President Biden Releases FY 2024 Budget Request
President Biden recently released his annual budget request to Congress for fiscal year (FY) 2024. The budget calls for $6.8 trillion in federal spending along with $5 trillion in new taxes on high earning individuals and corporations, including a 25% minimum tax on individuals worth more than $100 million and an increase in the corporate tax rate to 28%. In addition, the president wants to restore the top tax rate of 39.6% on single filers making more than $400,000 a year and married couples earning more than $450,000. The president is also proposing to increase the capital gains rate for those with more than $1 million in income. In total, the proposal seeks to reduce budget deficits by nearly $3 trillion, compared with the country’s current path.
It should be noted that the president’s annual budget request is seen as an aspirational document which lays out the Administration’s legislative agenda and is not required to be passed by Congress. These proposals are simply recommendations for Congress to consider as they craft appropriations bills for the next fiscal year. Several of the president’s proposal are not expected to pass the Republican-controlled House of Representatives. Congress will have to pass an appropriations bill by Sept. 30, 2023 to ensure the federal government is funded for the next fiscal year.
President Biden to Nominate Julie Su as Next Labor Secretary
President Joe Biden recently announced he would nominate Julie Su to be the next Secretary of Labor. Su is currently the deputy Labor secretary and will be nominated to replace Marty Walsh, who is departing the Biden Administration to run the professional hockey players’ union.
Before joining DOL, Su served in several top posts in California state government, including as labor secretary under Gov. Gavin Newsom. Prior to that she worked as a lawyer for low-wage and immigrant workers, including at a legal aid nonprofit in Los Angeles.
Tax Deadline Extended to Oct. 16 for Disaster Area Taxpayers in Three States
The Internal Revenue Service (IRS) recently announced that disaster-area taxpayers in most of California and parts of Alabama and Georgia now have until Oct. 16, 2023, to file various federal individual and business tax returns and make tax payments. Previously, the deadline had been postponed to May 15 for these areas.
The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA) in these three states. There are four different eligible FEMA declarations, and the start dates and other details vary for each of these disasters. The current list of eligible localities and other details for each disaster are always available on the Tax Relief in Disaster Situations page on IRS.gov.
The additional relief postpones until Oct. 16, various tax filing and payment deadlines, including those for most calendar-year 2022 individual and business returns. This includes: Individual income tax returns, originally due on April 18; Various business returns, normally due on March 15 and April 18; and returns of tax-exempt organizations, normally due on May 15.
IRS Issues Warning on ERC Claims
The Internal Revenue Service (IRS) issued a renewed warning urging people to carefully review the Employee Retention Credit (ERC) guidelines before trying to claim the credit as promoters continue pushing ineligible people to file.
The IRS and tax professionals continue to see third parties aggressively promoting these ERC schemes on radio and online. These promoters charge large upfront fees or a fee that is contingent on the amount of the refund. And the promoters may not inform taxpayers that wage deductions claimed on the business' federal income tax return must be reduced by the amount of the credit.
Businesses should be cautious of advertised schemes and direct solicitations promising tax savings that are too good to be true. Taxpayers are always responsible for the information reported on their tax returns. Improperly claiming the ERC could result in taxpayers being required to repay the credit along with penalties and interest.