Legislative Activity

Representative Dold Appointed to Ways and Means

While his selection has not yet been formally approved, it was announced that Representative Bob Dold (R-IL) will fill the seat on the House Ways and Means Committee that was vacated when former Representative Aaron Schock (R-IL) stepped down last month. Representative Dold, who was originally elected to Congress in 2010, lost re-election in 2012, only to run again and be re-elected in 2014. Given that he is expected to face yet another tough re-election bid in 2016, it is likely that Representative Dold – who presently also serves on the House Financial Services Committee – will be a particularly active member of the Committee in hopes of using the coveted position to shore up support among voters in his District. The Republican Conference is set to formally approve his appointment this week.

Tax Reform, Budget Under Consideration

According to House Majority Leader Kevin McCarthy (R-CA), House lawmakers may consider the House and Senate conference report on the Fiscal Year 2016 Budget this week. When the Budget Conference held its first public meeting to discuss S. Con. Res. 11  and begin reconciling the House and Senate budgets last week, House Budget Committee Chairman Tom Price (R-GA) called for fundamental tax reform and argued that “[a] balanced budget can be and ought to be achieved without raising taxes.” Nevertheless, the Ranking Members of the Senate and House Budget Committees, Senator Bernie Sanders (I-VT) and Chris Van Hollen (D-MD), respectively, argued that the Republican-passed budgets are not balanced and fail to take into account the cost of renewing expired tax extenders, repealing the estate tax, or replenishing surface transportation funding, which is set to run out in early summer. Despite these differences, it appears that lawmakers are still on schedule to pass a unified-budget by the end of the month.

This Week’s Hearings:

• Tuesday, April 28: The Senate Finance Committee will hold a hearing titled “Creating a More Efficient and Level Playing Field: Audit and Appeals Issues in Medicare.”

• Thursday, April 30: The House Ways and Means Subcommittee on Human Resources will hold a hearing titled “Next Steps for Welfare Reform: Ideas to Improve Temporary Assistance for Needy Families to Help More Families Find Work and Escape Poverty.”

Regulatory Activity

Treasury, IRS Propose Regulations on Passive Foreign Investment Companies

The Treasury Department and the Internal Revenue Service (IRS) have proposed regulations to clarify when a foreign insurance company’s investment income is derived in the active conduct of an insurance business, in order to determine whether the company is a passive foreign investment company (PFIC). According to the proposal, which was published last week in the Federal Register, the government is “aware of situations in which a hedge fund establishes a purported foreign reinsurance company in order to defer and reduce the tax that otherwise would be due with respect to investment income.” As such, while the proposal would not prohibit foreign companies from being PFICs, it defines terms involved in determining that status to remedy the uncertainty. Comments on the proposal are due by July 23, 2015. Notably, Senate Finance Committee Ranking Member Ron Wyden (D-OR) praised the rules, but underscored that “we still have more work to do to close this tax loophole down for good, and I intend to continue to focus on doing just that.”