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July 17, 2023

What to expect in Washington (July 17)

The House is back in session today, with votes postponed until 6:30 p.m. Bills for consideration under the suspension calendar include:

  • H.R. 813 - Global Investment in American Jobs Act of 2023, to require the Department of Commerce and the Government Accountability Office to conduct an interagency review of the global competitiveness of the United States in attracting foreign direct investment from responsible private-sector entities based in trusted countries and addressing foreign trade barriers that firms in advanced technology sectors face in the global digital economy
  • H.R. 752 - Securing Semiconductor Supply Chains Act of 2023, to require the SelectUSA program to solicit comments from state economic development organizations regarding federal efforts to increase foreign direct investment in semiconductor-related manufacturing and production

Later in the week is the planned consideration of the FAA reauthorization bill, the Securing Growth and Robust Leadership in American Aviation Act (H.R. 3935), which includes an extension of taxes funding the airport and airway trust fund through FY 2028. FAA reauthorization/taxes is one of three deadlines facing Congress before September 30. Short-term extensions are already being discussed for the other two, government funding and the farm bill.

The Senate is back on Tuesday, July 18, with a nomination vote followed by a procedural vote on the National Defense Authorization Act (NDAA). The House passed its version of the NDAA 219-210 on July 14.

Global tax - The House Ways & Means Tax Subcommittee has noticed a hearing, "Biden's Global Tax Surrender Harms American Workers and Our Economy," for Wednesday, July 19 (2 p.m.). Witnesses haven't been announced but Michael Plowgian, Deputy Assistant Secretary (International Tax Affairs), was expected to be invited to testify.

How the US has engaged in the negotiations over Pillar Two, the lack of Congressional action to bring the US into compliance with the global minimum tax regime, and the potential impact of that regime on US tax incentives and US revenues could be topics of discussion at the hearing. The OECD has been working on additional administrative guidance on Pillar Two that may be issued in the next few days and could address both the treatment under Pillar Two of transferable energy credits in the Inflation Reduction Act as well the impact of the undertaxed profits rule on the earnings of US MNEs that have effective tax rates below the 15% minimum rate, the latter being a topic of keen interest to the Committee.

The Bloomberg Daily Tax Report said on Saturday, "[C]ongressional Republicans have a hearing scheduled next week to grill Michael Plowgian, Treasury's lead negotiator at the OECD-led talks. A key issue for GOP members is the negotiations over Pillar Two, particularly the undertaxed profits rule, or UTPR. The rule stipulates that if a company's headquarter country hasn't adopted Pillar Two and the company is paying below a 15% rate of tax, other countries can tax the company to bring its rate up to the minimum. Rep. Kevin Hern (R-Okla.) called UTPR a 'nonstarter' for Republicans."

OECD: The next OECD Tax Talk is Wednesday, July 19 (15:00-16:00 CEST; Paris time).

Health - The House Energy and Commerce Health Subcommittee will hold a hearing, "Innovation Saves Lives: Evaluating Medicare Coverage Pathways for Innovative Drugs, Medical Devices, And Technology." on Tuesday, July 18 (10:30 a.m.).

The Senate Health, Education, Labor & Pensions Committee will hold a markup of the Pandemic and All-Hazards Preparedness and Response Act on Thursday, July 20 (10:30 a.m.).

The Senate Finance Health Care Subcommittee will hold a hearing, "The Cost of Inaction and the Urgent Need to Reform the U.S. Transplant System" on Thursday, July 20 (10 a.m.).

Pensions — The Wall Street Journal reported on retirement policy changes: "Savers ages 50 and older can make catch-up contributions in their 401(k) accounts each year, with eligible workers allowed to put an extra $7,500 into their accounts, for a total of $30,000, this year. Starting next year, those catch-up funds will be funneled only into after-tax Roth accounts for those who earned more than $145,000 the previous year. The change is part of a set of new rules Congress passed in December … This change means many workers will pay taxes on their catch-up money up front during high-earning years, rather than in retirement when they may be in a lower tax bracket. It stands to reshape how many Americans save for retirement and create financial and estate-planning strategies."

Further, "Another question hanging over catch-up contributions resulted from a drafting error in the retirement bill that Congress passed late last year, which many lawyers specializing in retirement plans interpret as prohibiting catch-up contributions for all workers starting in 2024." Tax-writing committee members have vowed to propose technical corrections legislation to fix the issue.

In Notice 2023-54, the IRS (1) announced its intention to issue final regulations related to required minimum distributions (RMDs) under IRC Section 401(a)(9), which will not apply before the 2024 distribution calendar year; and (2) provided transition relief in connection with the change in the required beginning date for RMDs under the SECURE 2.0 Act.


Contact Information
For additional information concerning this Alert, please contact:
Washington Council Ernst & Young
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