United States: Tax Policy Update 25 Mar 2014

Last Updated: March 28 2014
Article by Russell W. Sullivan and Danielle R. Dellerson

NUMBER OF THE WEEK: 15. The number of times Congress has extended the Research and Development (R&D) tax credit since its inception in 1981. Broad bipartisan support for another R&D credit extension -- possibly even making it permanent -- may be the only hope for pushing a tax extenders package over the finish line.


Senate and House: Extenders Battle Brewing. We expect theSenate Finance Committee to take up a package of expired tax provisions, known as "extenders," starting next week, and House Ways & Means Chairman Dave Camp (R-MI) told his fellow committee members to expect to be sifting through each of the extenders beginning in early April. Both tax-writing panels will look for consensus on which extenders to abandon and which to resurrect, with divergent views on whether to do another short-term extension or pick a select few to live on in perpetuity.

Look for more rapid developments on extenders in the Senate Finance Committee, which appears focused on a short-term solution for now, while the House Ways & Means Committee delves into the costs and benefits of permanently extending specific provisions.

Wyden's Got Issues. Finance Committee Chairman Ron Wyden (D-OR) will likely introduce a bill for committee markup in the next week or two with an endorsement from the panel's ranking member, Sen. Orrin Hatch (R-UT). Fellow committee members will be encouraged to introduce amendments, with priority given to those with bipartisan support. We do not expect an offset to be included in the Chairman's Mark package, but Wyden could require that offered amendments be paid for.

Wyden faces a formidable challenge in trying to move an extenders package without an engine. In the past, the need to patch the alternative minimum tax (AMT) or address sunsetting across-the-board tax cuts provided the necessary impetus, allowing extenders to hitch a ride. Now, support for an extension of the R&D tax credit provides some horsepower for extenders, but nothing compared to past legislative vehicles.

Here are some other issues that Wyden will have to address in the process:

  • Whether to stick to traditional extenders or allow amendments on unrelated provisions.
    For example, 28 senators recently signed a letter supporting a bipartisan bill to expand the availability of the tax credit for investment in solar energy production (Section 48C of the Internal Revenue Code) so that the credit would be available for projects under construction at the time of the credit's expiration on Dec. 31, 2016, rather than only for those already "placed in service" and generating power by that time.
  • If unrelated amendments are allowed, how to keep the package from becoming an "Obamacare" bill.
    For example, if unrelated amendments are allowed, how can Wyden prevent partisan amendments, like a proposal to delay the individual mandate, that could torpedo the package?
  • Whether to extend the chosen provisions one year or make some permanent, especially in light of House indications that they will make some permanent.
  • Whether to require offsets.

Camp Lays Out Road to Reform. The possibility that permanent extension of certain extenders does not need to be paid for was echoed in a memo Camp sent to fellow Ways & Means Committee members yesterday. The letter also outlined the next steps for shaping tax policy and indicated Camp's increased willingness to take a piecemeal approach to tax reform, marking a shift from the chairman's previous all-or-nothing attitude. The memo set forth a three-pronged approach based on Camp's Tax Reform Act of 2014 discussion draft, which will include:

  • Additional bipartisan meetings with the staff of the Joint Committee on Taxation until committee members have walked through the entire discussion draft;
  • Public hearings on specific portions of the bill; and
  • Advancement of permanent legislation, including some tax extenders, that paves the way for tax reform by making incremental progress towards full reform.


Surgery Sidelines Lew. Treasury Secretary Jack Lew is undergoing surgery this week, but is expected to return to official duties next week. Lew was slated to testify for a House Financial Services Committee hearing on "The State of the International Financial System" originally scheduled for Wednesday, March 26, 2014. The hearing will be postponed to a later time.


Inherited IRAs Exempt in Bankruptcy? The U.S. Supreme Court heard oral arguments March 24 in a case that asks whether an inherited individual retirement account meets the exemption from a bankruptcy estate that applies to "retirement funds." The transcript for the arguments in the case, Clark v. Rameker, is available here.



No Fooling. April 1 is no joke for the Senate Permanent Subcommittee on Investigations, which will hold a hearing Tuesday, April 1, 2014, on "Caterpillar's Offshore Tax Strategy." This is the latest installment of the subcommittee's focus on corporate and individual tax evasion. The hearing will examine "the structures and methods employed by multinational corporations to allocate income outside of the United States and how such activities are affected by the Internal Revenue Code and related regulations," according to the subcommittee's website. Witnesses will include representatives of Caterpillar Inc. and PricewaterhouseCoopers LLP, as well as tax experts. A witness list will be available Friday, March 28, 2014.

Last week, the subcommittee's chairman, Sen. Carl Levin (D-MI) and its ranking member, Sen. John McCain (R-AZ), urged the Department of Justice to seek extradition of Swiss bankers and financial advisers who have allegedly assisted U.S. residents in evading taxes.


IRS Targeting Hearing. The House Committee on Oversight and Government Reform will hold another hearing Wednesday, March 26, 2014, to examine the "IRS response to the targeting scandal." The sole witness will be IRS Commissioner (and frequent flier on the House hearings circuit) John Koskinen.

Chapter 11 Reform. On Wednesday, March 26, 2014, the House Judiciary Committee's Subcommittee on Regulatory Reform, Commercial and Antitrust Law will hold a hearing entitled "Exploring Chapter 11 Reform: Corporate and Financial Institution Insolvencies; Treatment of Derivatives." Witnesses will be:

  • The Honorable Christopher Sontchi
    U.S. Bankruptcy Court for the District of Delaware
  • Mr. Seth Grosshandler, Esq.
    Cleary Gottlieb Steen & Hamilton LLP
  • Ms. Jane Vris
    General Counsel and Partner
    Millstein & Co.
  • Professor Thomas H. Jackson
    William E. Simon School of Business
    University of Rochester
  • Professor Michelle M. Harner
    Co-Director, Business Law Program
    University of Maryland Francis King Carey School of Law

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions