Daily Tax Update - February 7, 2012: Sanders Introduces "Corporate Tax Fairness Act"

SANDERS INTRODUCES “CORPORATE TAX FAIRNESS ACT”:  Sen. Bernie Sanders (I-VT) introduced a bill to “stop profitable corporations from sheltering income in the Cayman Islands and other tax havens.”  According to Sanders, “The legislation also would end tax breaks for companies that ship jobs and factories overseas.”  Sanders said, “If we're going to be serious about deficit reduction, corporate America, which is now enjoying record-breaking profits, is going to have to step up to the plate.” 

  • According to the summary, the bill would:
    • “End the deferral of foreign source income that allows U.S. corporations to avoid paying taxes on overseas profits.
    • Under the Corporate Tax Fairness Act, U.S. corporations would continue to get a credit against their U.S. taxes for foreign taxes they pay. That means that when an American corporation has profits in a country with lower corporate taxes than the U.S., they would pay the federal government the difference between the foreign rate and the U.S. rate. When an American corporation has profits in a country with higher corporate taxes than the U.S., they would pay nothing to the U.S.
    • Close loopholes that allows U.S. corporations to artificially inflate or accelerate foreign tax credits.
    • The Corporate Tax Fairness Act would reform current law to limit foreign tax credits to offset income only from the country in which it is earned.
    • Prevent corporations from avoiding U.S. taxes by claiming to be a foreign company through the establishment of a post office box in a tax haven country.
    • The Corporate Tax Fairness Act would prevent corporations that are American for all practical purposes from avoiding U.S. taxes by claiming to be a foreign company through the establishment of a post office box in a tax haven country. Specifically, under this legislation, a corporation could not claim to be from another country if their management and control operations are primarily located in the U.S.
    • Eliminate tax loopholes for big oil companies that allow them to disguise royalty payments.
    • The Corporate Tax Fairness Act would close this loophole which amounts to a U.S. subsidy for foreign oil production for the five largest oil companies.”
    • For a fact sheet on the bill, click here.
    • To read the bill, click here.
    • To read a report, click here.

HEARING SCHEDULED ON NOMINATION OF JACK LEW TO BE TREASURY SECRETARY:  On February 13, the Senate Finance Committee will convene a hearing to consider the nomination of White House Chief of Staff Jacob "Jack" Lew to be the next Treasury Secretary. Chairman Max Baucus said, “We have a tremendous amount of work to do over the next couple months to get our fiscal house in order. It is my hope that — after a thorough vetting process – Jack Lew will be quickly confirmed so he can help tackle our country’s pressing economic issues.”

MISCELLANEOUS GUIDANCE RELEASED:

Notice 2013-12 establishes Phase II of the qualifying advanced energy project program. Phase I was originally established under § 48C of the Internal Revenue Code, and Notice 2009-72.  Section 48C was enacted by section 1302 of the American Recovery and Reinvestment Act of 2009, and provides an advanced energy project credit of 30% of the qualified investment for that taxable year with respect to the taxpayer’s qualifying advanced energy project. The total credit available under this program is approximately $150,000,000.

Notice 2013-6 provides guidance as to the corporate bond weighted average interest rate and the permissible range of interest rates specified under § 412(b)(5)(B)(ii)(II) of the Internal Revenue Code as in effect for plan years beginning before 2008. It also provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), and the 24-month average segment rates under § 430(h)(2). In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008, the 30-year Treasury weighted average rate under § 431(c)(6)(E)(ii)(I), and the minimum present value segment rates under § 417(e)(3)(D) as in effect for plan years beginning after 2007. The rates in this notice reflect certain changes implemented by the Moving Ahead for Progress in the 21st Century Act, Public Law 112-141 (MAP-21).

TAX BILLS INTRODUCED FEBRUARY 6TH:

1. [113rd] H.R.523: To amend the Internal Revenue Code of 1986 to repeal the excise tax on medical devices.
Sponsor: Rep Paulsen, Erik [MN-3] (introduced 2/6/2013)   Cosponsors (178)
Committees: House Ways and Means
Latest Major Action: 2/6/2013 Referred to House committee.
Status: Referred to the House Committee on Ways and Means.

2. [113rd] H.R.529: To amend the Internal Revenue Code of 1986 to allow certain individuals a credit against income tax for contributions to 529 plans, and for other purposes.
Sponsor: Rep Jenkins, Lynn [KS-2] (introduced 2/6/2013)   Cosponsors (1)
Committees: House Ways and Means
Latest Major Action: 2/6/2013 Referred to House committee.
Status: Referred to the House Committee on Ways and Means.

3. [113rd] H.R.535: To amend the Internal Revenue Code of 1986 to permanently extend the Build America Bonds program.
Sponsor: Rep Connolly, Gerald E. [VA-11] (introduced 2/6/2013)   Cosponsors (None)
Committees: House Ways and Means
Latest Major Action: 2/6/2013 Referred to House committee.
Status: Referred to the House Committee on Ways and Means.

4. [113rd] H.R.549: To amend the Internal Revenue Code of 1986 to provide for the creation of policyholder disaster protection funds, Catastrophe Savings Accounts, and tax credits for natural disaster mitigation expenditures.
Sponsor: Rep Grimm, Michael G. [NY-11] (introduced 2/6/2013)   Cosponsors (3)
Committees: House Ways and Means
Latest Major Action: 2/6/2013 Referred to House committee.
Status: Referred to the House Committee on Ways and Means.

5. [113rd] H.R.556: To amend the Internal Revenue Code of 1986 to require individuals to include their social security numbers on the income tax return as a condition of claiming the refundable portion of the child tax credit, and for other purposes.
Sponsor: Rep Johnson, Sam [TX-3] (introduced 2/6/2013)   Cosponsors (None)
Committees: House Ways and Means
Latest Major Action: 2/6/2013 Referred to House committee.
Status: Referred to the House Committee on Ways and Means.

6. [113rd] H.R.581: To amend the Internal Revenue Code of 1986 to exempt certain emergency medical devices from the excise tax on medical devices, and for other purposes.
Sponsor: Rep Turner, Michael R. [OH-10] (introduced 2/6/2013)   Cosponsors (3)
Committees: House Ways and Means
Latest Major Action: 2/6/2013 Referred to House committee.
Status: Referred to the House Committee on Ways and Means.

7. [113rd] H.R.582: To amend the Internal Revenue Code of 1986 to repeal the individual and employer health insurance mandates.
Sponsor: Rep Turner, Michael R. [OH-10] (introduced 2/6/2013)   Cosponsors (36)
Committees: House Ways and Means
Latest Major Action: 2/6/2013 Referred to House committee.
Status: Referred to the House Committee on Ways and Means.

INTERNAL REVENUE SERVICE - CIRCULAR 230 DISCLOSURE:  As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

STEPTOE & JOHNSON LLP - TAX PRACTICE  Steptoe & Johnson LLP has one of the largest and most diverse law firm tax practices in the country.  The practice covers the entire spectrum of federal taxation, including representation of businesses before the Congress, Treasury and the national office of the IRS; transactional planning for domestic and multinational corporations; complex audit and controversy work for corporations and other business interests contesting IRS adjustments; litigation before the Tax Court, Court of Federal Claims, district courts, courts of appeals and the Supreme Court.  The firm's tax practice also encompasses all aspects of employee benefits (ERISA), executive compensation, tax-exempt organizations and charitable giving.  Steptoe has an extensive state and local tax practice, representing an array of business clients on complex sales and use tax, corporate income tax and property tax matters, both advising those clients and handling audits, administrative appeals, and litigation for them. Read more information on Steptoe's tax practice.