Legislative Activity

Senate to Take Up Temporary Tax Extenders Package; House Takes Different Approach

During the week of May 12, the Senate is expected to take up the EXPIRE Act (S. 2260), which provides a two-year extension for certain tax extenders, which expired on January 1.

The Senate’s approach for dealing with tax extenders differs significantly from that in the House. The House, which is out this week, is going “policy by policy” to determine which extenders should be made permanent, rather than pursuing a short-term, across-the-board solution like the Senate. For example, on May 9, the House passed the American Research and Competitiveness Act of 2014 (H.R. 4438), which would make permanent the alternative simplified research credit that expired in 2013. Following the vote, House Ways and Means Committee Chairman Dave Camp (R-MI) urged the Senate to take up similar legislation, noting that “[s]hort-term tax policies aren’t helping businesses hire new workers or grow the economy.”

Senators Wyden, Levin Developing Tax Inversion Bill

On May 8, Senate Finance Committee Chairman Ron Wyden (D-OR) announced that he is working on a proposal with Senator Carl Levin (D-MI) to crack down on corporate tax inversion, which allows companies to decrease their U.S. tax liabilities by moving their headquarters overseas. According to Chairman Wyden, this practice erodes the U.S. tax base, making comprehensive tax reform all the more difficult to accomplish. Although neither Chairman Wyden nor Senator Levin have released details on the bill, Senator Levin has suggested that he hope to release legislation this week.  Additionally, Representative Sandy Levin (D-MI), Ranking Member of the House Ways and Means Committee, has indicated that he would introduce similar legislation in the House.

Regulatory Activity

IRS Announces Form Instructions, Guidance Fixes to be Complete by July 1; Planning “Reasonable Audit” Approach

On May 8, the Internal Revenue Service (IRS) announced that it plans to issue any remaining instructions for forms and non-substantive corrections to temporary regulations (T.D. 9657, T.D. 9658) before the Foreign Account Tax Compliance Act’s (FATCA) effective date of July 1. Additionally, on May 9, IRS Deputy Commissioner Michael Danilack announced that the IRS will not be developing new audit regimes, but will instead take a “reasonable and rational” audit approach to ensure that taxpayers are making a good-faith effort to comply with FATCA requirements.