The Senate Finance Committee held a hearing on 17 May titled "Integrating the Corporate and Individual Tax Systems: The Dividends Paid Deduction Considered." The hearing showcased Committee Chairman Orrin Hatch's (R-UT) plan to release a major proposal on corporate integration. Chairman Hatch confirmed his proposal will include a dividends paid deduction (i.e., allowing companies to deduct the dividends they pay out) as well as a 35% withholding tax on dividends and interest. The Chairman said his corporate integration plan will be released in the next several weeks.

Committee member Rob Portman (R-OH) also brought up the recently proposed Section 385 debt/equity regulations at the corporate integration hearing. The senator called the Section 385 regulations an "overreach," and urged the Committee to hold a hearing on the unintended consequences of the regulations. Chairman Hatch said he was pushing for such a hearing. A WCEY Alert provides details.

Also this week, Senate Finance Committee Ranking Member Ron Wyden (D-OR) released a discussion draft that would overhaul the taxation of derivatives. The comprehensive proposal would require the recognition of gains each year ("mark to market") and apply ordinary tax treatment to such gains. Importantly, the draft would also exclude from capital treatment, and thus treat as ordinary in character, any bonds or other indebtedness held by most insurance companies. A WCEY Alert provides details.

Requiring mark-to-market and ordinary tax treatment for derivatives was also proposed by former House Ways and Means Committee Chairman Dave Camp under a draft preceding the Tax Reform Act of 2014, and subsequently picked up in President Obama's budget proposals.

House Ways and Means Tax Policy Subcommittee Chairman Charles Boustany (R-LA) said this week he and other committee members still consider international tax reform a priority, notwithstanding the current push to finalize the House tax reform "blueprint," which is expected to be released before the end of June. Ways and Means Committee Chairman Kevin Brady (R-TX) reportedly said he would like to refocus on international tax reform once work on the tax reform blueprint is completed. Subcommittee Chairman Boustany was also quoted as saying the final reform blueprint will determine whether international reform should include some form of patent box.

Finally, Treasury Secretary Jack Lew this week called on Congress to enact legislation allowing for the reciprocal exchange of information under the Foreign Account Tax Compliance Act (FATCA). The Treasury Secretary sent a letter to House and Senate leaders earlier this month urging Congress to pass legislation on beneficial ownership disclosure, approving the large number of pending tax treaties and protocols, as well as addressing the FATCA reciprocity issue.