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Lawmakers tee up tax fixes for March 23 spending bill

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Tax Hot Topics newsletter Republicans have begun jockeying to attach their top tax priorities to the next government funding bill. The coming legislation represents a potential vehicle for fixes to the Tax Cuts and Jobs Act, including a change to the pass-through deduction for farm cooperatives, as well as proposals on state tax issues.

Lawmakers are aiming to pass an extension of government funding before the current agreement runs out on March 23. It is one of the few must-pass legislative initiatives this year, and many Republicans view it as a rare opportunity to move tax changes. Democrats are already campaigning on promises to repeal parts of TCJA, and are not expected to allow Republicans to move a stand-alone bill of technical fixes.

At the very least, Republicans appear poised to attach a provision addressing an issue that gives farmers selling grain through cooperatives a larger pass-through deduction than farmers who sell through an independent distributor. Other tax reform changes may also be possible, including fixing a glitch on the eligibility of qualified improvements for 100% bonus depreciation.

More substantive tax bills could also be attached, but face hurdles. Several Republicans are pushing to address longstanding state tax issues. The Mobile Workforce State Tax Simplification Act would generally only allow states to tax employee earnings if they work in the state at least 30 days. The Marketplace Fairness Act would expand the ability for state to tax online sales. Both bills enjoy some bipartisan support, but also face the opposition of important members of leadership.

The prospects for the Mobile Workforce bill are better, but it faces the opposition of Senate Minority Leader Chuck Schumer, D-N.Y. The administration supports the Marketplace Fairness Act, but the Supreme Court is already scheduled to address the issue separately in South Dakota v. Wayfair (No. 17-494).

Contact Dustin Stamper
Director, Washington National Tax Office
T +1 202 861 4144

Shamik Trivedi
Senior Manager, Washington National Tax Office
T +1 202 521 1511

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