Legislative Activity

Senate Finance Committee Aims to Markup Highway Funding Bill

While not yet noticed, the Senate Finance Committee is expected to markup a short-term highway funding bill before the week-long July 4 holiday recess; however, it is possible that the markup will slip until Congress returns the week of July 7. While disagreements remain over how to fund the Highway Trust Fund (HTF) through the end of the calendar year, with the nearly $8 billion it will require, it appears that both Senate Finance Committee Chairman Ron Wyden (D-OR) and Ranking Member Orrin Hatch (R-UT) would prefer to offset the funding rather than use a non-offset general fund transfer. Specifically, Chairman Wyden has suggested funding the HTF through additional transportation-related tax revenue, while House Ways and Means Committee Chairman Dave Camp (R-MI) has noted that the Committee is “having discussions about a package of pay-fors that would fill the gap for some number of months.” The Ways and Means Committee is not expected to markup such legislation until after the July 4 holiday recess.  Additionally, while Chairman Wyden would prefer to fund the HTF through the end of 2014, both House and Senate Republicans are “going to try to get as long of an extension of the Highway Trust Fund as [they] can.”  Given that the HTF is set to run out of money this summer, a patch of some sort is necessary.

With an eye toward providing longer-term funding for the HTF, Senators Christopher Murphy (D-CT) and Bob Corker (R-TN) on June 18 introduced a bill calling for a gas tax increase. Specifically, the proposal would increase the federal gasoline and diesel fuel excise taxes by 12 cents per gallon over the next two years and index them to inflation, while cutting taxes by the same amount to offset the increase.   Additionally, as mentioned in previous coverage, Senate Majority Leader Harry Reid (D-NV) and Senator Rand Paul (R-KY) are working on legislation that would allow corporations to repatriate foreign earnings at lower rates and use this revenue as a long-term source of funding for improvements to transportation infrastructure. Notably, while many would like to pass a long-term funding bill, the pressure for greater offsets will likely serve as a barrier to timely passage of any such legislation.

This Week’s Hearings:

  • Tuesday, June 24: The Senate Finance Committee will hold a hearing titled, “Less Student Debt from the Start: What Role Should the Tax System Play?”
  • Wednesday, June 25:  The Senate Finance Committee will hold a hearing to consider the nominations of D. Nathan Sheets, of Maryland, to be an Under Secretary of the Treasury, vice Lael Brainard, resigned; Ramin Toloui, of Iowa, to be a Deputy Under Secretary of the Treasury, vice Charles Collyns, resigned; and Maria Cancian, of Wisconsin, to be Assistant Secretary for Family Support, Department of Health and Human Services, vice Carmen R. Nazario.

Regulatory Activity

IRS Updates FAQs and Form Instructions, Will Issue More Technical Corrections

On June 19, the Internal Revenue Service (IRS) released an updated list of frequently asked questions (FAQs) on its downloadable and searchable list of foreign financial institutions (FFIs) that have registered under the Foreign Account Tax Compliance Act (FATCA). Specifically, the IRS has updated the FAQs with information about the registration deadline and XML/CSV files.

On June 24, the IRS will hold a hearing to discuss temporary regulations, which set forth rules related to information reporting by FFIs with respect to U.S. accounts and withholding on certain payments to FFIs and other foreign entities. The temporary regulations revise final regulations (TD 9610) under chapter 4 of the Internal Revenue Code.

As FATCA compliance deadlines draw closer, the IRS continues to incorporate various fixes to its regulations and forms. For example, on June 17, the IRS announced that it intends to issue technical corrections dropping the retail qualification in FATCA’s transitional rule for withholding on offshore payments of U.S.-source fixed or determinable annual or periodic income. Moreover, on June 19, the IRS announced updates to the instructions for Form W-8IMY, which is used by intermediaries and certain other entities to certify their status under FATCA.