MORE ON THE ERC: If the Wyden-Smith plan is enacted, then ERC claims will officially be finished — the bill puts into place a cut-off date of Jan. 31. But absent any congressional action, claims would spill into next year, which effectively was the last deadline approved by lawmakers. Business groups have said that plenty of companies are still trying to make legitimate claims for the ERC, which was enacted four years ago to help businesses affected by the coronavirus support their payrolls. But IRS chief Danny Werfel now estimates that 19 out of every 20 claims is suspect — and his agency, currently facing an ERC backlog that numbers in the seven figures, has taken to process them in slow-motion to try to weed out the questionable applications. The Wyden-Smith package would give the government a variety of new tools to tamp down on Employee Retention Credit fraud, and with some rather notable exceptions — see Sen. Thom Tillis (R-N.C.) — the ERC anti-abuse measures aren’t driving Senate GOP opposition to the legislation. Still, it’s probably fair to say that right-of-center supporters of the bipartisan tax bill wish that Senate GOP skeptics were more agreeable to the legislation because of that ERC crackdown. Meanwhile, the tax package has gotten so stuck in the Senate that Wyden’s team went public last week with details about so far fruitless negotiations between the Finance chair and the panel’s top Republican, Sen. Mike Crapo of Idaho. And that at least has to make you wonder how much Democrats are thinking about bringing the tax bill to the floor without a deal with Crapo, and how much they’re trying to show the Senate Republicans who might be open to backing the legislation in that scenario that they tried to reach an agreement. WHAT HAPPENED HERE? It’s a busy time for Wyden, who also teamed up last week with Senate Budget Chair Sheldon Whitehouse (D-R.I.) to press the Justice Department about a settled tax case involving Caterpillar. The Justice Department conducted an investigation into the construction equipment manufacturer that stretched for years, and could’ve led to the company paying more than $2 billion in back taxes and penalties — and even potential criminal charges. But as The New York Times reported last week, the department basically dropped that investigation around the time that then-President Donald Trump nominated Bill Barr to be attorney general late in 2018. Barr, as it happens, had just been one of the high-paid lawyers that Caterpillar employed to battle the Justice Department in that case, which focused on a profit-shifting scheme involving a Swiss subsidiary that the government believed allowed the company to vastly understate its profits. “In short, it appears that Bill Barr’s work on behalf of CAT minimizing its exposure to federal investigation became the official policy of the Trump DOJ,” Wyden and Whitehouse wrote to Attorney General Merrick Garland — noting, among other things, that a key interview in Amsterdam for the case was dropped right around the time of Barr’s nomination, and just hours before it was to begin. In their letter, first reported by Bloomberg Tax, Wyden and Whitehouse ask Garland for a wide variety of information, including more details on the IRS’s role in the investigation and more insight into the actions of Richard Zuckerman, the top tax official in Trump’s Justice Department who ordered that the interview in question be scrapped. WATCH OUT FOR IT: It’s been all of 10 days since Congress last avoided a government shutdown, and lawmakers will have a lot of work to do this week to repeat that performance. Appropriations negotiators had hoped to roll out the latest batch of spending bills — including the one that would fund the Treasury Department and the IRS — on Sunday. Now, those spending proposals are expected as soon as today, just a handful of days before a partial shutdown deadline.
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