International tax reform took center stage this week in Washington.

House Ways and Means Tax Policy Subcommittee Chairman Charles Boustany, Jr. (R-LA) was quoted as saying that he plans to have an international tax reform bill ready by the end of March. The subcommittee chairman made his remarks following a full committee hearing on international tax reform on 23 February. Subcommittee Chairman Boustany has been tasked by Ways and Means Committee Chairman Kevin Brady (R-TX) with developing an international tax reform plan.

The accelerated deadline for an international bill comes amid growing concern in Congress about European action on base erosion and profit shifting (BEPS) and the increasing number of US corporations inverting overseas.

The 23 February Ways and Means Committee hearing saw a general sense of urgency about the need for US international tax reform. Chairman Brady was quoted as saying at the hearing that foreign governments were out to "capture our companies, our jobs, our investments, our tax dollars."

Chairman Brady continued the drumbeat for US international reform during a speech at a Washington Think Tank on 25 February, again describing international tax reform as a critical first step toward comprehensive reform, and an urgent priority. He added a note of caution, however, saying he was not sure how far the Committee could get in advancing an international tax reform proposal as an element of broader reform.

Senate Finance Committee Chairman Orrin Hatch (R-UT) weighed in on US tax reform the next day, saying his corporate integration plan would dovetail with House efforts to develop an international tax reform bill. Chairman Hatch indicated he would not release details of his corporate integration plan until a Joint Committee on Taxation report on integration is released.

Also this week, Finance Committee ranking minority member Ron Wyden (D-OR) told a Washington audience that he is developing an international tax reform plan of his own, laying out some of the details, including anti-inversion provisions. The Finance Committee member said his plan would not include a "garden variety" territorial tax system, which he said would simply encourage US companies to operate overseas.

Finally, Congressional Democrats this week sent a letter to Treasury Secretary Jack Lew, urging the Obama Administration to take immediate regulatory action to address US companies moving their headquarters overseas. In separate letters to the Treasury Secretary, House and Senate Democrats asked the Administration to expand on anti-tax inversion Notice 2014-52 as well as expedite the issuance of anti-earnings stripping rules.

In other news, Treasury indicated it has no plans to renegotiate the pending tax treaties and protocols that are stalled in the Senate, notwithstanding the recent release of the new US Model Tax Treaty. (Note: An extensive ITS Alert on the new Model Treaty is available.) Treasury Deputy Assistant Secretary (International tax affairs) Robert Stack this week said rather the plan is to get the signed tax treaties and protocols ratified. The pending US tax agreements include proposed tax treaties with Chile, Hungary, and Poland, the proposed income tax protocols with Japan, Luxembourg, Spain, and Switzerland, and the proposed protocol amending the multilateral Convention on Mutual Administrative Assistance in Tax Matters.

The IRS has filed an appeal in the Ninth Circuit in Altera Corp. v. Commissioner. In Altera, the Tax Court held that the Treasury Department's 2003 issuance of a final rule mandating that stock-based compensation (SBC) costs be treated as costs to be shared in a qualified cost sharing arrangement (QCSA) failed to satisfy the reasoned decision-making standard and, thus, was invalid. As a result, the court found that the IRS erred in allocating the taxpayer's SBC costs to its QCSA cost pool, and the taxpayer was granted partial summary judgment overturning the allocations.

And the IRS this week issued final regulations (T.D. 9752) under Section 6038D that provide the conditions whereby a domestic entity will be considered a specified domestic entity and therefore required to report specified foreign financial assets in which it holds an interest. The final regulations are effective 23 February 2016.