IRS May Lose Some Enforcement Power in GOP-Led Revamp: Brady

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By Colleen Murphy, Aaron E. Lorenzo and Kaustuv Basu

The IRS’s Criminal Investigation division could be removed entirely from the agency as lawmakers aim to prioritize taxpayer service instead, House Ways and Means Committee Chairman Kevin Brady (R-Texas) said.

The Internal Revenue Service would have a single mission of helping taxpayers, according to a vision Republican lawmakers described in a tax overhaul blueprint released in June. Ways and Means members spent the last two days in private discussions about the GOP’s tax overhaul blueprint as they prepare to put it into legislative language. Their dream of a tax code revamp, and a restructure of the often-scorned IRS, came into focus when President-elect Donald Trump won the election last month.

“Whether that will be within the IRS is still to be determined,” Brady told Bloomberg BNA Dec. 15 after the meeting. “Maybe it’s time that the enforcement arm of this is separate from the IRS itself.”

One potential option could be a bill ( H.R. 5296) introduced in May by Rep. George Holding (R-N.C.) that would make the Criminal Investigation division a distinct entity within the Treasury Department.

Health Care Decisions Pending

Lawmakers are still mulling a transition timeline after a repeal of the Affordable Care Act, one of their top priorities next session. Brady said members haven’t decided what will happen with the tax provisions included in the law during that transition period, which could be several years in length.

He noted many tax elements, such as a tax on indoor tanning salons, were scrapped in repeal legislation ( H.R. 3762) President Barack Obama eventually vetoed last January.

Other items look pretty fixed to Brady, such as taxing imports and exempting exports through border adjustability.

Pressed on problems that some committee Republicans and retail and other business groups have with border adjustments, Brady said the meeting ended in consensus on major elements of the overall plan.

“The blueprint is in very good shape,” he said. “All of those key elements are in place, and if we pass this as designed, we’ve not only eliminated every tax incentive to move American jobs and companies overseas, we’ve established America as the place to be for the 21st century for that new job, that new manufacturing plant and that new research facility.”

Committee members settled on “multiple decision points and approaches,” Brady said.

Transition Timing TBD

But some temporary concessions still appear under consideration, though their exact nature and duration remain unclear. Raw material importers have pressed for a break on the import tax because they use such inputs to finish their products domestically.

“We know their concerns are sincere and we’re sincere about working with them throughout the process,” Brady said.

A decade-long transition period isn’t in the offing, he said, adding that transitions would benefit economic growth. Still open to stakeholder dialogue, Brady acknowledged that time is running short given that he wants legislation ready for Trump’s first 100 days should Trump decide to push tax changes through early in his term.

“It’s important for everyone to realize that the clock is ticking, and the sooner that industries can bring us their ideas and solutions, the sooner we can resolve them, because that window can’t be open forever and still be ready for Mr. Trump,” Brady said.

To contact the reporters on this story: Colleen Murphy at cmurphy@bna.com, Aaron E. Lorenzo at aaron@bna.comand Kaustuv Basu at kbasu@bna.com in Washington

To contact the editor responsible for this story: Meg Shreve at mshreve@bna.com

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