May 2013

Washington Report

Cantor predicts busy May agenda in House

House Majority Leader Eric Cantor, R-Va., predicted that the House will have a "full legislative agenda" in May in a recent memorandum to his GOP colleagues. Cantor said that current law does not require the Treasury Secretary to prioritize debt service payments on the government’s existing debt in the event that the government reaches the debt ceiling. Under proposed legislation, the Full Faith and Credit Act (HR 807), Treasury would be required to issue debt to the extent necessary and solely for the purpose of paying principal and interest on the debt obligations held by the public and the Social Security Trust Funds.

Cantor also said that the House will vote on legislation to replace the current interest rate for federal student loans with an interest rate tied to market rates for federal borrowing and on repeal of the Patient Protection and Affordable Care Act. Legislation that may be taken up before Congress’ August recess could include a farm bill, an energy bill and the U.S. Department of Defense appropriations bill, Cantor added.

Notably, Cantor did not predict that the House will vote on the Marketplace Fairness Act (S. 743). The Senate approved the bill, which authorizes states to collect sales tax on online purchases, on May 6. House Speaker John Boehner, R-Ohio, said on May 7 that the House Judiciary Committee would take up the bill “in regular order.”

JCT describes tax reform suggestions made to Ways and Means working groups

The Joint Committee on Taxation (JCT) on May 6 released a summary of comments submitted to the 11 House Ways and Means working groups on comprehensive tax reform. The suggestions and comments, which were made during the past two months, were included in the summary. The JCT summary details present law, public comments and other comprehensive tax reform plans. In a joint statement, Ways and Means Chair Dave Camp, R-Mich., and ranking member Sander Levin, D-Mich., said the tax writing panel plans to study the more than 1,300 comments summarized in the JCT report. "The report provides an important and comprehensive overview of the Tax Code. The committee will dig into its details over the coming weeks," the lawmakers said.

IRS Oversight Board explores ways to curb identity theft

The IRS Oversight Board held a public meeting in Washington, D.C. on May 1. One panel at the meeting discussed how the IRS and its partners can work together to prevent fraud.

Jeffrey Porter, CPA, chair, Tax Executives Committee, American Institute of Certified Public Accountants (AICPA), lauded the IRS’s activities to combat fraud, especially identity theft. However, Porter cautioned that more work remains to be done. "Despite the IRS’s successes in combating identity theft, we cannot over-emphasize the staggering dimensions of the tax identity theft problem. The IRS’s Identity Protection Specialization Unit (IPSU) received about 450,000 cases in FY 2012, a 78-percent increase over FY 2011," Porter said.

James White from the Government Accountability Office (GAO) suggested several approaches the IRS might use to reduce tax fraud. These include utilizing more income information provided by third-parties and enhancing the quantity of third-party information reporting. "GAO has recommended reporting on contractor service payments to corporations and contractor service payments made by landlords. Other changes could include revising the information reported on Form 1098-T, Tuition and Other Education Expenses, and on Form 1098, on the property address for mortgage interest payments," White said.

Larry Gray, CPA, National Association of Tax Professionals (NATP), recommended that the government curb its usage of Social Security numbers as the primary form of identification. "Social Security numbers are too well known," Gray cautioned.

Our strategic partnership with CCH, a Wolters Kluwer business, has enabled us to craft our Tax e-newsletter. We hope you find the articles valuable and relevant. Please feel free to contact ParenteBeard LLC at [email protected] if you have any questions related to these stories or ParenteBeard's services.

©2013 CCH. All Rights Reserved.