Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You’ll also receive daily policy news and other intelligence you need to act on the day’s biggest stories. BACK TO THOSE IRS PLANS: The good news for the IRS at least is that it still has a significant chunk of change to make visible improvements in taxpayer services over the next several years, Koskinen told Weekly Tax. If you’ve been around the block a few times, you’d know that the IRS’s perennial problem has been that it can only contract projects on a six- to nine-month basis based on annual appropriations, and the cut from the debt ceiling deal doesn't change the fact that the agency is now in a position to execute longer-term projects for transforming its infrastructure. Here’s another point worth considering, though: The GOP has also been chipping away at the IRS’s annual appropriations, notching, for instance, a $275 million reduction for the IRS in last year’s government spending package. And the less that the IRS has for its annual operations, the more of the IRA money it will have to divert for those purposes. “The real question is whether, as a result now of having had their pound of flesh as it were, Republicans quit trying to chip away at the annual budget in addition,” Koskinen said. Former IRS Commissioner Mark Everson, who's now vice chair for the tax consulting firm alliantgroup, said he thinks there could be something of a silver lining if it gives the IRS some certainty going forward. “I certainly hope that this represents an armistice, if you will, and that [the IRS is] now able to proceed with this funding pretty well-assured,” Everson said. THE TAX STICK: A GOP delegation led by House Ways and Means Chair Jason Smith (R-Mo.) had intended to fly to Paris this week to chat with folks at the OECD about the pending international tax framework, though that will surely now be delayed as Congress scrambles to pass the debt deal to avoid a catastrophic default. Nonetheless, when the Republican tax writers do eventually arrive in the city of lights, they will be armed with new leverage to sink the 15 percent global minimum tax that the OECD has been laboring over for years. Under GOP legislation unveiled last week, if any foreign government tries to levy an American multinational under the global framework for not paying at least 15 percent the U.S. could retaliate by adding 5 percentage points onto the tax rates of companies and investors from those countries. The plan would hike rates by 5 percent every year for four years as long as American firms are subjected to the global tax. While the proposal has no shot of getting enacted with Democrats in control of the Senate and White House, it represents a very real threat for OECD officials pondering the possibility of a Republican administration in 2024. As Daniel Bunn of the Tax Foundation notes in an analysis of the bill, a never-used section of the tax code dating back to a spat in the 1930s between the U.S. and France authorizes the president to double the tax rates of citizens and businesses of a foreign country that is subjecting U.S. taxpayers to extraterritorial taxation. So, even under a Democrat-controlled Congress, a Republican president could create a lot of headaches for the OECD rollout just by wielding the power of the executive branch. We're sure that point will not escape the attention of the GOP delegation in the upcoming talks. ACCIDENTAL AMERICANS: For the last item on our docket, you're likely well aware that the Foreign Account Tax Compliance Act has proven an important tool for the IRS to crack down on tax cheats looking to stash their money out of sight in foreign countries (cited most recently in Finance Committee Chair Ron Wyden's (D-Ore.) probe of Swiss banks facilitating tax evasion). But, in fact, the law isn't everyone's favorite, and a group known as the Association of Accidental Americans has now filed 23 complaints with European data authorities challenging FATCA's legality. The move follows a win for the association last week in Belgium, which ruled that transfers of information belonging to “accidental Americans” under FATCA are illegal under EU law, giving the group an opening to press its case with other countries in the bloc. FATCA, by requiring foreign banks to pass on account information of all U.S. citizens, captures in its dragnet some folks who have never lived in the U.S. but nonetheless have U.S. citizenship by dint of having been born in the country. According to the association, banks have threatened to close accounts belonging to thousands of such foreigners out of fear of being targeted by U.S. sanctions, which in turn has created very stressful situations for people who weren't even aware they had to file their tax returns every year with the IRS.
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