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Tag Archive for Senate Finance Committee

Tax Reform Links and Examples

Annette Nellen, Tax Advisor

UPDATED 12/2/17: Tax reform is moving along. The House Ways and Means Committee introduced its bill – H.R. 1, on November 2 and the House passed it on November 16. The Senate Finance Committee released its proposal on November 9 and passed it on November 16. Late on 12/1/17, the Senate passed a bill that made numerous amendments to the bill passed by the Senate (see the list of amendments in this JCT document). Now the House and Senate need to create a conference committee to work out the differences among the bills and that version will go back to House and Senate for votes.  Or, perhaps the House will just pass the Senate version, but I don’t think so. I think there are some items the House doesn’t like such as the corporate rate reduction not starting until 2019.

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Senate Tax Bill Update: 10% Additional Withholding on BEPS Payments, Increase to 12.5% After 2025

William Byrnes, Tax Advisor

The Senate Finance Committee has posted its 515 pages of new Internal Revenue Code language for a vote within 10 days.  Relevant text passages for base erosion and profit shifting are excerpted below.

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International Tax Reform & Can Wealthy Americans Move to Virgin Islands and Not Pay Federal Capital Gains Tax?

William Byrnes, Tax Advisor

The Senate Finance Committee Modified Mark has published the modification to source rules involving possessions; the following is a description and analysis of the proposal:

The proposal modifies the sourcing rule in section 937(b)(2) by modifying the U.S. income limitation to exclude only U.S. source (or effectively connected) income attributable to a U.S. office or fixed place of business. The proposal also modifies section 865(j)(3) by providing that capital gains income earned by a U.S. Virgin Islands resident shall be deemed to constitute U.S. Virgin Islands source income regardless of the tax rate imposed by the U.S. Virgin Islands government.

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Senator Hatch And Jump Starting Tax Reform

Senator Hatch, chair of the Senate Finance Committee, has done the following regarding tax reform:

Study and hearings on corporate integration as a way to reduce the corporate tax burden. The proposal (per statements rather than a report) is a dividends paid deduction with withholding. Read more

The Senate Finance Committee Approves Bipartisan Tax Extenders Bill

On July 21st of 2015, the Senate Finance Committee overwhelmingly passed a tax extenders bill with a bipartisan vote of 23 to 3 that plans to extend over 50 previously expired tax provisions for a two year period (e.g., retroactively to cover all of calendar year 2015 and prospectively to cover all of calendar year 2016).

The bipartisan tax extenders package includes provisions to assist both individuals and business entities alike. Just a few of the more popular tax provisions outlined within this bill include, but are not limited to:

• The Research & Experimentation Tax Credit Program;

• The I.R.C. § 179D Energy Tax Deduction for Building Envelope Efficiency; Read more

The Senate Finance Committee Outlines Tax Reform Principles

On Thursday, January 29th the Democrats on the Senate Finance Committee (hereinafter “the Committee”) issued a letter to the Republican Chairman, Orrin Hatch, R-Utah, outlining their main principles for tax reform that emphasizes first that the tax reform process should go through “regular order” and not the budget reconciliation process. “Reconciliation imposes tight restrictions, such as the Byrd rule, that could inhibit our work by forcing us to focus on procedural intricacies rather than good tax policy,” said the Senate Democrats in their letter. “Using, or even the implicit threat of using, the reconciliation process for tax reform would destroy the necessary bipartisanship that made the 1986 reform effort so successful.” Other principles cited by Senate Democrats include making reforms more progressive than current tax policy, and reducing the Read more

Summer Hearings On Comprehensive Tax Reform

On June 5, 2014, Senators Wyden and Hatch of the Senate Finance Committee announced three hearings for the summer on comprehensive tax reform. The topics:

June – Education incentives

July – (1) Identity theft and taxpayer privacy protection (2) Modernizing corporate taxation

They also mention:

• Simplification
• Promoting economic prosperity
• Innovative ways to fix the depleted Highway Trust Fund Read more

The Senate Finance Committee Agrees to Expand the Federal-Level Research & Experimentation Tax Credit for Certain Small Businesses

On April 3, 2014, The Senate Finance Committee agreed to expand the Federal-Level Research and Experimentation Tax Credit (hereinafter “RTC”) for certain small businesses, making the tax incentive available to companies that don’t have an income tax liability.

The change, pushed by Senator Chuck Schumer (D-N.Y.) and other lawmakers on the Hill, proposes to make the RTC available to many start-up companies that typically aren’t able to claim it during their first years in operation, as Senator Chuck Schumer indicated at the Finance Committee’s markup on expired tax incentives. Senators across both sides of aisles approved the proposal on a voice vote, with no objections.

Pursuant to the currently expired statute, companies can take the RTC only if they have Read more

Senate Finance Committee Blank Slate Project 2013 – Senator Rockefeller’s Suggestions

Evaluation of Senator Suggestions for the Blank Slate Project

As noted in my 9/9/13 post, I’m going to summarize and analyze proposals senators offered to the Senate Finance Committee, and that the senator made public. Despite falling behind on my project, as tax reform likely heats up in 2014, I’m back at it as I’d like to look at and share what might be a broader array of proposals and issues. In no particular order, the second set of suggestions I’m commenting on are from Senator Rockefeller (D-WV) (7/26/13 letter). Senator Rockefeller is a member of the Senate Finance Committee.

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Justify Your Favored Tax Breaks… If You Can

IncomeOn June 27, 2013, Senator Baucus, Chair of the Senate Finance Committee and Senator Hatch, Ranking Member of the committee issued a call to everyone asking them to submit justification for keeping any tax break they believe should be in the federal tax law. They refer to this as a “blank slate”approach. That is, assume that none of the 200+ special tax breaks (“tax expenditures”) are in the tax law. If you believe any should be there, send them the reasons why. House Ways and Means Committee Chairman Camp called this idea “welcome news” (6/27/13 press release).

The senators refer to the Joint Committee on Taxation tax expenditure report to define what a tax expenditure is. The Joint Committee on Taxation does not count rules tied to the basic design of a type of tax as tax expenditures. For example, the JCT states in its February 2013 report:

“Under the Joint Committee staff methodology, the normal structure of the individual income tax includes the following major components: one personal exemption for each taxpayer and one for each dependent, the standard deduction, the existing tax rate schedule, and deductions for investment and employee business expenses.” (page 3) The JCT also notes that the carryover of net operating losses is a normal part of an income tax. (page 8) Read more

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