Domestic Taxes

Sen. Max Baucus (D-Mont.), the chamber’s top tax writer, said Thursday that he wants to “carve a middle ground” on tax reform, and rewrite the code in a way that raises revenue for deficit reduction.

Baucus, the chairman of the Senate Finance Committee, praised President Obama’s most recent budget at a panel hearing for taking the same center course he was trying to plot.

“We will close billions of dollars of loopholes,” Baucus, the Finance panel’s chairman, said in his opening statement. “Some of this revenue should be used to cut taxes for America’s families, and some of the revenue should also be used to reduce the deficit. It’s all about finding common ground so we can move forward together.” Read more...

Treasury Secretary Jack Lew said Thursday he is willing to sit at the negotiating table with Republicans to overhaul the tax code but highlighted the gulf between their stances. 

Lew emphasized that the White House is seeking comprehensive tax reform that raises additional revenue while Republicans are pressing for a revenue-neutral plan.

"I have always been prepared to talk and I remain prepared to talk," he told the House Ways and Means Committee on his first trip back to Capitol Hill since he was confirmed in February. 

"But I need to be clear that I can’t paper over that there are significant differences,” Lew said.

Read more...

Two House lawmakers continued their push for online sales tax legislation at a press conference on Thursday.

Reps. Steve Womack (R-Ark.) and Jackie Speier (D-Calif.) said a recent Senate vote has given their bill, the Marketplace Fairness Act, more momentum.

"The Senate has spoken. It's time for the House to act," Speier said.

President Obama’s latest budget calls for billions of dollars in new taxes from the wealthiest, while also leaving the door open to a tax rewrite where corporations would contribute no more to deficit reduction.

The fiscal 2014 budget, to be officially released on Wednesday, would force the highest earning individuals to pay more through provisions like the so-called Buffett Rule and a cap on tax deductions – just two of the proposals that look similar to what the administration has rolled out before. 

But in advance of the budget’s release, the Obama administration also continued to sound open to a corporate tax reform that would not raise further revenues for deficit reduction – an idea that drew some frowns from Democratic lawmakers.

Administration officials said the business part of the budget’s tax proposal could be revenue-neutral – as long as Republicans dropped their opposition to tax increases on the wealthiest individuals.

“If Republicans were to block that, then president would continue to push for closing unfair loopholes to raise revenue,” a senior administration official said in a Tuesday conference call.

President Obama’s newest budget will contain several proposals to tackle the increase in identity theft and tax refund fraud, an administration official said Tuesday.

The fiscal 2014 blueprint, to be released Wednesday, will call for a new $5,000 civil penalty for those who fraudulently file tax returns as someone else, and potentially stiffer criminal penalties on identity thieves.

Obama will also propose making it more difficult to access Social Security death records, delaying access for three years unless there is an urgent fraud-prevention purpose.

Finally, the budget will recommend that the W-2 forms that employers file with the Internal Revenue Service (IRS) no longer list an employee’s Social Security number, instead substituting a different identification number. 

The Government Accountability Office has said in studies that the use of stolen names and Social Security numbers in tax-fraud cases has skyrocketed in recent years. 

A government watchdog is pressing the IRS to close what it calls a “glaring loophole” that allows tax-exempt groups to play an outsized role in elections.

Citizens for Responsibility and Ethics in Washington (CREW) is asking the IRS in a petition to revise its regulations to say that so-called 501(c)(4) groups must exclusively work on social welfare issues, as CREW says is mandated by tax law.

IRS regulations currently say that groups organized under the 501(c)(4) of the tax code must primarily engage in social welfare work.

Those rules, CREW says, have led groups like the American Action Network and Crossroads GPS to believe that up to 49 percent of their work can be political.

“For decades, this regulation has been a point of contention for the IRS,” Melanie Sloan, CREW’s executive director and a former Democratic congressional aide, said in a Tuesday statement.

“Being ‘aware’ of the problem is not the same as doing something about it. Political spending by tax-exempt groups is out of hand and it is way past time for the IRS to enforce the law as Congress intended.”

Lawmakers working on a tax overhaul are prepared to negotiate in secret, away from K Street's prying eyes.

The two top tax-writers in Congress said Monday that the prospects for tax reform are alive and well.

A trade association for major retailers has told congressional tax-writers that every preference should be on the table as Washington tries to rewrite the tax code.

The Retail Industry Leaders Association (RILA), which represents many big-name chains, said in a letter that it supported House Ways and Means Committee Chairman Dave Camp’s (R-Mich.) goal of reducing the top corporate tax rate to 25 percent, down from its current level of 35 percent.

To reach that goal without adding to the deficit, the RILA said many of the tax incentives that industries receive would have to be sacrificed.

“To achieve the kind of corporate tax rate that most economists believe we need to be competitive, a very high percentage of the current corporate tax preferences will need to be eliminated in order to accomplish rate reduction in a revenue-neutral fashion,” Bill Hughes, the RILA’s senior vice president for government affairs, wrote to a House Ways and Means Committee working group dealing with income and tax distribution.

President Obama will offer a budget this week that is expected to include $600 billion in new tax hikes and calls for entitlement cuts.

The long-delayed White House budget will arrive on Capitol Hill months late — and after the House and Senate approved their own budget blueprints.

Treasury Secretary Jack Lew will testify at hearings on Thursday with the House Ways and Means and the Senate Finance committees. He may also get some questions about his two-day swing through Europe, where he is set to discuss the EU financial crisis.

Jeff Zients, the acting director of the Office of Management and Budget (OMB), will testify Thursday before the Senate Budget panel on the president’s proposal. The House Budget Committee will also explore the president’s proposal with Zients on Thursday.