Q&A: New Year, New Tax Season
Q: What’s in store for 2020?
A: Passage of the Tax Cuts and Jobs Act in 2017 delivered across-the-board tax relief and more take-home pay for American workers, helping families make ends meet and small businesses to grow and invest in their operations. For U.S. households, the overhauled federal tax code increased tax credits for families with children, expanded the standard deduction and limited the alternative minimum tax. It also restored fairness and a competitive tax regime for corporations, lowering the federal rate from 35 percent, restricting offshore tax havens and encouraging companies to bring their overseas profits back to the United States. Across the country, the Trump tax cuts expanded consumer purchasing power, helping drive the longest economic expansion in U.S. history. Americans are ringing in the New Year with rising wages, historic low unemployment rate, robust stock markets and low inflation. Rolling back the Trump tax cuts would usher in a climate of uncertainty and dial back economic prosperity. As chairman of the tax-writing Senate Finance Committee, I’ll continue to advance efforts to make the 2017 tax reform permanent and correct technical errors in the bill so individuals, farmers, and small businesses enjoy the full benefit of the new tax law. We’ll also pursue other priorities that we began last year, such as retirement and pension reform, building on the passage of the Setting Every Community Up for Retirement Enhancement (SECURE) Act and helping ensure that multiemployer pension plans like Central States can provide retirement benefits over the long term.
Additionally, I’ll continue pressing forward in 2020 as a taxpayer watchdog. These efforts include my oversight work to uphold the integrity of federal tax laws and strengthen accountability at the IRS, including sharpening the effectiveness of the IRS whistleblower protection program to hold tax cheats accountable and restore even more revenue to the federal treasury. Since 2007, the IRS whistleblower program has recovered $5.7 billion. I’ve also stepped up my oversight of nonprofit hospital systems to ensure they’re fulfilling charitable care obligations as well as investigating unlawful tax avoidance schemes that cheat the taxpaying public and erode voluntary compliance.
Q: Why are syndicated conservation easements on your radar?
A: With many years of legislative and oversight experience under my belt writing federal tax policy, I work to ensure tax laws are administered as fairly and effectively as possible. As chairman of the nonpartisan Joint Committee on Taxation, our bicameral committee considers tax expenditures and tax revenue estimates to inform lawmakers throughout the stages of writing tax policy. It’s vital for Congress to know how proposed changes would affect taxpayers, government benefits and programs. I also work to hold the federal tax-collecting agency accountable and have spearheaded laws to restore customer service at the Internal Revenue Service (IRS). That’s why I’ve written several updates to my Taxpayer Bill of Rights to ensure taxpayers are treated with fairness. Our system of voluntary compliance depends on all taxpayers to fulfill their tax liability. As I often say, that means not a penny more and not a penny less. The tax gap reflects taxes that are owed compared to taxes that are paid. Last year the IRS reported a net tax gap of $381 billion, for a net compliance rate of nearly 86 percent. The IRS says the vast majority of noncompliance is attributed to underreporting income, thereby understating the amount of taxes owed. The private debt collection program that I helped create in 2004 has helped to improve IRS enforcement efforts and make the system fairer for law-abiding citizens. The IRS reports the private debt collection program collected nearly $213 million in 2019, which underscores the success of this public-private partnership. Wrongdoers who engage in illicit tax shelters create a bigger burden for law-abiding taxpayers to shoulder. It’s unfair and it’s illegal. Every year the IRS issues what it calls a “Dirty Dozen” list of tax scams and abuses. I’m actively investigating syndicated conservation easements with the committee’s top Democrat, Senator Ron Wyden of Oregon. Here’s how it works. Promoters appear to be twisting a legitimate tax tool called a conservation easement and distorting the tax benefit to game the system for profit. They appear to be selling bogus tax deductions on inflated appraisals, depriving the federal treasury of billions of dollars of revenue and besmirching the public good of charitable conservation. Conservation easements promote land conservation for public benefit by shielding land from development and preserving treasured lands for generations to come. A landowner redeems a charitable tax deduction for permanently removing the land from development. However, syndicated conservation easements appear to involve promoters overvaluing land to allow investors to scam the tax code for big-time profit. From the most recent IRS data available, approximately $20 billion in questionable tax deductions were claimed using conservation easements from 2010 to 2016. I’m investigating these transactions to find out what’s really going on in this area. When used as intended, conservation easements serve the public good by protecting natural resources and preserving cherished places for posterity. As the 2020 tax filing season gets underway, I’ll continue my legislative and oversight efforts to ensure the nation’s tax laws and federal tax-collecting agency are working effectively for Americans.
Opening day for paper and electronic tax returns is Monday, Jan. 27, 2020. The IRS expects to process 150 million individual tax returns. Go to IRS.gov to check out available tools and information.