United States: Tax Policy Update - October 21, 2014

Last Updated: October 27 2014
Article by Russell W. Sullivan and Danielle R. Dellerson

NUMBER OF THE WEEK: $1.64 Billion.

The "break-up fee" that Illinois-based pharmaceutical company AbbVie Inc. must pay Ireland-based Shire Plc. for backing out of the $54 billion cross-border merger deal that was called off last week due to the U.S. Treasury Department's recently released anti-inversion regulations. But, this breakup has a silver (or gold) lining — it's tax deductible.

LEGISLATIVE LANDSCAPE

Congress remains in recess until after the Nov. 4 midterm elections.

Wyden Welcomes AbbVie Breakup. Senate Finance Committee Chairman Ron Wyden (D-OR) said in a statement that "[i]t's encouraging that companies like AbbVie, and their shareholders, recognize the strategic business value of remaining an American company." Wyden also said he would continue "examining the issue" of inversions while working with his Republican counterparts toward comprehensive tax reform. Republicans have remained mum on the AbbVie/Shire split.

Inversions on the Campaign Trail? Republicans seeking re-election or a first-time seat in Congress are also keeping mostly mum on the corporate inversion issue. Meanwhile, Democrats are seemingly having little success in their efforts to label their Republican opponents as favoring "corporate tax breaks that help ship jobs overseas" — which is a much more campaign friendly (if not entirely inaccurate) way of describing a cross-border merger in which a U.S. multinational company moves its tax residence abroad.

In the race for the open Georgia Senate seat, Democrat contender Michelle Nunn is perhaps having the most success playing off inversion-like rhetoric — but that's mostly because her opponent, Republican David Perdue, was quoted in a deposition saying he "spent most" of his career outsourcing domestic companies' production as part of business reorganizations. Nunn is gaining, or even slightly ahead, in the polls, depending on which one you believe. The tight race is one of six seats that Republicans would need to pick up in order to regain the majority in the Senate — assuming, of course, that incumbent Senator Pat Roberts (R-KS) doesn't lose to Independent challenger Greg Orman. But back to Georgia, where if neither Michelle Nunn nor David Perdue wins by more than 50 percent of the vote, we could be waiting for a January run-off election to determine the winner, and possibly to determine which party holds the majority in the Senate. However, most polls predict the GOP will win the majority regardless of the outcome in Georgia.

REGULATORY WORLD

Where the Streets Have No ... Tax Deals?

Ireland Finance Minister Michael Noonan announced last week that the country would end its "Double Irish" tax structure, a tax-reduction strategy popular among U.S.-based tech firms. The lead singer of one of Ireland's most famous exports — U2's Bono — has defended the tax break, saying it has brought Ireland "the only prosperity we know."

The "Double Irish" allows companies to shift untaxed revenues from high-tax countries to havens, typically by setting up a subsidiary in Ireland that can then re-route royalty payments for intellectual property and other payments to another Irish-registered subsidiary located in a no-tax or low-tax jurisdiction, like Bermuda.

Companies that already use this structure have four years before it's phased out, but beginning in January 2015, new entrants will be required to keep their tax residency — and their revenues — in Ireland if they want to take advantage of its 12.5 percent corporate tax rate and other benefits.

LOOKING AHEAD

Agency Activity

The Federal Deposit Insurance Corporation
On Tuesday, Oct. 21, the FDIC Board of Directors will meet to consider the final credit risk retention rule.

Department of Labor
On Tuesday, Oct. 21, the DOL's Employee Benefit Security Administration (EBSA) will host a symposium in honor of the 40th anniversary of the Employee Retirement Income Security Act (ERISA). DOL Secretary Thomas Perez, assistant secretary of EBSA, Phyllis Borzi and other past and current EBSA officials are expected to discuss the past, present and future of the landmark law. The event will be livestreamed from 9:00 am through 1:00 pm here.

The Securities and Exchange Commission
On Wednesday, Oct. 22, the SEC will meet to consider the final credit risk retention rule.

On Friday, Oct. 24, SEC Commissioners Kara Stein and Dan Gallagher, along with other senior SEC officials, will join panelists covering enforcement and regulatory developments during the Los Angeles County Bar Association's annual Securities Regulation Seminar.

Board of Governors of the Federal Reserve
On Wednesday, Oct. 22, the Federal Reserve Board of Governors will meet to consider the final credit risk retention rule.

Other Activities

Tuesday, Oct. 21

The D.C. Bar Taxation Section will host a full-day discussion on the Tax Reform Act of 2014 (the Camp Draft). More information can be found here. Featured panelists include:

  • Thomas Barthold, chief of staff, Joint Committee on Taxation, Keynote Address
  • Ray Beeman, former House Committee on Ways and Means majority staff, Financial Instruments, International
  • Paul Chen, Joint Committee on Taxation staff, International
  • Laurie Coady, Joint Committee on Taxation staff, REITs and RICs
  • Aharon Friedman, House Committee on Ways and Means majority staff, Individuals/AMT, Employee Benefits, Executive Compensation
  • Viva Hammer, Joint Committee on Taxation, Financial Instruments
  • Patricia McDermott, Joint Committee on Taxation staff, Employee Benefits, Executive Compensation
  • Cecily Rock, Joint Committee on Taxation staff, Business (Corporate/Partnership)
  • Karl Russo, Joint Committee on Taxation staff, Business (Corporate/Partnership), Financial Instruments
  • Sean Hailey, House Committee on Ways and Means majority staff, International
  • Harold Hancock, House Committee on Ways and Means majority staff, Business (Corporate/Partnership), Exempt Organizations, REITs and RICs

Friday, Oct. 24

The Los Angeles County Bar Association will hold its 47th Annual Securities Regulation Seminar, focusing on current events and developments in the securities field, including discussions of SEC priorities as well as an overview of judicial, regulatory and enforcement developments; recent trends in Securities and Exchange Commission (SEC) enforcement; the public and private offerings of securities; regulation of investment advisers; and other matters of interest to the securities bar. A complete agenda is available here. Notable speakers include:

  • Kara Stein, commissioner, SEC
  • Daniel Gallagher, commissioner, SEC
  • Andrew Ceresney, director, SEC Division of Enforcement
  • Keith Higgins, director, SEC Division of Corporation Finance

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.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.