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Dec. 6 — Tax professionals could get many of the technical changes they seek for the new partnership audit regime when and if Congress passes a Tax Technical Corrections Act (H.R. 6439, S. 3506).
Partners could push out adjustments in an audit beyond the first tier of partners and underpaid tax amounts should factor in the partner’s tax rate, according to an analysis of the bill released Dec. 6 by the Joint Committee on Taxation (JCX-91-16). Tax lawyers and accountants have been pushing Congress to make changes to the new regime for examining partnerships that Congress included in the Protecting Americans from Tax Hikes (PATH) Act last year.
The technical corrections bill is unlikely to pass before the end of the year, but the changes give both taxpayers and Internal Revenue Service officials, who are in the process of writing regulations to implement the audit regime, a view of how the law could be revised in the coming months. The law goes into effect in 2018. The bill also makes changes and clarifications to other tax laws.
“The tax-writing committees should be commended for following up and clarifying key aspects of the historic partnership audit reforms enacted last year,” Ryan P. McCormick, senior vice president and counsel at the Real Estate Roundtable, told Bloomberg BNA in an e-mail. “The technical corrections bill provides critical certainty to the real estate industry and others that partnerships will be able to pass tax adjustments through tiered partnerships to the ultimate partner.”
The push to impeach IRS Commissioner John Koskinen continued into the Congress’ final days this year, and it will likely spill over into 2017.
Members of the conservative House Freedom Caucus filed a privileged resolution Dec. 6 that would force a vote on impeaching Koskinen. House members then voted to refer the motion back to the Judiciary Committee, where Chairman Robert W. Godlatte (R-Va.) will decide next steps. The series of events likely won’t culminate in any action this year, but the caucus will continue to push for the commissioner’s removal next year, Rep. Mark Meadows (R-N.C.) told Bloomberg BNA.
The Freedom Caucus members Reps. Tim Huelskamp (R-Kan.) and John Fleming (R-La.), have been pushing to remove the head of the IRS for the past several months. Neither member is returning to Congress next session. But even with Meadows, who is the incoming chairman of the caucus, continuing to spearhead the issue, it likely won’t gain any traction in the Senate.
Freedom Caucus members say Koskinen must be impeached for not cooperating with a congressional investigation into IRS targeting of conservative groups applying for tax exemptions. Finance Committee Chairman Orrin G. Hatch (R-Utah) has repeatedly said he opposes removing Koskinen, because there isn’t enough evidence. Koskinen’s term ends in November of next year. He has said he would step down if asked to by the new administration.
New Ways and Means members won’t get picked until early next year, Brady said.
Additions are typically named in the post-election, lame-duck period before a new Congress starts. But Brady said the schedule this year has been too full of other issues to allow time to fill the open spots. So the appointments have been tabled until after the new Congress starts on Jan. 3.
Republicans expect to have four openings to address, and aspirants include Reps. Jackie Walorski (Ind.), Mike Bishop (Mich.), Carlos Curbelo (Fla.), Bradley Byrne (Ala.), Andy Barr (Ky.) and Darin LaHood (Ill.). Across the aisle, Democrats interested in joining the committee include Reps. Brian Higgins (N.Y.), Suzan DelBene (Wash.) and Terri A. Sewell (Ala.).
The delay in adding new members has also delayed reshuffling on Ways and Means subcommittees. The panel needs to be filled out with its new members before new subcommittee assignments get settled, Brady said.
The answer to the 35 percent tax for companies that outsource jobs floated by President-elect Donald Trump is an overhaul of the tax code, Speaker of the House Paul D. Ryan (R-Wis.) said.
House Republicans and Trump have been at odds over how to handle companies that send jobs overseas since the President-elect helped broker a deal with some state tax incentives to keep some Carrier Corp. jobs at an Indiana factory that were slated to move to Mexico. Trump later said companies that move jobs overseas should pay a 35 percent tax. Ryan told reporters Dec. 6 that a comprehensive overhaul of the tax code is the most effective way to make American businesses competitive.
A group of Senate Democrats from Rust Belt states, led by Sen. Joe Donnelly (D-Ind.), said they plan to introduce a bill next year that would prohibit companies from receiving tax breaks for outsourcing jobs and relocating factories abroad. Their planned legislation would also offer benefits for domesticating jobs, according to a letter they sent to House and Senate leaders Dec. 6.
To contact the editor responsible for this story: Meg Shreve at email@example.com
Text of the JCT report (JCX-91-16), ‘Technical Explanation of the Tax Technical Corrections Act of 2016,’ is in TaxCore. The letter from Donnelly is at http://src.bna.com/kyJ.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
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