January 22, 2018 EY Center for Tax Policy: This Week in Tax Policy News for January 19 This week (January 22-26) Congress: The Senate is in session but the House is scheduled to be out. Davos: The World Economic Forum Annual Meeting will be held January 23-26 in Davos-Klosters, Switzerland. President Trump is scheduled to attend. Last week (January 15-19) Government funding standoff: Congress has been mired in a standoff over funding the government until mid-February and whether immigration should be addressed in conjunction with the funding measure. Senate Democrats have insisted that the latest continuing resolution (CR) include a fix for the "dreamers" issue as the end of the Deferred Action for Childhood Arrivals (DACA) program approaches on March 5. Senate Majority Leader Mitch McConnell (R-KY) said January 18 "there's no imminent deadline facing the DACA program — Congress has at least until March to arrive at a bipartisan solution," and that Democrats appear to want funding for other priorities to languish until a compromise is reached. McConnell has resisted a days-long CR proposed by Democrats to let negotiations continue. President Trump told reporters at the H&K Equipment Company in Coraopolis, Pennsylvania January 18 that he thinks Democrats want to create a distraction from the new tax law enacted in December. "I really think the Democrats want a shutdown to get off the tax cuts," he said. "Nobody thought, including the Democrats, it could work this well. They've been so good that I think Democrats would like to see a shutdown in order to get off that subject. That is not a good subject for them, the tax cuts, because of the way they've worked." Members of both parties have also grown impatient with the use of CRs to fund the government on a temporary basis, rather than regular appropriations bills or an omnibus through the end of the fiscal year. In addition to immigration, lawmakers have yet to reach a deal on spending levels for FY 2018. Republicans have proposed increasing defense spending levels above the Budget Control Act (BCA) sequester cap, and Democrats insist that any such defense spending increase be matched by an increase in non-defense spending. Delay of ACA taxes proposed: On January 18, the House approved 230-197 a CR that would extend government funding through February 16, extend the Children's Health Insurance Program (CHIP) for six years, and delay three health-related tax provisions imposed by the Affordable Care Act (ACA). The Senate followed with an affirmative vote (97-2) on the motion to proceed to consideration of the package amid doubts that it could win the necessary 60 votes for passage. With regard to ACA taxes, the House CR would: (1) extend for two years the moratorium on the 2.3% excise tax imposed on the sale of medical devices (through 2019), retroactive from December 31, 2017; (2) delay implementation of the excise tax on high-cost employer health coverage (the "Cadillac" tax) for an additional two years, until 2022; and (3) provide for a one-year moratorium on the annual excise tax imposed on health insurers for calendar year 2019. Second section 965 guidance: The Internal Revenue Service January 19 published Notice 2018-13, providing additional guidance under Internal Revenue Code section 965 for computing the "transition tax" to a territorial tax system under the tax legislation enacted on December 22, 2017 (P.L. 115-97). The Notice describes regulations that Treasury and the IRS intend to issue, including rules addressing the calculation of earnings under the transition tax and other rules to clarify certain aspects of the law. An IRS news release noted that the guidance also provides taxpayers targeted relief from certain unintended regulatory and reporting consequences arising from a change to existing stock attribution rules in the recent tax legislation. This is the second notice on the transition tax, with the previous Notice 2018-07 released on December 29; a third notice may be released before April. Trump touts tax bill benefits: During his speech in Pennsylvania January 18, President Trump continued to highlight the benefits of the December tax law (P.L. 115-97). "The tax cuts are the most significant tax cut, most significant reform in American history, with tremendous tax relief for working families, for small businesses, for big businesses that produce jobs, for just about everybody, tremendous numbers. And you're already seeing what is happening," the President said. "You're seeing what is going on. The signs of America's comeback can be seen at companies like this one." President Trump said "millions of American workers will be seeing the signs of America's comeback in their paychecks in February" because workers will be keeping more of their money. "When we began our push for tax cuts, I promised that our bill would result in more jobs, higher wages, and tremendous relief for middle-class families, and that is exactly what we have delivered," he said. The President was speaking in a congressional district where a special election will be held March 13 for the House seat vacated by former Rep. Tim Murphy (R-PA). Chamber proposes gas tax increase: On January 18, U.S. Chamber of Commerce President and CEO Thomas J. Donohue outlined a four-point plan for infrastructure modernization and investment that includes a 25-cent federal gas tax increase. The Trump administration is interested in pursuing infrastructure investment legislation this year. Quote of the Week "The agenda is — we're not going to wait 31 years to modernize the tax code again. This is going to be an ongoing effort to making sure we are constantly looking at reforms that need to be made, whether they are for startups or entrepreneurs or small businesses or large employers." - Rep. Erik Paulsen (R-MN), as reported by Bloomberg Tax January 19 ———————————————
| |||||
| |||||
