Taxation & Representation Update: PROTECT Coalition – Dedicated to Preserving the 199A Deduction

Brownstein’s National Tax Policy Group has created the PROTECT (Passthroughs Relying On Tax Equity & Championing Thriving Businesses) Coalition—a group dedicated to preserving the Section 199A Qualified Business Income Deduction. This provision was enacted as part of the Tax Cuts and Jobs Act (TCJA) to equalize the tax rate between corporations and passthrough entities. The provision allows passthrough business owners to deduct 20% of qualified business income when determining their federal tax liability, meaning that passthrough owners who are taxed at the highest statutory rate of 37% have an effective tax rate of 29.6%. The Section 199A deduction facilitates the growth of small and family-owned businesses, the majority of which operate as passthroughs.

Senate Finance Committee Hearing Discusses Tax-Filing Season, Direct File: On April 16, the Senate Finance Committee held a hearing titled “The President’s Fiscal Year 2025 IRS Budget and the IRS 2024 Filing Season .” Internal Revenue Service (IRS) Commissioner Daniel Werfel testified on progress made during the 2024 tax-filing season, including on taxpayer-service initiatives and the Direct File pilot program.

France, Brazil to Jointly Introduce Information-Sharing Proposals: On April 15, the French Ministry of Economics, Finance and Industrial and Digital Sovereignty announced that France and Brazil’s finance ministers will unveil joint proposals to increase requirements on information sharing between the tax authorities of G20 countries. The proposals would also increase transparency obligations and implement anti-tax avoidance mechanisms. Discussing the proposal, French Minister of the Economy, Finance, Industrial and Digital Sovereignty Bruno le Maire signaled that the new rules will facilitate the execution of the global minimum tax, saying, “I will put the same determination into implementing this minimum tax on income as I put into implementing the tax on digital giants or the minimum tax for large multinationals.”

Tax Day Report—Returns Processed Exceed 100 Million; Updates on IRS Direct File, Free File and Customer Service Initiatives: April 15 was Tax Day, marking the deadline for most U.S. taxpayers to file their federal tax returns. Reportedly, the filing season went relatively smoothly, with IRS statistics  as of April 5 showing that the IRS has once again processed over 100 million returns. Of those 100 million returns, more than 98 million were filed electronically. Though the number of taxpayers who received refunds decreased, the total amount refunded and the average amount refunded per taxpayer both increased. In addition, the number of visits to IRS.gov increased by more than 18%, indicating higher usage of IRS informational resources as well as the expanded “Where’s My Refund?” tool.

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