Both the House and Senate have returned to Washington this week to begin the second session of the 118th Congress. Legislators have a lot on their agenda to get done in the coming months including action on tax provisions important to manufacturers.
Despite bipartisan support, and the efforts of manufacturers and others who have been lobbying lawmakers, Congress has still not acted to reverse several harmful tax changes put in place by the Tax Cuts and Jobs Act (TCJA), such as the change to Section 174 requiring businesses to pay taxes on R&D activities, 100% expensing, and the Section 163(j) deduction.
The 2017 tax law eliminated the ability to immediately expense a company’s R&D activities and now requires manufacturers to capitalize their R&D and amortize those expenses over five years starting on January 1, 2022. Additionally, while the TCJA provided manufacturers with the ability to immediately expense 100 percent of their capital expenditures, the law reduced 100 percent full expensing to 60 percent effective January 1, 2024, and is set to continue to decrease annually before the full elimination of expensing in 2027. Also taking effect on January 1, 2023, was a provision eliminating the ability of companies to include Depreciation and Amortization when calculating their business loan interest deduction under Section 163(j).
Sources in Washington indicate that tax writers are close to reaching an agreement on a tax package in the coming weeks. One Voice continues to lobby Congress to move on all three provisions – R&D, 100% expensing, and 163(j).
Your voice matters and Congress needs to hear from you about the negative consequences of not acting to reverse the changes made to these tax provisions. Click here to contact your members of Congress TODAY and call on them to support American manufacturers by supporting and passing legislation reinstating R&D expensing while eliminating capitalization and amortization requirements, restoring 100 percent Bonus Depreciation, and including the full EBITDA standard for interest deductibility on business loans.
New OSHA Electronic Reporting Requirements Now Effective
The updated occupational injury and illness recordkeeping requirements, finalized under the Occupational Safety and Health Administration’s (OSHA) “Improve Tracking of Workplace Injuries and Illnesses” rule are now in effect with reports for 2023 due March 2, 2024.
Under the new rule, released on July 21, 2023, establishments with 100 or more employees in high-hazard industries, including manufacturing, are required to submit case-specific information from their OSHA Form 300 (Log of Work-Related Injuries and Illnesses) and Form 301 (Injury and Illness Incident Report) once a year.
Additionally, establishments with 20-249 employees in designated industries (including all manufacturing) will continue to be required to electronically submit information from Form 300A (Summary of Work-Related Injuries and Illnesses) once a year. All establishments with 250 or more employees will be required to electronically submit information from Form 300A.
The high-hazard designated industries include 3315-Foundries, 3321-Forging and Stamping, 3327-Machine Shops; Turned Products; and Screw, Nut, and Bolt Manufacturing, 3331-Agriculture, Construction, and Mining Machinery Manufacturing, 3335-Metalworking Machinery Manufacturing, and 3363-Motor Vehicle Parts Manufacturing.
Information must be submitted electronically via OSHA’s Injury Tracking Application (ITA), which opened on January 2, 2024. To determine the filing requirements under the new rule for your company, you can visit OSHA’s ITA Coverage Application.
Joint Employer Rule Challenged by CRA Resolution
The House of Representatives is set to vote on a Congressional Review Act (CRA) resolution, H.J.Res 98, to overturn the National Labor Relations Board’s new joint employer rule, which would expand the factors that can establish a joint employment relationship to include indirect and unexercised control over the terms and conditions of a job.
The CRA process allows Congress to repeal recent agency regulations with only a simple majority vote in both the House and the Senate as well as prohibit the agency from issuing any rules that are “substantially the same” as the overturned regulation.
The bicameral resolution was introduced on November 7, 2023, by Representatives John James (R-MI), Virginia Foxx (R-NC), and Speaker of the House Mike Johnson (R-LA), as well as Senators Bill Cassidy, M.D. (R-LA), Joe Manchin (D-WV), and Senate Majority Leader Mitch McConnell (R-KY). The CRA is expected to be considered by the full House on January 12.
Should the resolution be approved in the House, at least two Senate Democrats would then have to join all Republicans in the upper chamber, in approving the resolution which would then likely face a veto from President Biden.
The rule is set to take effect on February 26, 2024, after the NLRB extended the effective date to account for legal action against the rule.
301 Exclusions Extended as Review Continues
The Office of the U.S. Trade Representative has once again extended the remaining 429 exclusions from the Section 301 tariffs on Chinese goods to give the agency additional time in its review. USTR has extended through May 31, 2024, the exclusions for 77 medical-related products needed to fight COVID-19 as well as over 350 exclusions that were reinstated in March 2022. USTR has also announced the opening of a public comment period to receive input on whether to extend any of the exclusions beyond May 31. The docket for public comments on existing exclusions will open on January 22, 2024.
USTR extended the COVID-related exclusions multiple times since first being granted in December 2020, while the agency reinstated the exclusions for the 352 other products in March 2022 after a targeted review of exclusions that had been previously granted and extended were set to expire at the end of 2023, before being extended.
USTR is reviewing all of the tariffs imposed on China under Section 301 of the Trade Act of 1974 during the Trump administration. The tariffs will remain in place as USTR continues its statutorily required review.
EPA Penalties Increased
The Environmental Protection Agency (EPA) has adjusted the civil penalties for violations. The minimum and maximum penalties for violations of the various statuary programs subject to civil enforcement have been increased by roughly 3.2 percent to account for inflation.
The new civil penalty levels apply to violations under the Toxic Substances Control Act (TSCA), Clean Water Act (CWA), Clean Air Act (CAA), Resource Conservation and Recovery Act (RCRA), Safe Drinking Water Act (SDWA), and the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), among others. The minimum civil penalty under the CAA rose from $5,761 to $5,580 while the maximum penalty rose from $446,456 to $460,926. For the CWA, the minimum statutory penalty increased from $6,696 to $6,913, while the maximum penalty increased from $323,081 to $333,552. Penalties under TSCA now range from $11,524 to $48,512, up from $11,162 and $46,989, respectively.
The new statutory maximum and minimum levels “will apply to all civil monetary penalties assessed on or after December 27, 2023, for violations that occurred after November 2, 2015.”