Senate Finance Committee Chairman Orrin Hatch (R-UT) and Ways and Means Chairman Kevin Brady (R-TX) announced that the Joint Committee on Taxation (JCT) on July 6, 2016, will hold a “briefing and discussion of issues related to” the proposed regulations under section 385.
The purpose of the JCT meeting, which is open to all members of the Senate Finance and House Ways and Means committees, is to afford committee members an opportunity to address questions to Mark Mazur, Assistant Secretary of the Treasury for Tax Policy, and Robert Stack, Deputy Assistant Secretary for International Tax Affairs.
In a prepared statement, Chairmen Hatch and Brady indicated:
Members on both sides of the aisle have expressed concerns regarding the Treasury Department’s proposed regulations and their impact on our economy. This bipartisan, bicameral meeting will provide an opportunity for members and the administration to discuss this topic and focus on what the regulations could mean for American businesses here at home.
In a related matter, seven Republican members of the Senate Finance Committee sent a letter to Treasury Secretary Lew on July 1, 2016, indicating that the Senators are “deeply concerned” with the proposed section 385 regulations. Particularly, the senators asked the Secretary to: (1) extend the July 7, 2016 comment deadline to “at least” October 5, 2016; (2) consider comments and feedback received during the comment period; and (3) change the effective date for the rules so that they would apply to debt instruments issued, or deemed issued, no sooner than 90 days after the date the regulations are finalized. The letter expresses the belief of the senators that “finalizing these regulations will create new disincentives to investment in the United States and threaten to further exacerbate our current economic woes” and that the regulations “represent a fundamental shift in how debt and equity are characterized….”
The letter asked that “at the very least” the following reforms be made to the regulations prior to finalization:
The letter was signed by Senators Dean Heller (R-NV), Mike Crapo (R-ID), Pat Roberts (R-KS), John Cornyn (R-TX), Tim Scott (R-SC), John Thune (R-ND), and Johnny Isakson (R-GA). Senate Finance Committee Chairman Orrin Hatch (R-UT) was not a signatory.
Read text of the Republican Senate Finance Committee letter [PDF 1.2 MB]
This Republican Senate Finance Committee letter follows two other letters to Secretary Lew expressing concerns regarding the section 385 proposed regulations—letters previously sent by both Republican and Democratic members of the House Ways and Means Committee. Read TaxNewsFlash-Legislative Update
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.