Daily Tax Update - March 5, 2013: Some Senate Democrats Consider Including Tax Reform In Reconciliation Process

SOME SENATE DEMOCRATS CONSIDER INCLUDING TAX REFORM IN RECONCILIATION PROCESS:  Democrats on the Senate Budget Committee will meet later today to discuss whether to include instructions for tax reform in their budget resolution to the Senate Finance Committee.  Bills considered under reconciliation can not be filibustered.

  • Senate Budget Committee Chairwoman Patty Murray said, “I am working with all of our folks to make a determination on that [inclusion of tax reform instructions in the budget resolution] going forward.”  However, a Finance Committee aide said that Chairman Max Baucus does not believe reconciliation is the way to accomplish tax reform. 
  • Sen. Ron Wyden, who serves on both the Budget and Finance Committees, said that the instructions could be written with flexibility to allow the Finance Committee to design tax reform.  Wyden said, “All you can really do on the Budget Committee is lay out some very general parameters. You can’t write a major tax reform bill in the Budget Committee.”

SECTION 1603 RENEWABLE ENERGY GRANTS REDUCED BY SEQUESTRATION:  Today, the Treasury Department issued guidance stating that Section 1603 grants given to renewable energy project developers under the American Recovery and Reinvestment Act will be reduced by 8.7 percent because of the sequestration cuts that went into effect March 1.  Treasury’s memo states, “Pursuant to the requirements of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, payments issued under Section 1603 of the American Recovery and Reinvestment Tax Act of 2009 for specified energy property in lieu of tax credits, are subject to sequestration.  This means that every award made to a Section 1603 applicant on or after March 1, 2013 through September 30, 2013 will be reduced by 8.7 percent, irrespective of when the application was received by Treasury.  Awards made prior to March 1, 2013 will not be affected.  The sequestration reduction rate will be applied until the end of the fiscal year (September 30, 2013), at which time the sequestration rate is subject to change.”  The memo adds, “Applicants are reminded that the amount of their Section 1603 claim must be calculated in accordance with the Section 1603 Program Guidance and the laws applicable to calculating basis for federal tax purposes.  Applicants may not adjust claims to account for the impact of sequestration.”

PROPOSED CHANGES TO FBAR FORM:  FinCEN, a bureau of the U.S. Department of the Treasury, has requested comments on its proposed updates to Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (``FBAR''). FinCEN is proposing to update the current TD F 90-22.1 report to standardize it with other BSA electronically filed reports and to add the capability for a third party preparer to file the report should the owner of the foreign account wish to employ this option.  Written comments should be received on or before May 6, 2013.

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