The Inflation Control Act has had a significant impact on American households, according to the IRS and a U.S. Treasury Department report. But the Treasury Department suggests that the program could do much more with increased funding.

IRS data shows that more than 3.4 million families have already claimed over $8 billion in tax credits for things like purchasing solar and energy-efficient appliances – both expanded and extended under the Tax and Climate Act. The number of families receiving these expanded tax credits has increased by nearly a third since 2021, the year before the law was passed.

Taxpayers in all 50 states, Washington, DC, and Puerto Rico have helped ensure widespread adoption of the program. Nearly half of families receiving credits had incomes under $100,000, suggesting that the financial benefits of the tax credit program are likely to be substantial for many households.

But with more funding, for example, a program that makes heat pumps available to every household could be worth between $84 billion and $150 billion annually. This program could help reduce carbon dioxide emissions by 330 to 590 million tons per year, or 5 to 9 percent of total emissions.

The benefits of such programs are not just speculation either. In Europe, partial subsidies for heat pumps have boosted installations in both France and Germany. In 2022 alone, nearly a million new systems will be installed in these two countries.

The tax credit program saves American families money and plays a critical role in the fight against climate change. But more can – and should – be done to encourage the use of clean energy and energy-efficient technologies.

—Andrew Leahey

Welcome to the week in Insights for the latest analysis and news commentary from Bloomberg Tax. This week, experts analyzed tax arrangements for stock trades, foreign withholding taxes and more.

The exchange—Great ideas about taxes and accounting come together here.

— Curated by Melanie Cohen

Insights

PIIEs Gary Clyde Hoof Builder questions an EU proposal for a central multinational asset register, as it would raise data protection issues and have little impact on tax enforcement.

Withers Michelle Graham says the proposed IRS regulations for foreign trusts need more guidance, in part because determining whether a trust meets a particular test still requires an analysis of the facts and circumstances.

Greenberg Gluskers Zachary Nolan And Daniel Cousineau provide tips for negotiating stock purchase agreements and point out that understanding tax agreements and tax definitions protects both sides of the transaction.

Indiana University Vivian Fang says changes to the IRS’s updated crypto tax form simplify reporting but still do not define digital asset brokers.

Denton’s John Harrington calls for a reduction in the high US withholding tax on payments to non-residents, as non-US investors are reluctant to resort to tax avoidance measures.

Forvis Mazars’ Lola Lu, Brendan WilliamsonAnd Gokce Guçüyener Analyse how taxpayers can prepare for the potential impact of the OECD Pillar I on transfer pricing.

Columnist Corner

“Technically Speaking,” design by Jonathan Hurtarte/Bloomberg Tax

The IRS could improve the collection and remittance of federal excise taxes on sporting goods by applying a model used for state sales taxes and developing a central tax calculator, Andrew Leahey writes in his latest column “Technically Speaking.”

This would ensure more uniform financing for conservation projects and wildlife restoration, argues Andrew, adding that improvements in tax calculation “could also be shared with state governments in the future to provide them with a robust system to streamline their own tax collection processes.” Read more

News overview

IRS resumes voluntary credit disclosure program during Covid era

Businesses and tax-exempt organizations will be given more time to repay the IRS for pandemic-era tax credits they mistakenly claimed at a smaller rate. Read more

Harris’ economic proposals include tax cuts and subsidies

Vice President Kamala Harris will propose comprehensive new federal subsidies for parents, homebuyers and low-income Americans, in addition to new programs to curb rising rents and food prices. Read more

California receives first lawsuit over law repealing Microsoft tax refund

The National Taxpayers Union (NTU) is asking a California court to block a new state law that overturned a victory by Microsoft Corp. regarding the tax treatment of dividends multinational companies receive from foreign subsidiaries. Read more

The four major auditors keep their audit quality stable, while the second tier lags behind

Top U.S. accounting firms held their compliance rates largely stable in 2023, breaking a two-year trend of rising audit violations, according to the latest inspection results. Read more

Tax Management International Journal

Anshu Khanna by Nangia Andersen discusses the Indian Union Budget 2024 proposal, which envisages reform of direct and indirect taxation in India as part of the government’s objective to attract investors to India.

Baker McKenzie John Barlow, Ethan KrollAnd Samuel Pollack say that the proposed DCL and DPL regulations have drawn the ire of many taxpayers and represent bad tax policy.

Tax Management Memorandum

The Wagner Law Firm Izzy Goldowitz discussed how the Supreme Court of 28 June Loper Bright The decision may impact how federal agencies administer employee benefit regulations.

Career steps

Renesha Fountain Nelson Mullins joined as a tax partner in Houston.

Anastasios Kastrinakis And Jennifer Migliori were named co-vice chairs of Duane Morris’ Tax Department within the firm’s Corporate Practice Group.

If you are changing jobs or getting promoted, send your application by email to [email protected] for examination.