Dec 13, 2016
Tax Policy Update
NUMBER OF THE WEEK: 37
The percentage of registered voters who believe comprehensive tax reform should be a top priority for the Trump Administration according to a
conducted by POLITICO and Morning Consult.
Tax reform has been the talk of the town since Republicans seized victory on election night. The incoming administration and congressional Republicans
are in agreement regarding the urgency of reform and are aiming to get tax reform legislation moving as quickly as possible.
Republicans of the House Ways and Means Committee are huddling later this week for a two-day meeting to lay out a plan to repeal the Affordable Care Act and overhaul the tax code in 2017. “We will be going through the decision points on tax reform and health care,” said House
Ways and Means Chairman Kevin Brady (R-TX). Expect “border adjustment” to be a hot topic at the meeting.
RUSS SULLIVAN MEETS THE PRESS
Hey! Our own Russ Sullivan, partner, at McGuireWoods was quoted in Bloomberg BNA
on Dec. 12. With the nomination of Steve Mnuchin to the post of Treasury
secretary in the Trump Administration, many are wondering about the Senate
Finance Committee’s vetting process for the nominee, particularly whether
Mnuchin will face intense scrutiny by lawmakers. As the former staff
director on the committee, Russ remarked: “After this particular campaign
where the American people chose a president without any knowledge of his tax
returns, I query whether Congress will retain the same standard of review.
It’s an open question.”
No Government Shutdown. You May All Go Home Now.
It was touch and go for a minute for the CR, but Congress passed the short-term government funding measure on Friday. The stopgap measure will keep the
federal government running from Dec. 10 through April 28. The rationale behind the longer-term CR is to give the Senate additional time to get through
executive nominations in the new year. Here are some of the noteworthy CR-stocking stuffers that may be of interest to our clients…
If at First You Don’t Succeed, You Will Probably Fail Again.
Last week, the House Freedom Caucus, a conservative wing of the GOP, attempted once more to impeach Internal Revenue Service Commissioner John Koskinen.
Rep. Jim Jordan (R-OH) resurrected a resolution to impeach Koskinen, but the House overwhelmingly…
Democratic Trio Takes Aim at Trump’s Cabinet Picks.
Sens. Elizabeth Warren (D-MA), Sheldon Whitehouse (D-RI), and Tammy Baldwin (D-WI) introduced the No Windfalls for Government Service Act (S. 3527)
— a bill to limit the ability of presidential appointees to use Section 1043 of the tax code to defer paying taxes on profits from the sales of assets.
Trump’s potential cabinet consists of individuals with substantial wealth, which means that they will have to…
Koch Knocks Border Adjustability Provisions.
The House GOP’s border adjustability provisions have been met with criticism from several groups, including Koch Industries. The controversial nature of
the provisions have led a team of Goldman Sachs economists to predict that Congress may consider removing the proposal from tax reform legislation. The
provisions will be scrutinized over the next week, as House Ways and Means Republicans host meetings on Dec. 14 and Dec. 15 to discuss tax reform.
The House tax blueprint provides for border adjustments that would tax imports, while exempting exports. Currently, the U.S. is one of the few countries
that does not impose a value added tax (VAT). Many VAT systems provide border adjustments that reduce the costs borne by exported products and increase the
costs borne by imported products. Generally, the net impact of border adjustments…
Senate RPC Identifies Obama-Era Regulations for CRA Purposes.
Last week, the Senate Republican Policy Committee released its policy paper entitled, “
Reining in Obama Regulatory Overreach.” The paper identified a
number of regulations promulgated under the Obama Administration that are eligible for review under the Congressional Review Act (CRA). Among those
listed is the…
IRS Provides Guidance Under I.R.C. § 901(m).
On Dec. 6, the IRS released proposed regulations (Reg-129128- 14) and temporary regulations (T.D. 9800) under section § 901(m). The guidance addresses the
disposition of assets subject to…
U.S. May be Blacklisted as a Tax Haven.
The U.S. has been identified for potential screening on the European Union’s tax haven blacklist. The U.S. is on a list of “mismatch” countries due to its
failure to adopt the Organization for Economic Development’s automatic information exchange standard of certain bank…
- Portland passed a surtax on any publicly traded corporation that pays their chief executive more than 100 times as much as the median worker. Over 500
publicly traded corporations have operations in the city, making this subject to the new city tax. This includes companies like General Electric and
- The IRS will start accepting electronic and paper returns on Jan. 23, 2017. Tax and software preparers will accept returns prior to the 23rd
and submit them beginning on that date. This year, early filers claiming certain credits, including the Earned Income Tax Credit (EITC) and the child
tax, will need to wait until after Feb. 15 for their refunds. This year, the return filing deadline will be April 18, instead of April 15.
- IRS senior official, Mark Weiss, announced that any taxpayers with transaction questions that have not been answered via guidance or regulations should
contact the agency to discuss their issues. Weiss indicated that the IRS may be able to give a ruling of sorts on specific issues, if they are
presented with the facts.
- The U.S. added Israel, Korea, and St. Lucia to a list of countries that automatically exchange information on bank interest paid to nonresident aliens
pursuant to FATCA. The countries are included in Rev. Proc. 2016-56, which will be published on Dec. 19 in Internal Revenue Bulletin 2016-51.
- Sen. Ben Cardin (D-MD) has introduced an updated version of his progressive consumption tax proposal. The bill provides for a broad-based progressive
consumption tax (PCT) at 10 percent, while lowering the corporate income tax rate to 17 percent. While Cardin has not endorsed the border adjustability
provision, this represents a broader trend of a consumption-based tax model receiving serious consideration. Details of the updated bill titled, the
Progressive Consumption Tax Act (S. 3529), can be viewed
- In Rev. Rul. 2016-29, the IRS confirmed that in order for the low-income housing credit to be applied to a specific building project, the project must
benefit the community. The ruling also confirmed that state housing credit agencies may allocate the credit, even if the project does not have the approval
of local agencies. The IRS may release guidance clarifying what constitutes a “community benefit.” Public comments must be submitted by Feb. 10.
- Per T.D. 9796, U.S. limited liability companies with a single foreign owner will have to report tax information to the IRS starting next year, in an
effort to increase transparency. The rules will affect foreign buyers interested in buying U.S. real estate. The type of structure covered in the new rules
are very common, especially in large cities like New York and Miami.
- The tax exemption for municipal bonds may be in danger next year. As Congress seeks to simplify the tax code, this exemption bears a price tag of $ 420
billion between 2017 and 2026, and may be ripe for elimination.
POLITICO hosts a Morning Money Lunch Briefing, focusing on the Trump Administration and what it means for the economy and your hometown.
American Enterprise Institute
AEI holds a summit on “This Way Up: Economic Mobility for Poor and Middle-Class Americans.”
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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
Tax Policy Update
and tax news alerts, please contact Radha Mohan,
, (202) 857-2944.
Danielle Dellerson Hayes
Daniel M. Chung
Lai King Lam