CONSISTENTLY DELIVERS

Oct 4, 2016

Tax Policy Update

Image of young Tim Kainea and Mike Pence 

Hey…it’s young Tim Kaine and Mike Pence! We know it’s too early in the week for throwback pictures, but it’s timely. Sen. Kaine and Gov. Pence are scheduled to debate Tuesday, Oct. 4 at Longwood University. Outside of Virginia and Indiana, not many voters know much about these two candidates. And with Donald Trump and Hillary Clinton dominating most of the nation’s headlines since the conventions back in July, it’s been hard for Kaine and Pence to get their names and faces out there. But the debate offers both candidates a high-profile platform to introduce themselves to voters across America. Debate moderator Elaine Quijano of CBS News, the first Asian American to referee a general election debate, is expected to grill both candidates on a wide-range of policy issues during the 90-minute event.

Programming Note: With Congress out of town, McGuireWoods’ Tax Policy Update will be on pause until the start of the lame-duck session. See you back in your inbox on Nov. 14!

Check us out! On Oct. 25, join McGuireWoods Consulting and federal, state and local policymakers for a roundtable discussion of the innovative policies and programs taking hold at state and local levels. Explore how these innovative policies can be replicated at the federal level and how they could play out in the next Administration. Senior executives across all industries, including government relations specialists and legal counsels, are invited to attend in person or via webinar. Click here to register.

LEGISLATIVE LANDSCAPE

You Can Go Home Again. Congress is in recess this week and will return the week of Nov. 14. After averting a government shutdown, lawmakers have packed up and returned to the campaign trail. The stopgap funding measure passed on Sept. 28 will keep the federal government operating from Oct. 1 through Dec. 9. The continuing resolution (CR) contains federal funding to combat Zika and address opioids abuse, as well as FY2017 appropriations for Military Construction-VA. The 10-week CR means that lawmakers will have to …

Senate Republicans Tell Treasury to Back Off on Estate Tax Proposal. Senate Republicans want the Department of the Treasury to withdraw its proposed rules under Section 2704 of the tax code that would modify the valuation of interests for estate and gift purposes. In a letter to Treasury Secretary Jack Lew, lawmakers argued that the proposal would adversely impact family farms and businesses by discouraging the expansion of operations and by making it difficult for families to transfer ownership to future generations.

The Treasury Department has argued that the proposal is aimed at those who employ aggressive tax planning to lower their tax bills. “Treasury’s action will significantly reduce the ability of these taxpayers and their estates to use such techniques solely for the purpose of lowering their estate and gift taxes,” Assistant Secretary for Tax Policy Mark Mazur explained in an August blog post.

For a detailed explanation of the proposed rules, check out McGuireWoods’ analysis on the regulations here.

REGULATORY WORLD

Debt and Taxes. In anticipation of starting its private collection program next spring, the Internal Revenue Service has hired four companies to track down tax debts. The four companies are: CBE Group of Cedar Falls, Iowa; Conserve of Fairport, N.Y.; Performant of Livermore, Calif.; and Pioneer of Horseheads, N.Y., according to an IRS press release.

The private debt collection program was approved by Congress last year in order to help pay for highway funding legislation. The private debt collection program will enable these four companies to focus …

The Gap Widens. IRS collections has fallen by 5 percent in fiscal year 2015, as the number of enforcement personnel has hit a 10-year low of 11,801 employees, according to the Treasury Inspector General for Tax Administration (TIGTA). From FY 2015 to 2014, collections fell from $57.1 billion to $54.2 billion. TIGTA blamed a reduction staff and funding for enforcement activities for the $2.9 billion loss in revenue. In order to offset a loss of personnel in recent years, the IRS announced that it would …

IRS Releases Proposed Regulations on Requirements for RICs. On September 27, the Internal Revenue Service released guidance under Section 851 relating to investments in stock and securities. Reg. 123-600-16 provides information on the income test and the asset diversification requirements that are used to determine whether a corporation may qualify as a regulated investment company (RIC) for federal income tax purposes. The proposed rules also clarified that the IRS will not …

They’re Heeeere! (Almost) On Sept. 30, the Treasury Department sent the much-anticipated final version of earnings-stripping rules to the Office of Management and Budget (OMB) Office of Information and Regulatory Affairs for review. The OMB now has 90 days to review the rules, but may choose to expedite the process. Many speculate that the final rules will be released shortly after …

CAMPAIGN CORNER

Clinton is enjoying a small post-debate bump in the polls. She is leading Trump by about 6 percentage points in the latest Politico/Morning Consult survey:

2016 presidential campaign poll results chart 

Source: Politico/Morning Consult

Clinton Campaign Plays its Trump Card. Over the weekend, the Clinton campaign seized on a New York Times story about a $916 million loss that Trump reported on his 1995 income tax returns. This loss may have allowed Trump to legally avoid paying federal income taxes for 18 years, assuming he had about $50 million in taxable income per year. The story catapults …

LINE ITEMS

  • The Department of the Treasury has submitted its controversial Section 385 regulations to the Office of Management and Budget for final review. The office has up to 90 days to conduct the review. No specific timeline has been given in terms of when the public can expect the issuance of final rules.

LOOKING AHEAD

Congressional Activity

**Congress in recess**

Agency Activity

Tuesday, 10/4

Internal Revenue Service
The IRS holds a meeting by teleconference of the Taxpayer Advocacy Panel Special Projects Committee on improving customer service at the IRS.

Other Activity

Tuesday, 10/4

International Monetary Fund
The IMF and the World Bank hold their 2016 fall meetings, Oct. 4-9.

Wednesday, 10/5

SIFMA
SIFMA hosts an event titled, “Predictable Rule Making for A Dynamic Financial Services Sector” with special guest Valdis Dombrovskis, VP of the European Commission.

National Economists Club
The club holds a discussion with Laura Tyson, economist for the Clinton campaign.

Thursday, 10/6

SIFMA
Join SIFMA's Corporate Actions Section for the 13th annual Global Corporate Actions Forum in Boston. Connect with fellow industry professionals and hear from leading subject matter experts as they examine the latest challenges, regulations, and practices affecting the Corporate Actions community.

International Tax and Investment Center
The ITIC holds a lecture on tax and trade issues in Congress at the George Washington University.

Cato Institute
Cato holds a discussion on “What in the World is Going on with Obamacare’s Exchanges?”


For listings of all the week’s tax and financial services happenings, read below to find out how you can become a subscriber.

The McGuireWoods’ Tax & Financial Services Policy Group assists clients in understanding how the latest legislative and regulatory proposals and decisions may impact their business and industry. To learn more about how our team can help you monitor, analyze, and navigate all relevant legislative and regulatory developments, please contact any of our attorneys and consultants below at (202) 857-1700. For more information on how to subscribe to our weekly Tax Policy Update and tax news alerts, please contact Radha Mohan, , (202) 857-2944.

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