Last month, Congress’ Joint Committee on Taxation (JCT) released its annual “tax expenditure report.” This is a list of many tax code rules that result in the government not collecting tax on what would otherwise be taxable income. Many of these rules directly benefit life and health insurance, retirement savings, employer-provided benefits, and general investments.

Treasury and the Internal Revenue Service (IRS) have announced increased enforcement in connection with employee retention tax credit (ERTC) claims. The agencies are warning about more scrutiny as a result of what they call massive fraud in the pandemic-era tax rule. Now, some in Congress are pushing back, concerned that legitimate claims are not being paid as a result of this increased scrutiny. In addition, Congressional tax writers are looking at the ERTC as a possible source of offsetting revenue for the emerging tax bill (see story below).

Currently there are two principal tracks for tax legislation in 2024. The first is an emerging $78 billion package aimed at providing a combination of business and individual tax relief in certain discreet areas. The second is a bigger picture bill that would address the fact that more than half the tax code is scheduled to expire at the end of 2025. Both have significant implications for NAIFA members and their clients.

On January 8, President Biden officially renominated Julie Sue as Secretary of Labor. Su failed to win the votes needed to confirm her last year, but Senate leadership pulled her nomination from the floor rather than allowing a vote against her. Su is currently serving as acting DOL Secretary.

At the NAIC’s Fall Meeting in Orlando, Florida (November 30 – December 3), NAIFA’s Policy Director Roger Moore testified against the Department of Labor’s proposed fiduciary-only rule during the Life and Annuities (A) Committee meeting, commenting that the rule will harm lower- and middle-income families. Moore was joined by representatives from coalition partners in expressing strong support for the NAIC’s efforts opposing DOL’s actions.

NAIFA testified on the first day of the two-day (December 12-13) Department of Labor (DOL) fiduciary rule hearing. President Bryon Holz, who appeared with one of his clients, represented NAIFA, telling DOL of the harm its proposed rule would cause for middle-income retirement investors. NAIFA will also submit formal comments to the DOL ahead of the January 2 deadline for close of comments.

As part of NAIFA’s National Leadership Conference, 248 NAIFA leaders from around the country spent December 5 on Capitol Hill, asking lawmakers to support our efforts to kill the Department of Labor’s (DOL’s) proposed fiduciary rule and exempt financial advisors from its worker classification/independent contractor proposed rule.

On November 15, Congress enacted, and on November 17, President Biden signed into law a continuing resolution (CR) that extends current funding for the government’s discretionary spending until early in 2024. It was a two-part extension that was fraught with political peril. Renewed debate—and risk—will peak again right after the holidays.

On December 6, the tax-writing House Ways & Means Committee’s Subcommittee on Tax Policy held a hearing to look into extending those 2017 Tax Cuts and Jobs Act (TCJA) individual and estate tax provisions that are set to expire as of 2026. There was, of course, the predictable partisan squabbling over “tax cuts for the wealthy” as compared to “tax cuts that stimulate economic growth.” But there was also considerable evidence that there is bipartisan support for a fair number of the TCJA’s provisions, and for some other tax cut ideas.

On December 6, professional staff to Congress’ retirement savings committees released a draft of their proposed SECURE 2.0 technical corrections package. The committee staff are requesting input from stakeholders to be sure the proposed fixes work, and to provide one last opportunity to add any newly identified errors that need correcting.

The issue of “wealth taxes”—particularly whether investment wealth in the form of unrealized gains can be subject to current income tax liability—is swirling in Washington this month. Both the Supreme Court and Congress are confronting the issue.

On November 24, the Treasury Department and the IRS issued proposed regulations implementing the rules of the provision in the SECURE retirement laws that qualifies long-term (those who have worked two years or more for an employer), part-time (those who work at least 500 hours/year) employees to participate in an employer-sponsored retirement savings plan.

Congressional Republicans are fighting back against the Department of Labor’s (DOL’s) proposed rule to increase the salary threshold below which the white-collar exception to the Fair Labor Standards Act’s (FLSA’s) overtime (OT) rules would not apply.

Authority for federal discretionary spending expires at midnight November 17. Yesterday the House passed the legislation unveiled by GOP House leadership last Saturday, the Further Continuing Appropriations and Other Extensions Act, to fund the government’s discretionary spending beyond expiration on November 17 of its current spending authority. The vote was 336-95. Only 2 Democrats voted against it.

Bipartisan legislation to create a federal retirement savings plan has been introduced in both the House and Senate. The Retirement Savings for Americans Act (RSAA) was introduced on October 19 in the Senate by Sens. John Hickenlooper (D-CO) and Thom Tillis (R-NC). In the House, the RSAA was introduced by Reps. Terri Sewell (D-AL) and Lloyd Smucker (R-PA).

A bipartisan pair of House tax writers introduced legislation giving very small businesses (those with ten or fewer employees) a tax credit for establishing a new retirement savings plan for their workers. H.R.6007 was introduced on October 23 by Ways & Means Committee members Reps. Claudia Tenney (R-NY) and Dan Kildee (D-MI).

Laying the groundwork for more proposals to reduce or eliminate the growing economic gap between the wealthy and working American families, both the Senate Budget and Finance Committees held hearings on the wealthy’s tax liability. The Budget Committee hearing was held on November 8; the Finance Committee hearing was November 9.

In what turned into a partisan slugfest, on November 7, the House Ways & Means Committee held a hearing on the impact of the Department of Labor (DOL) rules on environmental, social and corporate governance (ESG) factors surrounding retirement plan investment choices. Generally, the committee’s GOP members slammed the permissibility of considering ESG factors in evaluating the appropriateness of certain investments for inclusion in a tax-favored retirement savings plan. By contrast, Democrats say the ESG rule is timely and appropriate in the context of retirement savings plan investment choices.

New Speaker of the House Rep. Mike Johnson (R-LA) promised to establish a bipartisan debt commission to address growing federal debt and deficit concerns. The commission would focus on revenue (taxes), spending, and the central role of entitlement programs like Social Security, Medicare, and Medicaid. The federal debt reached $1.7 trillion in FY 2023.

On September 30, in a last-minute maneuver that pitted hard-right conservative House Republicans against the perceived disaster of a government shutdown, Congress approved a “clean” continuing resolution (CR) that will keep the federal government funded and operating until November 17. The CR also extends authorization and funding for the National Flood Insurance Program (NFIP) until November 17.