2025.”
As to why the many provisions unrelated to government funding made it into the CR, Johnson said “we had circumstances outside of our control.” He cited the “record hurricane season” and “farmers who were in jeopardy of permanently going under.”
Johnson initially indicated he’d give lawmakers 72 hours to review the funding package before a vote. However with limited time before a shutdown and strong opposition, it’s unclear when – and if – a vote will occur.
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