Taxation

This Could Be the Year!

Every sports fan begins their team’s season thinking, “this could be the year” and hopes for the stars to align so that they can watch their favorite team in the title game.

In the tax policy world, we continue to hope that this is the year where Congress will pass, and the Administration will sign into law, comprehensive tax reform. However, just as athletes know you cannot forget about the fundamentals, as Congress continues to work towards comprehensive tax reform, they need to also ensure that the basics of sound tax policy are in place for our economy to grow. To that end, manufacturers across the country applaud the introduction today of H.R. 2510 by Rep. Pat Tiberi (R-OH) that would make permanent 50% first year expensing, aka “bonus depreciation” along with a complimentary provision which allows companies with AMT credits to accelerate the use of these credits in lieu of bonus depreciation. (continue reading…)

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NAM Applauds House Passage of Permanent R&D Credit

With a strong push from manufacturers, the House passed legislation (H.R. 880) May 20 to reinstate, strengthen and make permanent the tax credit for research and development (R&D) – the lifeblood of manufacturing.

While designed to be an incentive to spur private sector investment in innovation, the R&D credit has never been a permanent part of the tax code. Instead, it has been extended sixteen times since it was first enacted in 1981, most recently expiring at the end of 2014. The on-again, off-again nature of the credit creates unnecessary uncertainty for manufacturers who need to know the credit will be around when planning for long-term R&D projects. Making the R&D credit permanent would provide manufacturers with much-needed certainty, increase its incentive value, create over 36,000 jobs annually, and restore the U.S. position as the leader in global innovation. (continue reading…)

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

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.

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R&D Credit Keeps Manufacturing on the Cutting Edge

Manufacturers must invest in advanced technologies to stay competitive in a 21st century global economy. To be an innovator, manufacturers must hire engineers, scientists, and design teams who will create the next great technology that will make the company, and the economy, more productive. The research and development (R&D) tax credit contributes to this process by alleviating some of the cost of hiring such top-notch R&D teams and investing in the supplies needed to come up with the next big thing.  (continue reading…)

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Manufacturers Oppose “Truth in Settlements Act”

The Senate Homeland Security and Governmental Affairs Committee is slated to consider a bill this week intended to increase the transparency of settlements between companies and federal agencies. While the authors of the bill may have good intentions, the reality is that the legislation will add additional reporting and compliance burdens, potentially change the nature of legal proceedings, and negatively impact competitiveness. (continue reading…)

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Headwinds

As the NAM’s Chief Economist, Chad Moutray, pointed out in his blog “The U.S. Economy Stagnated in the First Quarter” on yesterday’s dismal GDP numbers, there are “a number of headwinds in the economy which have negatively impacted manufacturing activity. These challenges include weaknesses abroad, a strong U.S. dollar, lower crude oil prices, a West Coast ports slowdown, bad weather in some regions of the country and a still-cautious consumer.” As Dr. Moutray pointed out, a significant “challenge for manufacturers was the fact that consumer spending on goods was up only 0.2 percent. Businesses also spent dramatically less on nonresidential structures, with equipment spending slowing to a crawl.” (continue reading…)

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

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. (continue reading…)

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Support for Permanent R&D Credit Growing

For years, manufacturers have applauded the efforts of Congressman Kevin Brady (R-TX) and John Larson (D-CT) for championing legislation to finally make the on-again, off-again R&D tax credit permanent once and for all. Now, the wave of new supporters for this much-needed research incentive is picking up momentum. (continue reading…)

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Death and Taxes – Estate Tax Repeal Introduced in Senate

While death and taxes are two facts of modern life, death by taxes may soon be less of a worry for small and medium-sized family-owned manufacturers. During last week’s budget “Vote-a-rama,” where hundreds of amendments were offered and considered, Senator John Thune (R-SD) proposed S. AMDT. 607 to reintroduce his plan to repeal the “death tax.” This macabre term is given to the burdensome estate tax on an owner’s right to transfer property at his/her death. (continue reading…)

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Spring Showers Bring Highway Construction Season

As the calendar page turns to spring and the snowy parts of our nation defrost, attention turns to the upcoming highway and infrastructure construction season. Too long stitched together by a series of short term funding patches or short term reauthorizations, our nation’s infrastructure is in need of a long term solution to provide consistent funding for much needed upgrades and repairs to our country’s crumbling infrastructure. (continue reading…)

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