Daily Tax Update - March 15, 2013: Senate Budget Committee Approves Budget Blueprint

SENATE BUDGET COMMITTEE APPROVES BUDGET BLUEPRINT:  The Senate Budget Committee passed a Democratic Fiscal Year 2014 budget resolution (The Foundation for Growth: Restoring the Promise of American Opportunity).  The proposal would raise $975 billion in new revenue over the next 10 years through cutting unspecified tax expenditures for higher-income individuals and corporations. 

  • Budget Committee Chair Patty Murray said, “The Senate budget takes a very different approach than the plan proposed by House Republicans. Their budget doubles down on the policies the American people rejected last election. It would be devastating for the middle class and the economy, it would dismantle Medicare and the programs families depend on—and it would do all that while protecting the wealthiest Americans and biggest corporations from paying their fair share.  The House Republican plan is anything but balanced, and it’s anything but fair. Despite the significant differences in the approaches we have taken, I am hopeful that we can work together toward a balanced, responsible, and bipartisan deal. It won’t be easy, but the families we represent are looking to us to move past the gridlock and dysfunction that is hurting our economy and costing jobs.”
  • Both the House and Senate budget resolutions are expected to be considered next week.

IRS SEEKS COMMENTS ON BILATERAL SAFE HARBORS FOR SPECIFIED TRANSFER PRICING ISSUES:  The IRS announced it is seeking public comments regarding the development of a model memorandum of understanding between Competent Authorities on certain transfer pricing issues. The IRS specifically seeks comments on bilateral safe harbors with regard to arm’s length compensation for routine distribution functions. Such routine distribution functions are frequently an issue in transfer pricing cases.

  • According to the IRS, “On June 6, 2012, the Organisation for Economic Co-operation and Development (OECD) issued a discussion draft on Safe Harbours, which included draft sample memoranda of understanding on certain “low risk” functions. The IRS is seeking comments now in recognition that such safe harbors could support sound tax administration. The IRS requests comments that are highly specific to the issues at hand, to the point of proposing text for draft model agreements involving routine distribution functions. Comments should be submitted by May 1, 2013. All comments should be submitted electronically to: lbi.apmacomments@irs.gov.”