Tax
As Congress reconvenes this month, tax practitioners find themselves navigating an uncertain legislative landscape. The looming threat of a government shutdown and its potential impact on year-end tax legislation has become a focal point for the tax community, followed by the unknown of the November election.
The $79 billion Tax Relief for American Families and Workers Act of 2024, once seen as a promising vehicle for comprehensive tax reform, now sits in legislative limbo. Following its failure to clear a procedural hurdle in early August, the bill's fate remains uncertain. While some experts maintain hope for its revival, particularly during the post-election lame-duck session, others are already shifting their focus to 2025 for significant tax legislation.
The immediate concern for Congress is averting a government shutdown before the September 30 fiscal year-end. The approach taken to resolve this issue will have far-reaching implications for tax legislation. If lawmakers opt for a continuing resolution extending funding into fiscal 2025, it could effectively close the door on substantive tax discussions for the remainder of 2024. This is because the omnibus spending bill is widely regarded as the most viable vehicle for any year-end tax package.
Adding to the complexity of the situation are other pressing issues on the congressional agenda. These include the reauthorization of expiring programs such as those in the farm bill and the National Flood Insurance Program. The limited number of joint session days in September – a mere 13 – further constrains the potential for immediate action on tax matters.
For tax practitioners, this uncertainty underscores the need for adaptability and foresight. While the prospects for H.R. 7024 appear dim in the short term, the political calculus may shift following the November elections. This could potentially breathe new life into discussions around child tax credit expansion and business tax provisions.
Another area of interest for the tax community is the ongoing debate over IRS funding. The agency's budget for the upcoming fiscal year remains unresolved, with the Senate proposing to maintain current funding levels at $12.3 billion, while the House has put forward a significant 18% cut. The final budget determination will likely be part of broader omnibus negotiations, which are not expected to conclude until after the elections.
In this fluid environment, tax professionals should be prepared for various scenarios. There's a possibility of last-minute tax legislation emerging during the lame-duck session, which could lead to a particularly busy tax season in 2025 if significant changes are enacted late in 2024. Practitioners should also keep a close eye on IRS funding developments, as they may have implications for agency operations and enforcement activities.
As the legislative process unfolds, it's crucial for tax practitioners to keep their clients informed about the uncertain environment and the potential for retroactive changes. While comprehensive tax reform may be on hold for now, the possibility of targeted measures or extensions of existing provisions remains on the table. Whether significant changes come this year or are pushed to 2025, the tax community will need to be ready to adapt quickly to any shifts in the legislative landscape.
Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.
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