Weekly Legislative Update
November 1, 2021

TIA Signs onto Coalition Letter for S. 2387 and 199A Deduction

Dear Chairman Wyden, Ranking Member Crapo, Chairman Neal and Ranking Member Brady:

On behalf of the undersigned organizations, we write to convey our concerns regarding the Small Business Tax Fairness Act (S.2387) and other recent proposals to change the 199A deduction. While we appreciate the intent to simplify the 199A deduction and eliminate the special rules for specified service businesses, we have serious concerns that the proposed phase out limits set forth in S. 2387 will exclude a significant number of small businesses from this important deduction.

As you know, the 199A deduction was intended to create some parity between the tax rates for C corporations and the tax rates for pass through entities. Pass through entities are already facing a significant disadvantage by the fact that, while the lower C corporation rates set in 2017 are permanent, the 199A deduction will sunset at the end of 2025. To significantly lower the phase out, while also retaining the 2025 sunset will be extremely harmful for a wide swath of small businesses, many of which are still struggling to survive and recover from the pandemic.

Again, while we welcome the provisions of the proposed bill that would simplify the calculations of the 199A deduction and remove the distinction between different types of pass through entities, the tradeoff – namely the new complete elimination of the deduction for taxpayers with incomes over $500,000 (with a phase out starting at $400,000) – is far too high for the undersigned organizations to be able to support this legislation. We have the same concern with the 199A proposal that was recently approved by the House Ways and Means Committee.

As they considers S.2387 and the 199A issue, we would urge your Committees to eliminate any income threshold amount which cuts off the deduction entirely and to add a provision to make 199A permanent.

We thank you for your consideration of this matter and stand ready to provide any additional information or support that may be required to help enact these common sense provisions that are so essential to the success of our Nation’s pass-through businesses.

Sincerely,

Tire Industry Association and other trade associations

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TIA Signs onto Joint Trades Letter to President Biden on Tax Information Reporting

Dear President Biden:

The undersigned organizations representing a cross-section of business and financial interests write to reiterate our strong opposition to the new tax information reporting regime proposed by the Department of Treasury and under consideration by Congress as part of the proposed reconciliation spending package. We respectfully request that this proposal be withdrawn from further consideration, and the administration consider more targeted measures to reduce the tax gap.

Our member companies understand that this proposal is a good-faith attempt by your administration to ensure all taxpayers meet their tax obligations, and we strongly support that goal. However, our members, and the American people, believe that they have a reasonable right to privacy and this overly broad proposal to report gross annual inflows and outflows from nearly every account is disconnected from its purported narrow purpose of focusing government scrutiny on Americans with actual income above $400,000.

Recently, the Department of Treasury and congressional supporters finally acknowledged the program was far too expansive but, according to media reports, made only cosmetic changes by increasing the de minimis threshold to $10,000 and excluding wages and government benefits from that calculation. As we have stated in several previous letters, these changes fail to address the reality that any program based on gross annual inflows and outflows will impact Americans from all income levels. Even with the proposed exclusions of certain types of income, a large number of common and totally innocent transactions by individuals and small businesses will be captured by this new regime.

The privacy concerns for Americans who pay their taxes and would be swept into this account reporting program are real and should not be taken lightly. Financial institutions are already facing difficult customer questions about this proposal. According to the Department of Treasury, it only plans to use the data to increase audits for those who make over $400,000 a year. The likely question of any American taxpayer making less than that is: Why does the IRS need my account information if they aren’t going to use it?

At its core, this program will collect financial “metadata” on nearly every American in the hope that the IRS will be able to discern patterns in aggregate numbers that do not correspond to tax liabilities and target audits only to those who are breaking the law. This is a substantial expansion of the IRS’s authority that, once established, is sure to expand rather than roll back.

We strongly urge the Administration to withdraw this reporting regime and consider how the IRS can use its existing authorities to directly focus on those taxpayers suspected of evading their taxes instead of casting such a wide net.

Thank you for considering our perspective, and we stand ready to provide more details on our specific concerns at any time.

Sincerely,

Tire Industry Association and other trade associations

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TIA Exploring Defect Issue: Hyundai and Kia

From: Joanna Johnson, AOCA (Automotive Oil Change Association) Policy Advisor

Regarding all of the following listed Hyundai and Kia models, have any TIA members experienced a customer’s dealership claiming an engine seizure was caused by the oil drain plug falling out mid-interval i.e., 1,000 – 8,000 miles post-aftermarket service?

AOCA is in the process of developing a NHTSA defect petition and related MMWA complaint to the FTC. Please report confidentially to TIA or AOCA by VIN, city/state, mileage between service and allegation of plug-out, and the result of any aftermarket inspection of the alleged plug-out engine.

We cannot use any case that does not provide a complete VIN. Consumer complaints to NHTSA and aftermarket professionals’ experience with inspecting these alleged plug-out engines thus far indicates some of the cases are actually rod punctures.

BACKGROUND: Hyundai and Kia have issued an extensive patchwork of recalls and/or TSBs for all the listed models—Theta, Nu & Gamma engines alike—on the subjects of excessive oil consumption and/or rod bearing problems that can ultimately cause engine seizure, including after a rod punctures the engine block. The discovery of this nearly make-wide defect and the automakers’ attempts to manage it came from studying a bizarre recent trend of mid-interval plug-out claims made by Hyundai and Kia dealerships nationwide in situations where specification parts and torque pressure had been used and could be verified. There may also be another defect associated with the factory oil drain pan assembly being made of cheap stamped steel and painted so that the factory gasket and plug are painted together onto the pan, thereby camouflaging the gasket and creating a risk of double-gasketing. The factory gasket appears to be plastic and must be pried off.

KIA VEHICLES

HYUNDAI VEHICLES

Please contact: rlittlefield2@tireindustry.org if you have experienced this issue.

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