Legislative update: Congress returns to unfinished business

Possible tax and legislative agenda of Congress

Congress returns to Washington this week, and will immediately be forced to confront looming deadlines on a number of high profile issues. While Congress attempted to address most of these matters over the summer, Congress finds itself with only a few weeks to address the following items (as well as any other legislative business that might arise):

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  • Funding the government, with appropriations scheduled to expire September 30
  • Authorization for highway and infrastructure projects, currently scheduled to expire October 29
  • The debt-limit ceiling
  • Authorization for the Export-Import Bank, which expired July 1

 

In addition, among the tax measures that Congress will confront are bills that would:

  • Extend the tax preference items (“tax extenders”) that expired at the end of last year
  • Continue the moratorium on state and local taxation of internet access and on multiple or discriminatory taxes on electronic commerce set to expire on September 30
  • Extend the excise taxes that fund airport operation, that are set to expire on September 30
  • Repeal the excise tax imposed on medical devices

Congress may also consider legislation, not yet introduced, to reform taxation of international business income and provide new incentives for development of intellectual property, in the form of an “innovation box.”  Although the prospects for this legislation are quite uncertain, its proponents may offer it in connection with highway and infrastructure spending legislation.

Tax extenders

It appears likely that Congress would once again turn its attention to the 50+ expired tax preference provisions popularly known as the “tax extenders” before the end of the year.

The Senate Finance Committee in July 2015 approved (i.e., “reported” to the full Senate) a bill that would extend for two years—from January 1, 2015, through December 31, 2016—the 51 tax extenders that expired in 2014 and reinstate one provision that expired in 2013. The full Senate has yet to consider the Finance Committee bill.

The House approach to the tax extenders differs. Over the course of several months, and similar to its approach last year, the House has considered several of the tax extender provisions individually, with a view to making them permanent. To date, the House has passed legislation for permanent extension of the:

  • Research credit
  • State and local tax deductions
  • Certain charitable deductions
  • Small business-related relief provisions

BEPS reports, October release

The Organisation for Economic Co-operation and Development (OECD) is scheduled to release final reports of its base erosion and profit shifting (BEPS) project in October 2015 through December 2015.  These reports and international actions with respect to them may engender a U.S. legislative response.  These reports therefore bear watching.

One of the BEPS actions would aim for greater tax transparency by requiring country-by-country reporting by taxpayers.  Senate Finance Committee Chairman Orrin Hatch (R-UT) and House Ways and Means Committee Chairman Paul Ryan (R-WI) in August 2015 sent a letter to Treasury Secretary Jack Lew, expressing their concerns regarding the inclusion on the IRS / Treasury Department’s Priority Guidance Plan of a project to issue regulations relating to country-by-country (CbC) reporting requirements. This, too, may be an area to watch.

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