Tax Legislative Activity
January 1 Passes and Tax Extenders Allowed to Expire
No agreement was reached by January 1, 2014 on renewing many tax code provisions that expired on December 31, 2013.
These provisions, commonly referred to as “tax extenders”, include the research and development credit, wind credit and the exception for active financing, among many others.
Congress still has the option to extend these provisions retroactively, which has been typically how these provisions have been extended in the past.
Baucus to be Nominated as U.S. Ambassador to China
Senate Finance Committee Chairman Max Baucus (D-MT) will be nominated by President Obama as U.S. Ambassador to China. If confirmed, Chairman Baucus will have to leave his post on the Senate Finance Committee.
Many in Washington believe this will severely hamper any momentum for comprehensive tax reform, although Chairman Baucus’ expected replacement, Senator Ron Wyden (D-OR), has sponsored bipartisan tax reform legislation in the past.
Tax Regulatory Activity
FATCA FFI Agreement Released
On December 26, 2013, the Internal Revenue Service (IRS) released the final FATCA agreement that foreign financial institutions (FFIs) will have to sign to avoid a 30 percent withholding tax.
The agreement outlines procedures for FFIs to directly report information to the United States regarding U.S. owned accounts at their institution.
Withholding begins on July 1, 2014, and the first reports to the United States are due on March 15, 2015.