{"id":5276,"date":"2022-05-11T13:34:38","date_gmt":"2022-05-11T20:34:38","guid":{"rendered":"https:\/\/familyenterpriseusa.com\/?p=5276"},"modified":"2022-05-11T14:03:33","modified_gmt":"2022-05-11T21:03:33","slug":"congressional-tax-staffers-outline-agenda-taxation-representation-and-tax-tidbit","status":"publish","type":"post","link":"https:\/\/familyenterpriseusa.com\/taxes\/congressional-tax-staffers-outline-agenda-taxation-representation-and-tax-tidbit\/","title":{"rendered":"Congressional Tax Staffers Outline Agenda. Taxation & Representation and Tax Tidbit"},"content":{"rendered":"

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Congressional Tax Staffers Outline Agenda.<\/strong> Several senior staffers on the House Ways and Means Committee and the Senate Finance Committee\u2014Andrew Grossman, Courtney Connell, Derek Theurer and Tiffany Smith\u2014participated in a conference on tax legislation and regulatory developments last week held by the D.C. Bar Taxation Community. The staffers, who serve as tax counsel to either Republicans and Democrats on the committee, agreed on potential areas of bipartisan cooperation this Congress: a retirement security package and possibly an extenders package that could be considered before the end of the year.<\/h2>\n

Another potential area for bipartisan agreement, according to the staffers, is the Facilitating American-Built Semiconductors (FABS) Act (S.2107). Authored by Sens. Ron Wyden (D-OR) and Ranking Member Mike Crapo (R-ID), the chair and ranking member on the Senate Finance Committee, the FABS Act would establish a new 25% tax credit for investment in semiconductor manufacturing facilities. The FABS Act is being considered by conferees negotiating the Bipartisan Innovation Act.<\/h3>\n

Beyond this, the legislative priorities diverged. The Democratic staffers insisted that the Build Back Better Act remains the party\u2019s top legislative priority, whereas Republicans warned against passing large spending packages that could exacerbate inflationary trends. If Republicans regain control of either chamber, the staffers said they would seek to make permanent the Tax Cuts and Jobs Act (P.L.115-97)\u2014something the Democratic staffers largely opposed.<\/p>\n

Staffers Discuss Build Back Better.\u00a0<\/strong>On a separate panel at the tax conference last week, Democratic congressional staffers discussed the long-stalled Build Back Better Act (BBBA). According to Robert Andres, a senior policy adviser for Senate Finance Committee Democrats, the package will not pass in between the August district work period and the November midterm elections due to political sensitivities. Should BBBA remain stalled in Congress before the monthlong break, the next opportunity for passage would be during the \u201clame-duck\u201d session, the period after the midterm elections and before the next Congress. Should Democrats attempt to move a package then, they will need to initiate a new budget reconciliation process since Congress will enter a new fiscal year beginning Nov. 1.<\/p>\n

In the meantime, Andres said the BBBA still remains \u201cthe best vehicle to provide long-term certainty for [energy] incentives.\u201d<\/p>\n

Alice Lin, a budget policy adviser for House Ways and Means Committee Democrats, agreed. Should the package ultimately fail, however, she said lawmakers could still move energy provisions in a year-end tax extender package. She acknowledged, though, that the duration of the provisions would likely be shorter if they moved through an extenders package, suggesting one- or two-year periods as opposed to five years, for example.<\/p>\n

Implementing the Inclusive Framework.<\/strong>\u00a0Treasury Secretary Janet Yellen is still hopeful Congress can enact some version of the Build Back Better Act this year, and she wants it to include the corporate minimum tax provisions required for compliance with the Pillar Two global minimum tax regime endorsed by nearly 140 countries through the Organisation for Economic Cooperation and Development (OECD) last October.<\/p>\n

While Yellen admitted to not knowing \u201cwhat will happen with reconciliation,\u201d she nevertheless remains \u201chopeful that some reconciliation package will be passed\u201d before adding that she \u201cbelieve[s] that this [the global minimum corporate tax language] will be a component.\u201d<\/p>\n

In terms of timing, she expects the European Union (EU) to adopt its Pillar Two measures \u201cthis spring\u201d since \u201cthe EU is very close to adopting the global minimum tax.\u201d Should this occur, Yellen contends, \u201cIt will be a good example for the U.S.\u201d Pascal Saint-Amans, director of the Center for Tax Policy and Administration at the OECD, seemingly agreed when he said at a tax conference last week that the EU would likely pass the directive enacting the 15% minimum tax this month.<\/p>\n

At the same time, however, Saint-Amans was less optimistic about other countries adopting similar legislation quickly. He said, for instance, that \u201cthere is an extremely ambitious timeline. We\u2019ll see whether it can be met.\u201d<\/p>\n

Batchelder Addresses Tax Credit Concerns.\u00a0<\/strong>Lily Batchelder, Treasury assistant secretary for tax policy, responded last week to claims that the global minimum tax agreement would undermine U.S. tax incentives.<\/p>\n

Speaking at a tax conference, Batchelder\u00a0said<\/a>\u00a0the administration is \u201cconfident that the value of many [domestic] business credits is preserved under the OECD rules.\u201d She explained that tax breaks related to low-income housing and renewable energy, in addition to the New Markets Tax Credit, would not be affected because \u201cthe income or loss and the income tax consequences of those investments typically will be excluded from the effective tax rate calculation.\u201d<\/p>\n

In response to questions about other U.S. tax credits such as the research and development credit, Batchelder said the U.S. has \u201cestablished a process with the OECD for working towards additional clarifications.\u201d Under the current OECD model rules, non-refundable credits would adversely affect a company\u2019s effective tax rate calculation, potentially subjecting it to a top-up tax under the proposed global minimum tax regime.<\/p>\n

Commissioner Rettig Testifies on the Hill.<\/strong>\u00a0The Senate Appropriations Subcommittee on Financial Services and General Government held a\u00a0hearing<\/a>\u00a0last week on the fiscal year 2023 budget request from the Internal Revenue Service (IRS). Commissioner Charles Rettig testified before the committee\u2014his third time appearing before Congress within the last few weeks. During his remarks, he updated lawmakers on several issues:<\/p>\n