House Passes hIGHWAY fUNDING bILL, sENATE Prepares TO vOTE oN Legislation
Last week, the House voted 367-55 to pass H.R. 5021, the Highway and Transportation Funding Act of 2014. The bill would patch and reauthorize the Highway Trust Fund (HTF) through May 2015 by using transfers from the General Fund and the Leaking Underground Storage Tank Trust Fund (LUST Fund). To offset the cost of the General Fund transfer, the bill calls for pension smoothing and customs fees. As noted in previous coverage, while the Senate Finance Committee’s version of HTF funding legislation includes many of the same provisions as the House bill, it also incorporates additional revenue-raising compliance measures.
Moving forward, Senate Majority Leader Harry Reid (D-NV) has announced he will likely call for votes on three separate proposals: (1) the House-passed bill; (2) the Senate Finance Committee proposal; and (3) a plan from Senator Barbara Boxer (D-CA), which would extend current policy through December 2014. It is expected that the Senate will simply pass the House version of the bill, given that Congress must enact legislation before the August recess to prevent a slowing in HTF payments to the States.
sENATE Finance TO FOCUS ON iNVERSIONS
On July 15, Treasury Secretary Jack Lew sent a letter to leaders of the Congressional tax-writing committees calling for a “new sense of economic patriotism” and urging lawmakers to take action to curb corporate tax inversions. Further, the Obama Administration has suggested that any such legislation be retroactive to May 2014.
Last week, after noting that “this inversion loophole must be plugged,” Senate Finance Committee Chairman Ron Wyden (D-OR) announced that his committee will hold a hearing on Tuesday, July 22, to address the issue. However, not all lawmakers are in favor of standalone inversion legislation. For example, Senate Finance Committee Ranking Member Orrin Hatch (R-UT) noted “there may be steps Congress can take, short of comprehensive tax reform, to address corporate inversions, and related issues….I’m certain we can find alternatives that could easily be enacted and are less punitive and restrictive to businesses than those outlined” by the Obama Administration. On the House side, Ways and Means Committee Chair Dave Camp (R-MI) has suggested that anti-inversion legislation is not the solution, instead focusing his efforts on comprehensive reform.
THIS WEEK’S HEARINGS:
- Tuesday, July 22: The Senate Finance Committee will hold a hearing titled “The U.S. Tax Code: Love It, Leave It, or Reform It.”
- Tuesday, July 22: The Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations will hold a hearing titled “Abuse of Structured Financial Products: Misusing Basket Options to Avoid Taxes and Leverage Limits.”
- Wednesday, July 23: The House Ways and Means Subcommittee on Oversight will hold a hearing titled “Integrity of the Affordable Care Act’s Premium Tax Credit.”
irs iSSUES fINAL rULES on mIXED sTRADDLES
On July 17, the Internal Revenue Service (IRS) issued final regulations (T.D. 9678), which provide guidance on how a taxpayer can account for unrealized gain or loss on a position held before the taxpayer establishes a mixed straddle using straddle-by-straddle identification. The guidance is applicable to mixed straddles under tax code Section 1092, which are identified after August 18, 2014.