- The Inflation Reduction Act provides new capabilities and resources for the IRS
- The new legislation incentivizes solar, electric vehicles and other energy-saving endeavors
- The 1031 loophole was not closed as part of the Inflation Reduction Act
Howard Altshuler went to hell and back to be with co-host Rob Nowak. Okay, not literally, but Altshuler did return from a recent visit to Weaver’s new office in Houston, Texas, and the Hotter’n Hell bike ride in Wichita Falls, an annual Texas ‘ride of passage’. Altshuler completed a fifty-mile ride in the Texas heat and finished in time to make it into the studio to tell Nowak about it.
Inflated bike tires were not the only things on Altshuler and Nowak’s minds; congress had just passed the Inflation Reduction Act of 2022, and some aspects of the legislation surprised them. Nowak wasn’t necessarily surprised by what was in the final bill; rather, he was surprised by what it did not include.
Nowak says, “There were no tax increases. So, it becomes a spending with a revenue offset plan, as opposed to a tax-related bill.” Nowak notes there are tax incentives in the bill, but no change in the solve cap for individual taxpayers, as state and local tax is limited to $10,000, along with no carried interest changes.
If the bill’s purpose is to reduce inflation, Altshuler asks how the legislation is a spending bill. Nowak thinks of it more as a zero-spend bill due to the revenue-raising potential of the new law. “It’s a spending bill, but because it was passed through reconciliation, there has to be a revenue offset mechanism in the bill,” Nowak says. “So, the spend provisions are largely incentives in the form of tax credits, many of which are environmentally friendly in nature.”
Other revenue offset provisions include the reimposed minimum tax of 15% on corporations with more than $1 billion in profits and IRS enforcement actions. “The IRS’s budget was beefed up by $80 billion,” Nowak says. “That does not all go to enforcement action. A good portion of it goes to help the IRS modernize their systems.”