On September 26 President Biden signed into law the three-month funding bill that avoided a government shutdown on October 1. The continuing resolution (CR) extended fiscal year (FY) 2024 funding levels until December 20 and made few (none of them controversial) policy changes. So, the tough issues—e.g., FY 2025 funding levels, whether to block certain regulations (including the fiduciary rule)—were left to be resolved during the November-December lame duck session of the 118^th Congress.

On September 12, the Senate Finance Committee held a hearing to lay the groundwork for the 2025 tax bill effort to cut down on “tax avoidance.” The hearing highlighted proposals to improve tax equity in current law. It also focused considerable discussion on section 199A, the deduction for qualifying noncorporate business income.

The premium tax subsidies that allow lower-income individuals to get Affordable Care Act (ACA) health insurance free or at reduced cost are scheduled to expire at the end of 2025. If the current subsidies do expire, millions of low-income individuals will face significant health insurance cost increases. Extension of the subsidies will be a key issue in the 2025 tax bill and/or during the November-December lame-duck session of the 118^th Congress.

The ENABLE Act, a bill that makes permanent three provisions of the ABLE account law, passed the Senate under a unanimous consent agreement on September 19. The bill, the ENABLE Act, was introduced in the Senate by Sen. Bob Casey (D-PA), the author of the original ABLE Act, and Sen. Eric Schmitt (R-MO) and in the House by Rep. Lloyd Smucker (R-PA) and Rep. Don Beyer (D-VA).

Private sector economists, including the respected Committee for a Responsible Federal Budget (CRFB), are sounding the alarm over the cost of both presidential candidates’ tax proposals. This suggests the 2025 tax bill will be as much about revenue as tax policy.

On October 3, the Internal Revenue Service (IRS) and Treasury issued new guidance, Notice 2024-73, on coverage requirements for long-term part-time employees (LTPTE), beginning in 2025. SECURE 2.0, enacted late in 2022, includes a provision requiring employer-sponsored retirement plans to allow long-term (those with service of two years or more) part-time (those who work at least 500 hours/year) to participate in the employer-sponsored retirement savings plan.

A bipartisan bill to cut off employee retention tax credit (ERTC) claims has been introduced in the Senate. The bill pulls the ERTC provisions from the House-passed HR 7024, a bill that has been long-stalled in the Senate.

At a September 12 hearing, the Senate Finance Committee explored tax avoidance strategies used by the very wealthy. Strategies identified included lack of current tax liability on unrealized asset gains, step-up in basis, trust rules, and private placement life insurance (PPLI). This is a prelude to the looming 2025 tax bill debate.

Congress ended its summer break on September 9, returning to Washington to deal with the need to fund the U.S. government by midnight September 30. None of the 12 regular-order appropriations bills, which together fund the U.S. government’s discretionary activities for each fiscal year, have been enacted into law. None have passed the Senate, and only five have passed the House. Hence, there is no visible way Congress can enact many (if any) of these 12 bills before Fiscal Year (FY) 2024 ends on September 30.

The debt limit (the statutory limit on the amount the federal government can borrow) is currently suspended until January 2. That means unless Congress acts to raise the borrowing limit or further suspend the statutory cap on borrowing by January 2, the U.S. risks being unable to make timely payments on all of its obligations. Economists widely believe this would trigger worldwide economic catastrophe.

Both former President Trump and Vice President Harris announced economic and tax policy agendas earlier this month. Key implementing details are missing from both candidates’ plans, but the general outlines suggest a legislative battle over tax rules regardless of who wins the presidency. Both candidates’ plans have triggered predictions of big (as in trillions of dollars) revenue losses, although both candidates have also suggested ways that those losses would be contained if not offset. So, both pose risks for NAIFA tax issues.

Historically, the performance of the presidential candidates has a measurable impact on the fates of candidates down-ballot (Senate, House, and state races, too). Some presidential candidates have longer, stronger coattails than others (or act as a bigger drag on down-ballot races). A favorite discussion point among Washington insiders these days is the potential influence of candidates Trump and Harris on House, Senate, and state races. Here is what we know as of now.

On August 1, the Senate failed to invoke cloture (cut off debate) on HR 7024, the House-passed tax bill that would, among other things, cut off employee retention tax credit (ERTC) claims, and provide better depreciation and business interest tax rules. The failed 48 to 44 cloture vote makes it ever more unlikely that the bill—which passed the House on January 31 by an overwhelming 357 to 70 vote—can be enacted into law this year.

Congress has left Washington for an extended (lawmakers do not return until September 9) summer recess. NAIFA members are visiting with their Representatives and Senators at home.

When Congress returns to Washington on September 9, lawmakers will have less than three weeks to fund the government (and consider any other pre-election pending legislation). Plus, Representatives and Senators will be focused on the November 5 election, when partisan control of the House, Senate, and Presidency are all in play. So, most Washington insiders believe that Congress will punt on most, if not all, major decisions, leading to a fraught post-election lame-duck session.

On August 8, the Internal Revenue Service (IRS) announced it will again process 2021 Employee Retention Tax Credit (ERTC) claims. It says it has resolved many claims issues, so far resulting in 28,000 denials and many valid claim payments.

On July 25, Senate Finance Committee Chair Sen. Ron Wyden (D-OR), along with five colleagues, introduced legislation that would impose criminal penalties on “rogue” health insurance advisors who make changes to individuals’ Affordable Care Act (ACA) health insurance without the insureds’ knowledge or consent. The Insurance Fraud Accountability Act would impose fines on brokers who negligently provide incorrect enrollment information, and criminal liability if the provision of incorrect information is “knowingly and willfully false or fraudulent.”

On July 10, the House Education and Workforce Committee approved a Congressional Review Act (CRA) resolution to block the Department of Labor’s (DOL’s) new fiduciary-only rule. The CRA resolution, H.J.Res.142, would “disapprove the rule submitted by the Department of Labor relating to “Retirement Security by Rule: Definition of an Investment Advice Fiduciary (89 Fed. Reg. 32122 (April 25, 2024)), and such rule shall have no force or effect.”

A federal district court in Texas has stayed a Department of Health and Human Services’ (HHS’) Centers for Medicare and Medicaid Services (CMS) rule that sets a fixed administrative fee and consequently prevents payment to health insurance agents and brokers for advice recommending certain managed care plans. In Am. For Beneficiary Choice v. HHS and Council for Medicare Choice v. HHS, the court found that the plaintiffs demonstrated a substantial likelihood that they would prevail on the merits. The merits include plaintiffs’ claims that the rule would “upend the regulatory status quo, dramatically limiting administrative fees that Congress did not intend” for CMS to regulate.

In Moore v. United States, the Supreme Court (SCOTUS) sidestepped the question of whether it is constitutional to tax unrealized income—but four opinions (two concurring and two dissenting) suggest that at least four of the current SCOTUS justices might in another case find it is unconstitutional to tax income until it is realized.