Daily Tax Update - June 16, 2017: Chairman Hatch Calls for Public Comments on Tax Reform

Chairman Hatch Calls for Public Comments on Tax Reform:  Today, Senator Orrin Hatch (R-UT), chairman of the Senate Finance Committee, requested feedback from stakeholders and experts on how to improve the American tax system. Chairman Hatch specifically requested recommendations in the areas of:

  • Providing tax relief to middle-class individuals
  • Lowering tax rates and broadening the tax base for businesses
  • Removing disincentives for savings and investment in the tax code
  • Making the international tax system more competitive and preserving the tax base 

Comments may be submitted to taxreform2017@finance.senate.gov no later than July 17.

IRS Issues Ruling on Online Software for Section 199:  In Chief Counsel Advice 201724026, released today, the IRS advised that the taxpayer was not entitled to the domestic production activities deduction under section 199 for its online software. The IRS characterized the online software as a service through which the taxpayer’s customers are able to interface with the taxpayer’s products, rather than the software itself being the product. The IRS also took issue with the taxpayer's allocation of gross receipts based on development time, stating that regulation section 1.199-3(d)(1) requires that gross receipts be allocated for domestic production gross receipts on an item-by-item basis, and not on a transaction or product-line basis.