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Dorothy Coleman

Treasury’s First Step Toward Implementing BEPS Highlights Manufacturers’ Broader Concerns

By | Shopfloor Main, Shopfloor Policy, Taxation | No Comments

As promised, Treasury yesterday released proposed regulations to implement new country by country reporting requirements included in recommendations on Base Erosion and Profit Shifting (BEPS) approved this fall by the G-20 and the Organisation for Economic Cooperation and Development (OECD).

While the requirement to file country by country reports (CbCRs) on a company’s global financial and tax data impose an additional administrative burden on companies, the proposed guidance makes clear that the reports will be submitted by Treasury to foreign countries under bilateral treaties and information exchange agreements with protections to ensure confidentiality, consistency and appropriate use of the information by foreign countries. The proposed guidance—which covers who has to file the reports and what information is required—also reiterates Treasury’s position that it will suspend the information exchange if a country fails to abide by these conditions.
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NAM Raises Concerns Over BEPS Requirements to Senate Finance Committee

By | Shopfloor Policy, Taxation | No Comments

Today, the Senate Finance Committee met to discuss the Organization for Economic Co-operation and Development’s (OECD) project on Base Erosion and Profit Shifting (BEPS), a set of proposals on international tax policy approved earlier this fall that will place U.S. companies at a competitive disadvantage globally. Testifying with me today was Robert Stack, Deputy Assistant Secretary for International Tax Affairs at the Treasury Department, and Michael Danilack, Principal at PricewaterhouseCoopers. Read More

ICYMI: Congressional Taxwriters Press Treasury Again on Country By Country Reporting

By | Taxation | No Comments

While many of us were enjoying a little R&R in the waning days of August, House Ways and Means Committee Chairman Paul Ryan (R-WI) and Senate Finance Committee Chairman Orrin Hatch (R-UT) were focused on BEPS— the OECD’s Base Erosion and Profit Shifting (BEPS) project.

In an August 27th letter to Treasury Secretary Jack Lew, the Chairmen questioned Treasury’s ability to impose some new tax reporting requirements on U.S. multinational companies, reiterating a request made earlier this summer that Treasury provide them with a memo outlining their legal authority to collect country by country (CbC) information from U.S. companies with global operations. Read More

Kudos to Congressional Taxwriters for Sounding the Alarm on BEPS

By | Taxation | No Comments

In a letter yesterday to Treasury Secretary Jack Lew, Senate Finance Committee Chair Orrin Hatch (R-UT) and House Ways and Means Committee Chair Paul Ryan (R-WI) reminded Secretary Lew of the critical need for the Treasury Department to “remain engaged with Congress” on their participation in the on-going Base Erosion and Profit Shifting (BEPS) project at the Organization for Economic Co-operation and Development (OECD). The Chairmen made clear that “[r]egardless of what Treasury agrees to as part of the BEPS project,” it’s Congress’ job to craft U.S. tax policy. Read More

Chief Senate Tax Writer Calls for IRS to Stop Use of “Hired Guns” in Taxpayer Exams

By | Taxation | No Comments

Senate Finance Committee Chairman Orrin Hatch (R-UT) this afternoon sent a strongly worded letter to IRS Commission John Koskinen asking him to “immediately halt” the practice of using private attorneys to carry out taxpayer examinations including taking sworn testimony from taxpayers. In May of 2014, the IRS retained the global litigation firm of Quinn Emanuel on a $2.2 million contract to assist in the income tax audit and investigation of a corporate taxpayer, including the conduct of sworn interviews.  Shortly after retaining the firm, Treasury and IRS issued a temporary regulation allowing third party contractors to take compulsory, sworn testimony in connection with an IRS investigation.  According to the IRS, the temporary regulation—issued without a notice and comment period—represented a “clarification” of existing law.

The Finance Committee Chairman doesn’t agree with the IRS’ assessment, noting that the temporary regulation represents “an unprecedented expansion of the role of outside contractors in the examination process.” Moreover, according to Senator Hatch, the IRS’ hiring of a private law firm to conduct a taxpayer exam: appears to violate federal law and the express will of Congress; removes taxpayer protections by allowing the performance of inherently governmental functions by private contractors; and calls into question the IRS’s use of its limited resources.

House Taxwriter Questions Use of IRS Funds to Hire “White Shoe” Law Firms

By | Taxation | No Comments

Manufacturers were glad to see House Ways and Means Oversight Subcommittee Chair Peter Roskam (R-IL) today raise serious concerns at a hearing about the IRS’ use of outside law firms to question witnesses under oath in on-going audits and litigation. In conjunction with a hearing on the 2015 tax filing season, the Subcommittee issued a report, “Doing Less with Less: The IRS’s Spending Decisions Harm Taxpayers,”  which outlines a number of instances of IRS’ wasteful spending, all at the expense of American taxpayers. One of the worse cases described in the report is IRS’ decision to hire a team of high-priced attorneys to help out with an on-going case, at a cost of $2.1 million. Read More

Don’t Be So Quick to Dismiss the Growth Potential of Tax Reform

By | Taxation | No Comments

For a number of years, manufacturers have been calling for an overhaul of our tax system, arguing that a simpler, fairer, more competitive and pro-investment tax system will unleash economic growth and the jobs that go with it. A study we released just last week backs this up.

A Missed Opportunity: the Economic Cost of Delaying Pro-Business Tax Reform, takes a close look at the economic impact of enacting a five-prong pro-business tax package that includes a maximum corporate tax rate of 25 percent; a globally competitive international tax system; full expensing for capital equipment; enhanced and permanent research and development incentives; and parallel changes for non-corporate pass-through businesses. Read More

Comprehensive Tax Reform the True Solution to Broken System

By | Taxation | No Comments

The NAM continues to believe that recent M&A activity in the international arena strengthens the case for a comprehensive overhaul of the nation’s tax laws and the focus on regulatory fixes or targeted legislation is misplaced. While we will take a close look at the guidance released today by the Treasury department, comprehensive tax reform is essential to unleashing the economic growth we so badly need. The NAM will continue to ensure that Washington doesn’t change the discussion and keeps its focus where it belongs – on pro-growth, pro-competitiveness tax reform.

Dorothy Coleman is the Vice President of Tax and Domestic Economic Policy for the National Association of Manufacturers

Revisionist—and Discriminatory—Tax Policy Is Not the Path to Economic Growth

By | Taxation | No Comments

Manufacturers in the United States were taken aback this weekend when word leaked out that the senior Senator from New York and long-time member of the Finance Committee –Chuck Schumer (D)—is floating a tax increase proposal that would actually reach back 20 years to discriminate against certain businesses that play a critical role in the U.S. economy. While it appears that the Senator’s goal is to discourage recent M&A activity in the international arena (aka inversions), the proposal would actually discourage important foreign direct investment in the United States and set a dangerous precedent for changing tax rules mid-stream, injecting even more uncertainly in our nation’s  shaky tax system.

Specifically, what Sen. Schumer’s proposal would do is significantly limit interest deductions for some non-U.S. domiciled companies that were headquartered in the United States at some point in the past 20 years. In laymen’s terms, this would be similar to limiting the deduction for a homeowner’s mortgage interest depending on where they were born. In both cases, it adds up to discriminatory tax policy. At the same time, adopting this revisionist approach to tax policy would open to door to similar proposals affecting other tax deductions and other groups of tax payers, and promulgating even more uncertainty in our uncertain times.

The proposal from Sen. Schumer seems to disregard the very important role that foreign direct investment plays in the U.S. economy and discriminates against non-U.S.-headquartered companies that play an important role in the U.S. economy. Indeed, U.S. subsidiaries of foreign companies employ more than 2 million U.S. workers, over 17 percent of America’s manufacturing workforce. The ability to deduct interest expense is a critical factor in a company’s decision to invest and create jobs in the United States.

As we’ve noted many times before, the NAM believes that recent M&A activity highlights the critical need for a comprehensive overhaul of the U.S. tax system to reflect the global marketplace of the 21st century.  In short, the answer is comprehensive tax reform, not punitive tax treatment of foreign-owned companies.

Dorothy Coleman is the Vice President for Tax and Domestic Economic Policy at the National Association of Manufacturers.