On this week's episode of What's at Stake, Penta Partner Bryan DeAngelis and Managing Director Ylan Mui explore the implications of the Tax Relief for American Families and Workers Act with expert insights from guests Michael Steel, senior vice president of Communications at Business Roundtable and Kasey Pittman, a director with Baker Tilly’s Washington national tax practice. They offer analysis on critical updates to business tax provisions, highlighting potential impacts on low-income families and business owners nationwide.
The group touches on the changing U.S. business environment with a focus on small businesses and startups, assessing how updates to R&D tax credits, business interest deductions, and bonus depreciation could affect cash flows and innovation investments. Looking forward, they examine the dynamics of tax policies amidst global competition and a divided government. Discussing the potential for tax code revisions post-2024 elections, they also analyze the expiration of key provisions and the political strategies shaping the economic landscape. Tune in for a thoughtful exploration of the intersection between political decision-making, financial accountability, and the real-world impact on American businesses and families.
On this week's episode of What's at Stake, Penta Partner Bryan DeAngelis and Managing Director Ylan Mui explore the implications of the Tax Relief for American Families and Workers Act with expert insights from guests Michael Steel, senior vice president of Communications at Business Roundtable and Kasey Pittman, a director with Baker Tilly’s Washington national tax practice. They offer analysis on critical updates to business tax provisions, highlighting potential impacts on low-income families and business owners nationwide.
The group touches on the changing U.S. business environment with a focus on small businesses and startups, assessing how updates to R&D tax credits, business interest deductions, and bonus depreciation could affect cash flows and innovation investments. Looking forward, they examine the dynamics of tax policies amidst global competition and a divided government. Discussing the potential for tax code revisions post-2024 elections, they also analyze the expiration of key provisions and the political strategies shaping the economic landscape. Tune in for a thoughtful exploration of the intersection between political decision-making, financial accountability, and the real-world impact on American businesses and families.
Welcome to another episode of what's At Stake, a PENTA podcast. I'm your host, brian D'Angelois, a partner here at PENTA, joined today by my colleague Alain Moy, a managing director at our firm, and we have two very special guests Michael Steele, a PENTA alumnus who currently serves as senior vice president for communications at the business roundtable, and Casey Pittman, a director with Baker Tilley's Washington National Tax Practice.
Speaker 2:We are so excited to have both of you on the pod today to chat all things tax policy and, of course, the big news that's happening right now is the Tax Relief for American Families and Workers Act. That is a bipartisan, bichameral tax package that promises to provide low-income families additional access to the child tax credit. It also addresses some critical business tax breaks that were phased out or curtailed by the tax bill back in 2017. There's a lot to unpack here, as well as what's going to happen in 2025, when the tax code could see major revisions, so let's just dive right into it.
Speaker 1:Casey, maybe we can start with you. Can you just help us break down what's in this bill, what are the main issues it's aiming to address, and we'll get into a little bit of the impact of it.
Speaker 3:Sure, yeah, absolutely. The main features of this bill, I would say, fall into two categories for me. One is the child tax credit, which makes some changes to the child tax credit in terms of refundability for lower-income families. It would also index the credit to inflation, which we haven't seen since the $2,000 credit was put in place at the end of 2017 with the Tax Cuts and Jobs Act.
Speaker 3:The second portion of the bill would address a trio of business tax provisions. These are tax provisions that were implemented by the Tax Cuts and Jobs Act in 2017, but we saw some phaseouts in 2022 and 2023. I don't know that the drafters of Tax Cuts and Jobs Act ever expected these to actually phase out, but they have, and they've had impacts on many of our business taxpayers. So there are three. The first is research and experimental provisions, and there's a retroactive change in the bill back to 2022 for domestic expenditures. And then there's the business interest deduction limitation, and so that would be optionally retroactive back to 2022 and 2023.
Speaker 3:This one's really important because it limits a business's ability to deduct their interest payments, and it got more restrictive in 2022. We switched from having a calculation based on essentially 30% of earnings before interest and taxes, depreciation and amortization to just earnings before interest and taxes, so it became more restrictive. At the same time, we saw interest rates increase exponentially over our historical norms. So we're at a higher interest rate than we've seen in decades right now and we have less ability to deduct those on our business tax returns. So that's really important. And then the last is bonus depreciation, and bonus depreciation lets taxpayers deduct the full cost of an item that has a multi-year life, assuming it's a qualifying item right now, in the year that they actually pay for it. So we saw 100% bonus deduction through 2022. Now we're in a phase down. If we follow the law without any changes, in 2023, we reduced to 80%, 60% in 2024, and so on until we're down to 0% in 2027. So those are the main provisions. There's a few others that are more prospective, but these are the most impactful.
Speaker 1:And Steve, let me bring you into this. So there's obviously a lot of negotiations surrounding this and we'll jump right into this, but it'll tee up some bigger fights coming for DC in 2025. What is your read on the current state of play and how are you guys thinking about it?
Speaker 4:Well, so this bill, the combination described, is incredibly popular. The bill passed the House Ways and Means Committee on January 19th on a 40-3 vote. It passed the House Floor on February 1st 357-70.
Speaker 4:These aren't numbers you see very often anymore, and that's because it reflects what it is, which you don't see very much of anymore a big bipartisan compromise.
Speaker 4:Now, when we talk about congressional deals, we usually talk about the corners. Four corners means House Republicans, house Democrats, senate Republicans and Senate Democrats in whatever office is appropriate. Appropriators, leadership, tax writers have all agreed. This unfortunately faces a little rougher waters in the Senate than you would expect, because it's what's called a two-corner agreement. It was reached between the Chairman of the Ways and Means Committee, a Republican, jason Smith, and Ron Wyden, the Democratic Chairmen of the Senate Finance Committee. Senate Finance Republicans were not part of this deal, and they have questions or they want the ability to offer amendments. They want the ability to hold their own regular order process and be part of the result, and when the House is a majority-oriented institution, you have the majority or you don't. House Democrats I'm sure would have liked to have been involved in crafting this proposal, but they're sort of used to being excluded. Senators, because it requires a 60-vote threshold, expect to be part of the process, no matter within the majority or the minority, and so it's a legitimate danger to the progress of the bill.
Speaker 2:Casey, we've talked a little bit about what exactly the bill is and a little bit about the state of play and whether this bill will ever actually become law. But what would the impact of this bill be? What does this mean for the average American family?
Speaker 3:So the average American family might not see much in terms of impact for this bill. The changes to the child tax credit which are the ones that are giving rise to this debate, for the most part, that we just heard about in the Senate where that's where we see some of those Republican senators really wanting to make some changes to the text they would affect low-income families more than, I would say, the average American family. What it does is it doesn't change the tax child tax credit right now. Right, I mentioned that it does index it to inflation, but it makes it refundable for taxpayers. Additionally, refundable for taxpayers right now.
Speaker 3:I'll go ahead and explain this. If you have a tax credit that is calculated and it is more than your actual tax liability that you owe, it has to be refundable for you to get it back. If you have enough tax liability to cover this child tax credit, it won't make any change for you right now the legislative text. If you don't have enough tax liability to get the full credit, what it would do would increase the amount you're able. We're really targeting families that are at risk, that are lower income. For those families, it would have a substantial impact.
Speaker 2:What about the impact on what's commonly known as the salt deduction? I know there's been a lot of debate around the child tax credit and what the parameters around that might be, but there's also this other contentious piece of the discussion, which is that currently the amount of deduction that folks can take for state and local taxes is capped at $10,000. There's a lot of folks who feel like that's too little.
Speaker 3:I would say that's been a common concern, particularly for blue state representatives and senators. They've got higher income taxes. What we saw for this bill was that Mike Johnson was going to Speaker Johnson was planning to bring it to the floor and there were a few members of his caucus who were really unhappy, and they were the more moderate Republicans who are from primarily New York, long Island, where we see high property taxes and high income taxes. Now they haven't been able to deduct it. $10,000 isn't a lot for people living in those states. In order to get the bill to the floor, the Speaker had to make a side deal with these Republicans saying hey, I will bring a standalone salt bill to the floor. Now it's already gone through markup from the Rules Committee and it's ready to go.
Speaker 3:I believe the last thing I heard was that they're waiting on the special election before they vote on it. Yes, but this only addresses salt. It only addresses it for one year and all it does is remove the marriage penalty. Right now, the limit, as you mentioned, is $10,000. It's $10,000 if I'm single and it's $10,000 if I'm married. The only thing it does is change it from $10,000 to $20,000 for one year for taxpayers who have income of $500,000 or lower. It's really a targeted group and it would particularly benefit those blue state taxpayers.
Speaker 1:And Casey, what year is that Is that for—how much of this is going to go into effect? I mean, we're only a couple weeks away from tax day for this year and we still have to get through the Senate. But if that were to happen, how much of this is impacting I guess this year as taxpayers?
Speaker 3:It is only for 2023. The tax does run, so it is for tax returns that are potentially being filed right now.
Speaker 1:Already yeah.
Speaker 3:Right now, tax filing season opened two weeks ago, a little less on January 29th, so you are able to submit your tax returns and it will make a difference in whether those taxpayers itemize or not. Right now, many of those taxpayers may be filing a tax return with a standard deduction and then, if this bill were to pass, they would have to go back and amend their tax return to itemize in order to take advantage of this benefit.
Speaker 1:I want to go back to something Casey was breaking down earlier. So we have heard about the individual benefits. We've heard about some of the—for lack of a better term—big business benefits, but where does small business fit into this?
Speaker 4:Yes, just I want to make one point or two points on the salt thing before we move off of that. This is politically very difficult, I should note. Brt has no position on salt whatsoever. But it's politically tricky for Speaker Johnson because most Republicans believe that the salt deduction incentivizes big spending and high taxes by irresponsible liberal jurisdictions at the expense of taxpayers in red states. At the same time, his majority, slim as it is, rests on New Yorkers. It rests on people in Pennsylvania or the Salto Initiative in Philadelphia. So these are the majority makers raising these concerns that are not necessarily shared or viciously opposed by the bulk of the conference.
Speaker 4:On the impact on the business provisions, there is no doubt that there is a huge impact for bigger businesses. The chairman of the BRT, chuck Robbins, the CEO of Cisco, estimates that the lack of the R&D provision alone has cost Cisco $1.7 billion over the past two years. So that's it's not yet driving decisions about where to invest in R&D, but it will if we don't get this fixed. And I'd also say that we had a call last week with some small businesses across the country and we heard from Benjamin Mengfort at Notional Labs in Iowa City, iowa.
Speaker 4:Our tax liability increased 438% when we lost the R&D tax credit. This is an existential threat to all software and engineering companies. Strong quote we heard from Jeff Hibbard in Waltham Massachusetts. This R&D tax-expensing disproportionately crushes small engineering and startup companies. We heard from a woman at a tech startup in North Carolina who said that the CEO of the company literally owes more in 2022 federal taxes than his annual salary. That means, rather than getting paid to work, he paid the US government to work as a result of the loss of this deduction.
Speaker 1:That's pretty valid. Go ahead, Casey, please.
Speaker 3:I'd love to sort of put an example to that right. So, whether you're big business or small business, but let's just imagine you're a small business and you're investing in research we're talking about the research and experimental provision right now. So the change that we had in 2022 was that you used to be able to deduct these in the year in which you incurred the expense, and I won't get into the details because there's a little bit of a play if you want to use a credit too. But we'll just say we're expensing them all. We'll ignore the credit for the time being. So I spent $5 million on research and experimental expenditures. That is money that is leaving my bank account that I have used in my business. In this way, I get a write-off. That makes sense. So the change was that for domestic expenditures, instead of writing them off in that year, you have to capitalize them, so kind of like put them over here on a shelf and I get to write off one-fifth of it each year nominally. I'm oversimplifying this.
Speaker 1:It's our podcast. We can read it Over five years.
Speaker 3:And then if it's an international, I have to do it over 15 years, right? So let's imagine that same scenario. I spent $5 million on research and experimental expenditures and we'll say it's domestic, which is great. That's what our tax law has been incentivizing. Recently We've seen a real shift toward on-shoring with our tax bills, so we move it over here. I've spent this $5 million on it, but I only get a $1 million deduction, right? So I spent $5 million, but I'm paying tax on $4 million that I spent in my business. That affects my cash flow at the end of the day, which gives me less money to continue to invest in these items, to invest in research and experimental expenditures. And we've seen reports there's been some great reporting on it actually that companies are saying I am going to invest less this year because I have less money because I didn't get that deduction. So that's the actual sort of real life impact. Is that I have to do?
Speaker 1:it differently, which seems like the exact opposite of what we want them to do right now, coming out of where our economy's been and all we've seen with our area and we've seen businesses under a lot of stress, right.
Speaker 3:We've seen them with these high borrowing costs, we've seen labor shortages. There's a lot that we're having to grapple with. And for businesses who do research and experimental, have research and experimental activity, this has been really impactful. And this is just one of the provisions, right, that we're sort of going back and retroactively fixing in order to incentivize Again, we want to incentivize that behavior.
Speaker 4:Right, and we should say this is not a new wackadoodle idea. This has been, I think, since 1954, this is 70 years of bipartisan tax policy. When we're talking about the R&D tax credit, this is pretty common sense stuff.
Speaker 1:And I imagine that's why we're seeing such big numbers. I mean, you said at the beginning, but we don't see bills move through Congress 350,000 votes in the House.
Speaker 4:No Like this anymore. This is a win-win.
Speaker 1:And I haven't seen much talk about the cost and that's always a big part of the tax fight, but there is. The Committee for Responsible Budget has estimated this could cost roughly 650 billion over a decade if these sunsets are abandoned, if the policies are made permanent. I haven't seen much debate on this. Where's-.
Speaker 4:If in butts for candy and nuts it'd be Christmas every day.
Speaker 1:I mean this is the way we do tax policy they have.
Speaker 4:it's a time limit, it's a. There's an offset for this bill. They're getting rid of a pandemic-era policy that is rife with fraud and none of these hypothetical scenarios really have to bear here. And because it is paid for in a responsible, bipartisan way. No, there's not a lot of concern about deficits or debts when you talk about this package.
Speaker 2:Okay, can I just say that that blew my mind that this entire tax package could be paid for essentially by stamping out fraud. What is the? And the employee retention tax credit? I mean, what does that say about how much wrongdoing was going on? You didn't have to raise new revenue. You just have to stop the bad actors from playing a bad game.
Speaker 3:Yeah, and that was an interesting development for me too to to get the scoring on how much we would save from ending the ERC early and increasing the statute of limitations and increasing the penalties on on what they call ERC promoters in the bill. Well, we've also heard them referred to as AI. Cpas called them credit mills, erc credit mills, and I think that that for me was really telling, as well, $79 billion.
Speaker 2:That's how much they estimate they can raise from getting rid of this credit or tightening the screws on the credit, and that would pay for pay for all these very important incentives.
Speaker 3:And I do want to say that there are some. There are some legitimate ERC claims that have not been filed, whether those taxpayers didn't have great advice, or whether you know there has been. Before this law was written, there was a strategic pause taken by IRS hey, we're not processing these, you know, in order to slow things down. Take a look at the claims before they were processed and some people stood on the sidelines or like, well, we'll, we'll file it when that opens. And so there are some people who have legitimate ERC claims who will be left out, who won't be able to take advantage of this program. Now, I mean, they've had a few years to do it and I don't know any individual circumstances, but certainly there are some people that are going to be some sad cases, but I think, for the most part, it looks like what it will do is stop the flow of fraudulent claims.
Speaker 1:That's great. Let me maybe shift gears a little bit. I mean, this all feels like the warm up to the big act, which is, you know, the 2025 tax cliff or whatever you want to call it, but but big fight coming. I think a big fight coming, maybe that's my question for you guys. This seems to have such broad bipartisan support. Obviously, we have an election to get through and we'll see how that shakes out, but what does this tell us about the 2025 expirations and how Congress will handle it?
Speaker 3:Well, I think, as we look at this kind of piggybacking off of Michael here right, we talk about the four corners. This was a two corner deal that we were talking about to begin with, but these are likely to be the same actors If we wind up, if we presume that after the 2024 election, we wind up with a divided government, we are facing this cliff, and these are many of the same players who are going to have to negotiate a compromise or else we fall off this cliff, right, no-transcript. And I will say that if we pass the tax bill that's on the table today, it will only make those states higher, because all of the provisions we have in here you talked earlier about, hey, if we made these permanent, it would be 650 billion. That's because these provisions in the bill are for retroactive, to 2022, 2023 and for 2024, 2025. Then we face this cliff all over again, just the way we do with all those tax cuts and jobs acts.
Speaker 3:And I want to say that you know, Congress sometimes does make provisions temporary and it's to keep the costs down, and we saw that with tax cuts and jobs act. You know that was passed via reconciliation and I believe the latest estimates on that to extend those permanently would be 3.3 trillion or something like that. So that's not uncommon, I don't know. My hope is that whenever we get tax reform, that it is done before the end of the 2025 year and that it is, you know, comprehensive and permanent. That might be too high of a bar.
Speaker 2:We're going to have to Over here.
Speaker 1:You can come back on in 2025 and tell us that prediction holds up.
Speaker 4:Yeah, I mean, it's really hard to discuss the contours of the debate in 2025 without knowing the results of the 2024 election.
Speaker 4:And I, right now, I would bet 20 bucks on a narrow Republican majority in the Senate and I wouldn't bet a nickel either way on the White House or the House. And so if there's a scenario where House Republicans run the table, you could see another reconciliation vehicle, essentially keeping the tax code intact. If Democrats run the table or we have divided government, there will have to be that negotiation and it's likely be pretty contentious. I mean, this is a $3 trillion swing in revenue.
Speaker 2:But also I think it's important to point out which we're kind of alluding to, but maybe not sitting explicitly that this is by design, right that when the tax cut and jobs act was passed, the majority of the business tax provisions were permanent, notably the reduction in the corporate tax rate, and in order to save money according to you know the fuzzy math of a fiscal policy right the individual tax provisions were primarily made temporary, the sunset after what it was at seven years right, because I think lawmakers at the time were betting that you know Congress would not let taxes go up on middle class Americans, on American households, but they may have a harder time renewing some of those business tax cuts that were made permanent back in 2017.
Speaker 2:So these business tax incentives that we're talking about you know those are some of the smaller provisions that they had to sort of compromise with back in 2017, but there's a huge, huge impact potentially to the average household from what's to come in 2025. And so they played a little bit of politics with it and now now it's coming home to roast.
Speaker 3:And when we passed tax cuts to Jobs Act, the way I described it to taxpayers, you know, to our clients, was that we've got all these little knobs and they were turning each one to see if we can get to the magic number. How many of these priorities can we pass with any real scope? Right, you don't want to pass a one year or two year with, you know, any real longevity. How many of these can we pass? What do we have to dial up and dial down? And we're dealing with some of those right now. Right, with the interest and with the research, and that's what this tax bill is about. Many, many of the individual ones were punted, I would say, in terms of we're going to renew them or they're going to fall off a cliff. That's at the end of 2025, beginning of 2026.
Speaker 3:But there is an important business one, and it is the Section 199A, or the Qualified Business Income Induction, and so we got this reduction in the corporate tax rate and we called that Wall Street. You know that was the. We said that's for Wall Street. And then we have this 199A, or QBI deduction. That's for Main Street, and so that's for all those flow through businesses, right, there's, there's so many partnerships and S corporations not, and they're not just small businesses. A lot of times, right, there are many large businesses that are able to use this so many, but not all there are. There are a lot of parameters around using this deduction and are able to essentially take 20% of their taxable income off the table. If I made a million dollars this year, I only have to pay tax on 800,000. And that's what this deduction does. That's also set to expire, and so I really love to hear what Michael has to say about that, because I can imagine that's a huge issue.
Speaker 4:Well, I have to start by saying that the rate is a is a huge issue for Parain Street as well as Wall Street. Anyone who shops at a Walmart or eats at McDonald's hamburger, or uses an iPhone or takes an airline flight or does any of the things that we do throughout our day that are that are provided by the innovations and folks that work for America's bigger companies and their suppliers and their and their communities. So I think that we're going to have a a robust effort to defend a competitive tax rate that keeps American capital and American businesses here in the United States, and we haven't had the kind of corporate inversions that we were having prior to the Tax Cuts and Jobs Act.
Speaker 4:We've seen substantial economic growth, even through some pretty amazingly turbulent times, and I think that there's no question that that the design of the of the tax code right now is is a big part of that, and so, as folks start depending on how who's holding the levers in various places, in 2025, as we start trying to get to the next level, we're going to figure out how to protect middle class Americans from tax hikes on their individual, on the individual side. We also need to keep a weather eye on the competitiveness of our of our business tax code.
Speaker 1:Can you say more about that too, Steel? I mean, 2024 is not just US selection selections. Around the world there's going to be new governments coming in and I suspect they're going to want to be pretty competitive for a lot of our businesses as well. Yeah, what are you guys looking at there?
Speaker 4:It's the stated goal of pretty much every developing or develop power in the in the world to to develop, to innovate in exactly the same kind of areas AI, biopharmaceuticals, all of the stuff that energy, renewable energy, all of the things that we hope America continues to to lead the world in. Yes, all of our, all of our competitors are investing in exactly the same stuff, and when we talk about the R&D tax credit, for example, I mean we're talking about whether to get that back in the United States, whereas China has a massive system of subsidies for things that they consider cutting edge technologies.
Speaker 1:To a fair point.
Speaker 2:One of the important international tax developments was the move toward this idea of a global minimum tax. Treasury Secretary Janet Yellen sort of led the charge, developed the coalition and now it looks like, while she got everybody together to agree to this, other countries are the ones who are actually now implementing it, and the US is still sort of twiddling its thumbs. Can you see what? Can you tell us about where things stand with with that provision?
Speaker 3:And I will let me preface this I'm not an international tax expert of this.
Speaker 2:Neither are we, it's okay.
Speaker 3:But I will say, yeah, this was, I mean, this was a global negotiation and and the US was part of it, but we can't implement it without passing it through Congress and that's just not a reality at this point. Republicans are not on board. They've been pretty vocal in their opposition and I want to say it was like right before the conference this summer, they released a proposed legislation that would sort of deal with some of the negative effects of not joining on, not signing on to. It's called pillar two. That would increase tax rates on certain foreign entities in response in order to make us to keep our revenue. The idea is to keep our revenue, even for the United States to get their share. I don't know that hasn't gone anywhere. I don't expect that it will in the current Congress, but we will see Again, absent a democratic sweep. I just don't know that it's realistic for us to expect that we're going to join and sign on to pillar two.
Speaker 4:Yeah, I mean, I think the reality is that the Treasury Secretary does not set US tax rates. The President does not set US tax rates. The President's role is someone once said, is to provide one operable thumb to sign the legislation into law after it passes Congress.
Speaker 2:You only need one, you don't need two.
Speaker 4:I don't think it's just Republicans. Honestly, I don't think you would see substantial bipartisan opposition to any effort to pass this as legislation.
Speaker 3:And you know what, Michael, you might be right and that might just be that Republicans have been the most vocal about it doesn't feel to me like a realistic possibility at the moment I was going to say it doesn't, and the road to this seems very difficult to see and regardless of kind of the shakeup that happens after the elections. I would put no money on it also. Yeah, not even that. I was like oh no, nick, oh yeah.
Speaker 1:Um, so steal one. Follow up to that, even if Crap oh and Republicans get on board. They have their say with amendments and mark up um pretty crowded Senate calendar with some of the funding bills and Tax day, as I said, is a couple weeks away, Like I'm wondering how much runway Schumer actually has here.
Speaker 4:Yeah, I mean I start by saying that I my whole career was in the house. I covered the Senate a little bit as a reporter, but not a Senate expert.
Speaker 1:That's a good flip, as maybe in the Senate guy asking the house guy to talk about the Senate.
Speaker 4:Yeah, it's, the Senate hasn't done a standalone tax bill in 15 or so years, I think, so you've got to find a vehicle that can get through once Senate finance Republicans are satisfied with the process and I should note we've seen support already from Senate Republicans who are not on the committee. It's this is very much a committee jurisdiction respect. It's a legitimate which the Senate issue, but that's fanatical.
Speaker 4:And we've got funding deadlines on March one and March eighth. So if we can't find a way to process this before that, we're getting pretty deep into filing season. After I would just say we've got um, senate is expected to be out for two weeks. The status of the funding supplemental funding situation makes that very much in doubt right now, and I just don't know when they're going to have the time to move to this um, if they don't do it pretty quickly.
Speaker 3:Yeah, and I just just adding to that. Um, we are into tax season, right. I mentioned that tax season had opened, um, and for businesses many of them they can use extensions, right. So you don't necessarily have to file your tax return by April 15th If you're a corporation or March 15th if you're a flow through entity. You can have a six month extension. It's automatic. However, all of the taxes do on that filing date for that year and we have to use these numbers to create estimates.
Speaker 3:So once we get so far down the road, once we get too far away from filing season, it becomes almost unadministrable. Um, so the sooner the better. If this were to pass, say, on a legislative vehicle, it would attack onto that first round of funding If the appropriations bills are ready by March first, or, if not, if there's an additional continuing resolution. If they were able to get this bill tacked on and passed with that at least, then taxpayers would know what the law would be before the filing deadline. We'd be able to adjust accordingly after the filing deadline. It it gets really difficult, um, and that being said, even if it does pass right, we have to. The IRS has to make changes to forms. They have to give guidance. We have to. You know there's there's quite a bit that will waterfall out of the passing of this tax bill, um and and so there's a real concerns for taxpayers.
Speaker 2:Um and look, I feel like we're not even sure we're going to get the government funded on March first and March eighth, much less get the tax bill Right.
Speaker 1:There might not be people working to update those forms.
Speaker 2:Exactly, casey, not to put you on the spot here. But I mean, in your estimation, is there a drop dead? I mean, if this passed in September, let's just pick a date, september 30th, let's say at the end of the fiscal year, would that be too late? Is there a time when businesses will have to just say you know this isn't going to do us any good in this year?
Speaker 3:That's a great question. So if this were to pass, in September, almost everybody's tax returns will have been filed and anybody who hasn't will be running up against those extended deadlines. And that's it. You've got six months, right. So those tax returns are due.
Speaker 3:It would be really hard to do a retroactive provision in September of 2024 that dates back to 2023. So a lot of these provisions we talked about the ones that date back to 2022, one is the interest limitation and that's kind of optional. You can go back and amend if you want. But the other ones the other one that goes back to 2022 is this research and experimental, this R&D that we were talking about. But the law is written so that in 2023, you can figure out what that delta is for 2022 and take it into account in 2023. You do that in September. That's too late. So then could you still make it retroactive yet, but it would be a different bill and it would likely we would need these 2024 applications in order to make it easy to administer. I think we've got a limited window here. If we don't know in the next month or two what's happening with this bill, it's not to say it can't pass, I just don't know that it could pass in its current form.
Speaker 4:Yeah, we're going to start getting into political primaries. The prospect of passing anything like this six weeks before a presidential election is not good, and even two months from now we'll have a general election.
Speaker 1:So this is going to be a sprint if they're going to make it work.
Speaker 2:We'll have to leave the conversation there, michael Casey. Thank you guys both so much for joining the show today. To our listeners, remember to like and subscribe wherever you listen to your podcast and follow us on X. We're your hosts, elon Mui and Brian D'Angelois, and, as always, thanks for listening to what's At Stake.