Daily Tax Update - February 14, 2013: Ways and Means Holds Hearing on Tax Reform and Charitable Contributions

WAYS AND MEANS HOLDS HEARING ON TAX REFORM AND CHARITABLE CONTRIBUTIONS:  Today, the House Ways and Means Committee held a hearing to examine the itemized deduction for charitable contributions as part of the Committee’s work on comprehensive tax reform.  Over 40 witnesses testified at the hearing.

  • In his opening remarks, Chairman Camp said, “We want to ensure that whichever policies we ultimately decide to pursue are crafted in a way that makes the tax code simpler, fairer and easier to comply with.  In the case of the charitable community, we also want to make sure tax reform allows you to continue to meet and fulfill the mission of each of your organizations. Our nation’s public charities and private foundations perform invaluable services for our society – at home, nationally and, in some cases, across the globe.  This is especially true during times of economic slowdown and high unemployment – challenges we have struggled with mightily over the past years.  These are also the same organizations that step up and respond to individual moments of crisis  – hurricanes, floods, earthquakes, fires, acts of terrorism and community-specific tragedies, too.”  Camp continued, “Over the last several months we’ve heard a lot about the different ways that the tax code might be changed that could affect the charitable community and the valuable services it provides.”   

Camp said examples of some of these changes include:

  • “Limiting the tax rate against which contributions may be deducted;
  • A dollar cap on total itemized deductions, as the President has repeatedly proposed;
  • A floor below which contributions may not be deducted; and
  • The replacement of the deduction with a tax credit available regardless of whether the taxpayer itemizes.”

Camp added, “Different types of limitations could have varying effects on giving. Because of the critical role that charities play, the Committee needs to hear directly from the charitable community before considering any proposals as part of comprehensive tax reform.”

TREASURY, SWITZERLAND SIGN BILATERAL AGREEMENT ON FATCA:  The Department of the Treasury announced that it has signed a bilateral agreement with Switzerland to facilitate the implementation of the information reporting and withholding tax provisions commonly known as the Foreign Account Tax Compliance Act (FATCA).  According to Treasury, “Switzerland is one of eight countries that have signed or initialed an intergovernmental agreement (IGA) which helps to facilitate the effective and efficient implementation of FATCA. In addition to the previously announced countries, Treasury initialed an IGA with Italy on January 24. Treasury is engaged with more than 50 countries and jurisdictions to curtail offshore tax evasion, and more signed agreements are expected to follow in the near future.”

MISCELLANEOUS GUIDANCE RELEASED:

On Feb. 5, 2013, the IRS released Rev. Rul. 2013-5, to be published in I.R.B. 2013-9 dated Feb. 25, 2013, which holds that Eurex Deutschland, a regulated exchange of Germany, is a qualified board or exchange ("QBE") within the meaning of section 1256(g)(7)(C) of the Code. The IRS has amended the revenue ruling to clarify that only contracts that qualify as section 1256 contracts receive mark-to-market treatment under section 1256. Revenue Ruling 2013-5 will appear in IRB 2013-9 dated Feb. 25, 2013.

Announcement 2013-15 contains a revised Exhibit: Sample Notice to Interested Parties, attached to Rev. Proc. 2013-6, 2013-1 I.R.B. 198. The Exhibit is revised to include the correct addresses for submitting applications for determination letters and comments submitted by interested parties, in accordance with the corrections to Rev. Proc. 2013-6 made by Announcement 2013-13, which was released on Jan. 25, 2013, and will appear in 2013-9 I.R.B.

  • For more information on these topics, please contact the Steptoe tax attorney(s) with whom you usually work or any member of our tax group.”

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.

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