Fall Magazine - Page 10

abandoning the climate change and tax provisions of the BBB .
But then , on the evening of July 27 , the news emerged that Senator Joe Manchin ( D-WV ) and Senate Majority Leader Chuck Schumer ( D-NY ) had been engaged in secret negotiations about a reconciliation package even after the Build Back Better bill “ fell through ”. Manchin ’ s bill , eventually titled the “ Inflation Reduction Act ,” passed the Senate via the reconciliation process on August 7 , which required a tie-breaker vote from Vice President Kamala Harris , and then passed the House on a party-line vote , on August 12 . This is rapid progress by the standards of today .
So , what happened ? The secrecy of the move surprised many observers , but those in the know had been hearing from sources connected to Senator Schumer that the Senate Majority Leader was highly optimistic BBB would eventually pass . It appears that , in a certain form , it has . Joe Manchin has put a new title on the bill , with an ostensible focus on relieving inflation , which undoubtedly has hit his constituents hard . But the core of the bill is still largely tax and environmental provisions . Thankfully for CLDA members , the most-damaging parts of the BBB - the “ PRO Act ” which would have threatened the use of the Independent Contractor model – have been left behind in the BBB ’ s transformation into the IRA .
Less thankfully , the legislation contains very significant tax implications . For companies with more than $ 1 billion in average annual income , there is a new 15 % minimum tax in tax years after 2022 on the income corporations report on their financial statements , or “ book income .” But even for companies with smaller income amounts , the bill will have tax implications due to increased funding for the IRS . The Internal Revenue Service has been allocated $ 80 billion dollars over the next nine years and is expected to collect $ 203.7 billion in new revenue as a result . There have been reports that the IRS will use these funds to increase its workforce , potentially adding another 87,000 new employees .
While the Treasury has downplayed the reports about an army of new auditors , claiming the extra funding is destined to help fill holes caused by IRS employees set to retire soon , the Treasury has not explain how the IRS is meant to raise the projected $ 203.7 billion in additional revenue the government wants it to raise without resorting to harsher enforcement . In fact , the lion ’ s share of the $ 80 billion allocated to the IRS by this bill will go to enforcement activities .
So , every business and every taxpayer must be aware that the IRS is likely to step up the frequency of its audits . And while the Administration has claimed that the increased audits coming down the line will be focused on the wealthy , those earning more than $ 400,000 in income ever year , the math on that claim does not hold up very well to scrutiny because high-income taxpayers will , of course , have more resources at their disposal to ensure tax compliance . This is born out by GAO reporting . A GAO report from 2021 found that , from fiscal years 2010 to 2021 , “ the majority of the additional taxes IRS recommended from audits came from taxpayers with incomes below $ 200,000 .” Even with a beefed-up auditor corps focusing entirely on those earning more than $ 400,000 , the government will not likely hit its $ 200 billion-plus revenue targets . Many analysts , in expressing their doubts about the Treasury Department ’ s ability to extract more than $ 200 billion dollars from the super-wealthy , suggest that the remainder of that projected revenue will have to come from the middle class .
10 customized logistics & delivery Magazine fall 2022