Legislative Activity

Tax –Writers Plan to Put Out Comprehensive Blueprint by June

Last Friday, April 15 (i.e., Tax Day), House Ways and Means Committee Chairman Kevin Brady (R-TX) confirmed that the tax reform task force (set up earlier in the year by Speaker Paul Ryan (R-WI)) plans to release a comprehensive tax reform “blueprint” by June of this year. This announcement comes as both Representative Charles Boustany (R-LA) and Senate Finance Committee Chairman Orrin Hatch (R-UT) have recently indicated their tax reform efforts (international tax reform and “corporate integration,” respectively) have been delayed. Despite these delays, however, House tax-writers (partially in tandem with efforts by the tax reform task force) are continuing to actively examine various approaches (cash-flow, consumption-based, income, etc.) to tax reform.

Relatedly, despite a significant effort by various parties, it now appears clear that proposals to extend certain tax extenders (namely, energy tax credits) will not be included in the reauthorization of the Federal Aviation Administration (FAA). Instead, today the Senate is expected to move forward with a “clean” FAA bill that will include only tax provisions directly related to funding the FAA. Still, there will likely be another effort to extend these provisions later in the year – though such an effort is expected to see opposition from Chairman Brady, who would like to address tax extenders as part of comprehensive tax reform efforts.

This Week’s Hearings:

• Tuesday, April 19: The House Ways and Means Subcommittee on Oversight will hold a hearing titled “Tax Return Filing Season.”

• Wednesday, April 20: The Joint Economic Committee will hold a hearing titled “The Complex Tax Code and the Economy.”

Regulatory Activity

Treasury May Take Additional Action on Corporate Tax Inversions

Last week, Internal Revenue Service (IRS) Commissioner John Koskinen announced that Treasury and the IRS are working to finalize their recently-released anti-inversion regulations prior to Labor Day.  Moreover, following that announcement, Treasury Secretary Jack Lew announced that, in addition to its most recent round of regulations, Treasury is continuing to examine ways in which it can further curb corporate tax inversions. While it is unclear when and how Treasury might take further action, congressional tax-writers have already expressed their commitment to examining Treasury’s actions, including whether they have exceeded their authority under the law and what could be done if they did.

EU Moves Forward with Country-by-Country Reporting

On Tuesday, April 12, the European Commission adopted a Directive that would impose country-by-country reporting (CbyCR) requirements on certain multinational corporations. Specifically, the framework for the CbyCR requirements, set forth by the Organisation for Economic Co-operation and Development’s (OECD) Base Erosion and Profit Shifting (BEPS) Project, would require every multinational corporation operating in the EU with global revenues exceeding 750 million euros to publish certain financial information.

Domestically, the IRS has scheduled a public hearing for Friday, May 13, during which it will review its proposed CbyCR regulations, which were released at the end of last year.  The IRS is currently expected to finalize the proposed CbyCR regulations by the end of June. Note too, in addition to CbyCR regulations – and largely in response to fallout from the “Panama Papers,” which revealed the breadth and depth of global tax evasion practices – Treasury intends to release a final rule requiring banks to obtain the names of the owners of the shell companies with which they conduct business.