Pardon Our Dust
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LEGISLATIVE LANDSCAPE
House and Senate: The Calm Before the Tax Reform Storm. With both houses of Congress in recess last week, there was plenty of time for speculation about what might be included in Rep. Dave Camp’s (R-Mich.) forthcoming tax reform discussion draft, set for official release tomorrow, Feb. 26.
We expect to see a draft that sacrifices some very popular tax breaks in exchange for lower rates on both the corporate and individual sides, and a move toward a more territorial international tax system. Financial services firms can expect to see some unwelcome proposals — similar to those the Obama administration has offered in the past — that would levy “financial responsibility fees” on large firms.
While the draft is highly anticipated and will no doubt spark a renewed debate on tax reform, there is little hope the legislation will be marked up, let alone reach the House floor, with only eight months left before the 2014 midterm elections.
REGULATORY WORLD
G20 Announcement Boosts FATCA Goals. Finance ministers and central bank governors of G20 member nations and the European Union agreed over the weekend to a common standard for the automatic exchange of tax information as part of a global response to base erosion and profit shifting by multinational corporations. The sharing of tax information among the G20 members is set to begin by the end of 2015, with implementation details expected to be fleshed out later this year.
The announcement comes just days after the Treasury Department issued the last package of substantial regulations for implementation of the Foreign Account Tax Compliance Act (FATCA), set to take effect July 1, 2014. Treasury Secretary Jack Lew told reporters during the G20 meeting in Australia on Sunday that he welcomed the G20’s cooperation on targeting “non-compliant” taxpayers.
Fire From All Sides. The Internal Revenue Service’s proposed regulations to define what constitutes “candidate-related political activity” for 501(c)(4) social welfare organizations is not just a hot-button issue for Republicans and Tea Party groups. Left-leaning and nonpartisan nonprofits are also expressing concern over the proposed regulations and calling for their withdrawal. The regs have garnered more than 70,000 comments, many arguing that the proposed rules would have an adverse effect on conservative and progressive organizations. The comment period ends Feb. 27, and the House is expected this week to take up Chairman Camp’s bill, H.R. 3865, which would delay the proposed regulations until after the November elections.
COURTS & LEISURE
State Court Enjoins Colorado’s “Amazon” Law. A Colorado state court ruled Feb. 18 that the state’s law imposing notification and reporting requirements on out-of-state vendors that don’t collect the state’s sales and use tax is discriminatory. This is the latest development in the Direct Marketing Association’s ongoing attempts to block the law aimed at Internet retailers. BloombergBNA reported that the court temporarily barred the state from enforcing the so-called Amazon law, granting the Direct Marketing Association’s request for a preliminary injunction. The Tenth Circuit Court of Appeals threw out the lawsuit last August.
LOOKING AHEAD
Relevant Senate Hearings:
The Senate Finance Committee’s Subcommittee on Social Security, Pensions, and Family Policy will hold a hearing on Wednesday, Feb. 26, to discuss retirement savings for low-income workers. Witnesses include:
- Mr. J. Mark Iwry, Senior Advisor to the Secretary and Deputy Assistant Secretary (Tax Policy) Retirement and Health Policy, United States Department of the Treasury
- Ms. Diane Oakley, Executive Director, National Institute on Retirement Security
- Mr. Stephen P. Utkus, Principal & Director, Vanguard Center for Retirement Research
- Ms. Judy A. Miller, Director of Retirement Policy, Executive Director, American Society of Pension Professionals & Actuaries (ASPPA), ASPPA College of Pension Actuaries
The Senate Homeland Security and Governmental Affairs Committee’s Permanent Subcommittee on Investigations will hold a hearing on Wednesday, Feb. 26, on the subject of “Offshore Tax Evasion: The Effort to Collect Unpaid Taxes on Billions in Hidden Offshore Accounts” in order to “probe Swiss banks aiding Americans who dodge taxes.” Witnesses will include representatives from a Swiss bank and the Department of Justice, but have not yet been specified.
Relevant House Hearings:
The House Ways & Means Committee’s Subcommittee on Social Security will hold a hearing Wednesday, Feb. 26, “examining the Acting [Social Security] Commissioner’s plan and legislative recommendations for preventing disability fraud schemes.” The subcommittee will also hear the recommendations of public- and private-sector experts regarding stopping disability fraud schemes before benefits are awarded and deterring criminals from attempting to cheat the system.” Witnesses have not yet been announced.
The House Appropriations Committee’s Subcommittee on Financial Services and General Government will hold an oversight hearing Wednesday, Feb. 26, examining the Internal Revenue Service’s treatment of 501(c)(4) social welfare organizations. Witnesses include:
- The Honorable John Koskinen, Commissioner, Internal Revenue Service
- The Honorable J. Russell George, Treasury Inspector General for Tax Administration, Internal Revenue Service
- Ms. Nina E. Olson, National Taxpayer Advocate, Internal Revenue Service
The House Committee on Oversight and Government Reform’s Subcommittee on Economic Growth, Job Creation and Regulatory Affairs will hold an oversight hearing on Thursday, Feb. 27, to discuss the IRS’s proposed regulations on 501(c)(4) social welfare organizations. Witnesses have not yet been announced.
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