Pardon Our Dust
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NUMBERS OF THE WEEK: $320 Billion and ZERO.The first is the amount in tax increases over 10 years under President Obama’s tax plan, which will be officially unveiled during this evening’s State ofthe Union address. The latter is the number of Republicans who have anything positive to say about it. Find more details on the administration’s taxproposals in the SOTU TAX PREVIEW below.
Hatch Outlines Committee Priorities for the Year. Just this morning, Chairman Hatch described his vision for the committee’s work this year while speaking at an event hosted by the U.S. Chamber ofCommerce. In addition to the committee’s efforts to make progress on trade agreements and roll back various elements of the Affordable Care Act, Hatch saidtax reform is the top priority. He expressed his disappointment with President Obama’s approach on individual tax proposals, which is expected to beformally spelled out during tonight’s State of the Union address. Hatch also reiterated that any proposal for reform should make the tax code fair, simple,and permanent while promoting economic growth, American competitiveness, savings and investment. Most importantly, it should be revenue neutral. Hatch allbut ruled out a gas tax increase to fund transportation and said he would look for other solutions. He also promised to move his pension reform legislationin 2015.
Tax Reform Working Groups Take Shape in Senate. Hatch has already put the wheels into motion to move tax reform ahead this year. He announced last week the creation of bipartisan working groups toanalyze current law and weigh tax reform options before submitting a report to the whole committee by the end of May. Former House Ways and Means ChairmanDave Camp (R-MI) formed similar working groups prior to releasing his tax reform discussion draft last year.
The five bipartisan groups will each focus on different aspects of the tax code, including individual, business, savings and investment, internationalissues and community development and infrastructure.
Each group will work with the Joint Committee on Taxation to create a report to be delivered to Hatch and Ranking Member Ron Wyden (D-OR) by the end ofMay. The chairs of the working groups are as follows:
Individual Income Tax Co-Chairs:
Senator Chuck Grassley (R-IA) & Senator Mike Enzi (R-WY), Senator Debbie Stabenow (D-MI)
Business Income Tax Co-Chairs:
Senator John Thune (R-SD) & Senator Ben Cardin (D-MD)
Savings & Investment Co-Chairs:
Senator Mike Crapo (R-ID) & Senator Sherrod Brown (D-OH)
International Tax Co-Chairs:
Senator Rob Portman (R-OH) & Senator Chuck Schumer (D-NY)
Community Development & Infrastructure Co-Chairs:
Senator Dean Heller (R-NV) & Senator Michael Bennet (D-CO)
The full announcement is available here.
SPOILER ALERT: SOTU TAX PREVIEW
Rather than make us all wait until 9 p.m. ET to hear the administration’s policy proposals during the State of the Union address, the White House released numerous details of the president’s tax plans over the weekend in a fact sheet entitled “A Simpler, Fairer Tax Code That Responsibly Invests in Middle Class Families.” And who among us doesn’t want to spend a holiday weekend sorting through tax proposals?!
Here are the big takeaways so far:
POTUS Proposes New Infrastructure Bond. Last week, Obama also previewed what will likely be added to the list of direct asks of lawmakers during tonight’s State of the Union – a proposal toencourage investment in infrastructure around the country through the creation of a new municipal bond called a Qualified Public Infrastructure Bond(QPIB).
The QPIB bond program would have no expiration date, no issuance caps and interest on these bonds will not be subject to the alternative minimum tax,according to a fact sheet from the White House.
Also today, the administration is launching a new, interagency Water Finance Center at the Environmental Protection Agency to increase innovative financingsupport for water systems across the country, the White House said. Read more about the QPIB proposalhere.
Claiming R&D Credits on Internal Use Software. The Treasury Department released proposed regulations pertaining to the research and development tax credit under Section 41 of the tax code. Theregulations clarify that the research credit is available when internal use software is used in providing services in its trade or business. Manybusinesses were unsure on the definition of “primarily” and avoided claiming the credit. The proposed regulations provide examples, and it can be found here.
IRS Private Letter Ruling on Multinational Storage Company REIT. The IRS recently published a private letter ruling submitted by a multinational storage company addressing various REIT-related issues. The company was astorage company providing storage for paper, media records, and other items in facilities. The company intended to be a REIT structured with taxable REITsubsidiaries (TRS). The IRS responded to twelve different requests, and the ruling can be found here.
COURTS & LEISURE
Supreme Court to Hear Same-Sex Marriage Cases. On Friday, the US Supreme Court granted a writ of certiorari to hear same-sex marriage questions. The questions are whether the 14th Amendment requires astate to license same-sex marriage and whether the Amendment requires a state to recognize an out-of-state same-sex marriage. This will affect whether theindividuals are married for federal tax purposes. Additional information can be found here.
President Obama’s State of the Union Address.
The address will begin at 9:00 PM ET and can be viewed on every major network as well as on the White House website here.
Senate Finance Committee
The full committee will meet to hold a hearing on “Jobs and a Healthy Economy.” A witness list has not yet been provided. A complete list and additionaldetails will be posted here whenavailable.