|US Highway Bill Passed With Contentious Tax Measures|
The US Congress passed a USD305bn bill to fund the Highway Trust Fund (HTF) over five years, and included two contentious tax measures that involve the use of private debt collectors to recover unpaid taxes and the denial of passports individuals with tax debt.
The HTF has depended on the federal fuel tax, otherwise known as the gas tax, which has remained unchanged since 1993. As a consequence, revenues from the US gas tax and tolls have recently been covering only about a third of state and local spending on roads, despite these revenues being solely dedicated to funding transportation projects.
The Fixing America's Surface Transportation (FAST) Act, which cleared the Senate by a 83-16 vote after an earlier 359-65 vote in the House of Representatives, has had to include a USD70bn package of miscellaneous federal budgetary measures that move the funding of US transportation away from the "user pays" principle. This was necessary as a result of lawmakers ruling out the politically difficult solution of hiking gas taxes.
The requirement for the Internal Revenue Service (IRS) to use private collection agencies (PCAs) to recover unpaid taxes is expected to raise USD2.4bn over a 10-year period. It would apply to accounts that have been designated as "inactive" by the agency for lack of resources or ability to locate the taxpayer; on which more than 365 days have passed without interaction with the taxpayer; or where more than one-third of the applicable statute of limitation period has lapsed.
Some tax accounts have been excepted from private debt collection – for example, if they are being paid by installments; if they are subject to litigation; or if the taxpayer is deceased, under 18 years old, a victim of tax-related identity theft, or an innocent spouse.
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Published on our website on Dec.09, 2015