Pardon Our Dust
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LEGISLATIVE LANDSCAPE
The Senate: Wyden (Almost) IN, Baucus OUT. What a difference a week can make! Sen. Ron Wyden, D-Ore., did not waste any time airing his agenda for the Senate Finance Committee — especially considering he has not yet officially been named chairman. Those formalities are expected later this week, but Wyden outlined his priorities in appearances over the weekend. More on that below.
Former chairman, Sen. Max Baucus, was unanimously confirmed by his Senate colleagues Feb. 6 to serve as the ambassador to China, and he has officially left the Senate after serving the state of Montana for 39 years in Congress. You can view his farewell speech on the Senate floor here.
Meanwhile, Sen. Mark Warner, D-Va., is widely expected to be named the newest member of the Finance Committee, filling the vacancy created in the wake of Baucus’s departure. Warner has developed a reputation for supporting business-friendly tax provisions and has floated proposals for permanent and expanded research & development tax credits in the past. He’s also regarded by many as someone willing to work across the aisle given his efforts between 2010 and 2013, leading the Senate’s “Gang of Six,” along with Sen. Saxby Chambliss, R-Ga. The group unsuccessfully attempted to patch together a “grand bargain” for addressing the country’s deficits and debt, but it did develop .
Wyden Dives In. Wyden outlined his priorities while speaking at a conference hosted by the USC Gould School of Law over the weekend and in an interview with the Oregonian newspaper.
At the top of the list is Wyden’s plan to negotiate a bipartisan tax extender bill that would serve “as a bridge to comprehensive tax reform,” Wyden told the Oregonian. Without getting into specific details, Wyden indicated that he would seek a package extending all the 55 expired tax breaks, including those for renewable energy — a pressing issue in Oregon. According to an article in Forbes, Wyden also emphasized the following priorities in his address at USC:
- Narrow the gap between taxation of investment income and ordinary income
- Significantly increase the standard deduction
- Simplify and enhance the refundable Child Tax Credit and Earned Income Tax Credit
- Revise savings incentives by creating a new investment account for all Americans at birth, shift savings subsidies from high-income taxpayers to low- and moderate-income households, and consolidate and simplify the current tangle of existing tax-preferred savings incentives
- Restore Build America Bonds — a short-lived program that partially replaced tax-exempt state and local bonds with direct federal subsidies. (A recently introduced House bill also seeks to resurrect BABs.) Wyden also said he would seek ways to encourage business to funnel overseas earnings into domestic infrastructure investment
The House: Marking Up IRS Targeting Bill. The House Ways & Means Committee is marking up a bill to prevent the IRS from finalizing new guidelines for political activities of 501(c)(4) nonprofits, so-called “social welfare organizations” under the tax code, if they want to maintain their tax-exempt status. Republicans argue the new rules are meant to codify the targeting of groups that was at the heart of last year’s IRS scandal. The entire bill can be viewed here.
Support Builds for R&D, Other Tax Credits. Rep. Richard Neal, D-Mass., introduced a bill Feb. 6 calling for the permanent extension of the currently expired research and development tax credit, among other calls for renewals and expansions of tax provisions aimed at boosting economic and job growth and funding infrastructure projects. Neal, a member of the House Ways & Means Committee, is the latest of a growing number of House members and Senators throwing support behind the R&D credit’s permanent extension. The full text of the bill can be accessed here.
REGULATORY WORLD
Employer Mandate Delayed Again. In final regulations issued Feb. 10, the Obama administration announced it is again delaying parts of the Affordable Care Act’s employer mandate. The new rules released Feb. 10 give employers with 50 to 99 full-time employees an extra year to comply with the mandate, while those with 100 or more employees must come into compliance by Jan. 1, 2015, as stipulated in the delay announced last year. However, this time around, employers hoping to be eligible for the “transition relief” must certify that they did not cut jobs simply to come under the 100-employee threshold.
McGuireWoods Lawyer Named to IRS Advisory Council. Ron Aucutt, a partner in McGuireWoods LLP’s Tysons Corner, VA, office, has been selected to join the IRS Advisory Council. Aucutt will join 14 current and 5 other new members in “provid[ing] the IRS commissioner and division leadership with important feedback, observations and suggestions,” according to an IRS news release.
Aucutt’s specialties include corporate reorganizations, the investment tax credit, tax-exempt financing, TEFRA partnership audits and tax treatment on inventories, as well as tax-exempt organizations, estate and gift taxes and the income taxation of estates and trusts.
COURTS & LEISURE
Tax Court “Thriller.” The IRS is turning up the heat in a legal battle brought against the estate of the late pop star Michael Jackson. According to documents obtained by the L.A. Times, “Jackson’s executors placed his net worth at the time of his June 2009 death at slightly more than $7 million. The IRS placed it at $1.125 billion, a difference so vast it looks like a typo.” The IRS alleges that the estate’s tax filings were so inaccurate, it qualifies for a gross valuation misstatement penalty, which, in this case, would amount to about $197 million on top of the $500 million the IRS says the estate already owes.
LOOKING AHEAD
Dancing on the Debt Ceiling. The House GOP leadership apparently failed to sell its rank-and-file members yesterday on a bill to raise the debt ceiling that would also reverse recent cuts to military retirement benefits. House Speaker John Boehner, R-Ohio, announced today that the House will vote on a clean debt ceiling bill before members recess Feb. 12. It is unclear how many Republican members will vote against the bill. Lawmakers won’t return from recess until Feb. 25 — two days before the country would default on its obligations without an increase in the borrowing limit, according to Treasury Secretary Jack Lew.
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