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April 10, 2024

What to expect in Washington (April 10)

Punchbowl News reported April 9 that Senator Josh Hawley (R-MO) — an early supporter of the Tax Relief for American Families and Workers Act (H.R. 7024) business tax and Child Tax Credit (CTC) bill that many other Senate Republicans oppose advancing because of policy or political concerns or wariness of running afoul of Finance Committee Ranking Member Mike Crapo (R-ID) — floated the prospect of attaching the tax measure to his Radiation Exposure Compensation Act (RECA) expansion bill (S. 3853) that passed the Senate 69-30 March 7. The bill to bolster RECA, originally enacted in 1990 and expiring in June, reportedly faces an uncertain vote in the House. "At this point, combining the tax bill with RECA looks to be the only way to get this done," Hawley said in the report, which noted that Crapo supports the RECA measure.

The opportunity to attach H.R. 7024 to an appropriations bill has passed, and it's uncertain whether there could be an effort to attach it to other legislation like the Federal Aviation Administration (FAA) reauthorization and taxes bill required to meet a May 10 deadline. As Congress returned from recess this week, questions remained over whether the requisite number of Republican Senators (probably 9 or 10) would vote for the tax bill amid Crapo's opposition, and whether Majority Leader Chuck Schumer (D-NY) would bring it up for a test vote and challenge GOP members to either vote for the bill or own its demise.

Tax Notes April 9 reported Finance Committee Chairman Ron Wyden (D-OR), who crafted the bill with House Ways & Means Committee Chairman Jason Smith (R-MO), saying, "If the Senate Republicans have concerns now, they ought to bring them to me, but let's get on with it." Asked at the regular Tuesday post-lunch press conference whether he'd bring the House bill to a vote, Leader Schumer said: "I'm all for the package. If there are enough votes to move it forward in the right way, yes, we'll try to get it on the floor. But right now … they're trying to get enough votes. Yes, the sponsors are trying to see if there are enough votes."

An April 9 Bloomberg Daily Tax Report (DTR) story focused on United States-Taiwan Expedited Double-Tax Relief Act (H.R. 5988) provisions, which are folded into H.R. 7024, languishing with the broader bill. "If the bigger package is declared dead, an attempt to get the popular Taiwan bill provisions through Congress on their own could still face stiff headwinds, raising 'questions about not just the Senate but how it could get through the House on its own,' said Ray Beeman, a former Ways and Means GOP tax counsel who now leads EY's Washington Council practice … Beeman said Taiwan advocates hoping for relief will have to wait and see the endgame on the tax package, but there's always a sliver of hope for the popular provisions."

Stock buyback tax — On April 9, Treasury/IRS issued proposed regulations (REG-115710-22) on the application of the Inflation Reduction Act (IRA) excise tax on repurchases of corporate stock made after December 31, 2022, which applies at a rate of 1% of the fair market value (FMV) of any stock of a covered corporation that is repurchased by the corporation during its taxable year, minus the aggregate FMV of stock issued by the taxpayer during that year.

A Treasury release said the regulations largely adopt the framework of Notice 2023-2, published on January 17, 2023. The proposed rules do modify, among other things, the funding rule for foreign-parented groups. Treasury said the proposed regulations provide a targeted anti-abuse rule to ensure foreign-parented multinational corporations pay their fair share of the stock buyback excise tax, without ordinary course intercompany funding transactions among their corporate affiliates being inadvertently captured.

The IRS simultaneously released proposed rules (REG-118499-23) on the procedures for reporting and paying the new excise tax.

Trade — Japanese Prime Minister Fumio Kishida is in Washington this week, dining with the President last night prior to a White House dinner tonight and an address to a joint meeting of Congress on Thursday. The visit comes amid President Biden's opposition to a Japanese company's proposed acquisition of the iconic U.S. Steel company, saying at the time, "It is important that we maintain strong American steel companies powered by American steelworkers."

An April 9 New York Times story, "Biden's Trade Moves Raise Tensions Abroad but Draw Cheers in Swing States," said Biden's opposition to the deal and restrictions on certain imports represent efforts to shield US industries from foreign competition "as he courts blue-collar workers and attempts to avoid being outflanked on trade by his Republican rival." The moves strained US relationships with some nations but "have cheered labor unions, environmental groups and other key members of Mr. Biden's political support base, particularly in the swing states of the industrial Midwest." The story suggested President Biden wants to leave no doubt that he is "America First" on manufacturing and noted that he "has retained many of Mr. Trump's tariffs and added new limits on the export of certain high-tech American semiconductors."

Ukraine — As the House came back into session from recess on Tuesday, the focus was on opposition to Ukraine funding from conservative Republicans and the potential for Speaker Mike Johnson (R-LA) to face a motion to vacate his position, six months into his tenure, upon bringing a bill to the floor that would rely on Democratic votes for passage. "He's gotten himself down to a Catch-22," Republican Study Committee Chairman and Ways & Means member Kevin Hern (R-OK) said in the April 9 Washington Post. Some conservative Republicans refuse to back a Ukraine measure, which the Speaker planned to bring to a vote as soon as next week after conferring with members this week, while others want border security added.

The unrest in the House comes as Republicans, with a 218-213 majority, can lose only two votes and pass any party-line bill. The Post report said the FISA reauthorization the House is expected to take up on Friday, ahead of an April 19 deadline, already caused a rift over requiring warrants among Republicans when it was brought up in December, and failure this week "could further irritate the extreme flanks of each party." CNN reported Rep. Matt Gaetz (R-FL) as saying he would vote 'no' on the FISA bill rule.

On House personnel decisions, in the wake of Rep. Kay Granger (R-TX) stepping down from the Appropriations Chair, Speaker Johnson announced late April 9, "Tonight, the Steering Committee met and recommended Rep. Tom Cole to chair the Appropriations Committee, and I will be recommending Rep. Michael Burgess to chair the Rules Committee. I look forward to working with them to advance our agenda."

Hearings — Today, April 10 at 10 a.m. is the Senate Budget Committee hearing, "Sunny Places for Shady People: Offshore Tax Evasion by the Wealthy and Corporations."

On Thursday, April 11 at 2 p.m. is the House Ways & Means Committee hearing, "Expanding on the Success of the 2017 Tax Relief to Help Hardworking Americans."

On Thursday, April 11 at 10 a.m. is the Senate Finance Committee hearing, "Bolstering Chronic Care through Medicare Physician Payment."

Next week — On Tuesday, April 16 at 10 a.m. is the Senate Finance Committee hearing on the President's Fiscal Year 2025 IRS Budget and the IRS 2024 Filing Season.

On Tuesday, April 16 at 10 a.m. is the Ways & Means hearing on the Biden Administration's 2024 Trade Policy Agenda with United States Trade Representative Katherine Tai.

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Washington Council Ernst & Young