The Obama administration submitted a budget proposal on March 4 that includes new provisions that would expand the reach of self-employment taxes on professional service businesses, limit likekind exchanges and raise $55 billion with new rules aimed to curb profit shifting.

The budget includes hundreds of proposed tax changes in total, but the overwhelming majority are recycled from previous budgets — including proposals to limit the benefit of deductions to 28%, impose a "Buffett Rule" minimum tax, repeal the last-in, first-out (LIFO) method of accounting, impose a "financial responsibility fee" on the liabilities of financial institutions, change the taxation of carried interest and repeal tax benefits for oil, gas and coal producers.

There are several significant new proposals, including provisions to combat base erosion and profit shifting, allow a greater information exchange with foreign jurisdictions to facilitate the Foreign Account Tax Compliance Act and grant the IRS the authority to regulate tax return preparers, among other things.

The budget would also increase IRS funding to approximately $12.5 billion for the 2015 fiscal year. Some of that money would be earmarked to improve customer service and to address stolen identity refund fraud.

Like those of his predecessors, President Obama's budget reflects the aspirational goals of his administration. There are several provisions in the budget that retain bipartisan support, but it is unlikely the budget as a whole will be adopted by the politically fractured Congress.

It is notable that this fiscal year 2015 budget does not specifically address tax extenders, which expired at the end of 2013. Congress has routinely renewed these provisions, often retroactively. The Senate Finance Committee is expected to take up the matter of tax extenders in the next several weeks, but it is unclear when the House Ways and Means Committee will do the same, as its chair, Dave Camp, has focused his attention on comprehensive tax reform in the short term.

For more information, see our Tax Legislative Update.

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