NUMBER OF THE WEEK: 9

The number of hours the Senate spent voting on procedural measures on Saturday, after Senators Ted Cruz (R-TX) and Mike Lee (R-UT) objected to the government spending bill, or “cromnibus.” The parliamentary obstructionism not only failed to stop passage of the spending bill, it also gave Democrats additional time to move forward 24 more of President Obama’s executive and judicial nominations before adjourning for the year.

LEGISLATIVE LANDSCAPE

Extenders: The Final Countdown (We Hope). Amid dramatic political party infighting and parliamentary hijinks, the House and Senate managed to get the government spending package, or “CRomnibus,” across the goal line late Saturday night, opening the way for what we sincerely hope is a quick and painless passage of the House-passed extenders bill, H.R. 5771, early this week. The House has already gone home for the year, so the Senate has no choice but to pass the extenders bill as is—or not pass it at all. We expect it will pass easily, but the question is when.

The Senate is back in session today, with votes on nominations beginning at 5:30 pm this evening. If Senate Majority Leader Harry Reid (D-NV) can get unanimous consent to proceed to consideration of the bill tonight, the tax extenders bill could be on President Obama’s desk by Wednesday. Republican Senator Tom Coburn (OK), who calls the extenders package “wasteful spending” thought the tax code, has dropped his bid to hold it up at this late stage in the game.

For a refresher on what exactly is in the one-year retroactive extenders package, click here.

Hatch Releases Big Ideas on Tax Reform. Sen. Orrin Hatch (R-UT), the next chairman of the Senate Finance Committee, is pulling back the curtain on how he and his staff will approach tax reform efforts come 2015. In a new 340-page report released Dec. 11, Hatch lays out a dramatically different vision for the tax code. The report promotes the elimination of the two-tier tax system for individuals and corporations and notes a number of proposals for “integration” of the two tiers in order to eliminate economic distortions.

The report states that “[s]imilar to the taxation of individuals, the corporate tax base needs to be broadened with an elimination of almost all corporate tax expenditures”—with the exception, the report emphasizes, of subsidies for research and development. While the report promotes the elimination of corporate tax expenditures, it does so within the context of an integrated tax system where corporations only pay one level of tax.

More interesting tax food for thought is available here.

New Republican Senate Finance Members Announced. Hatch (R-UT) today welcomed Senators Dan Coats (R-IN), Dean Heller (R-NV) and Tim Scott (R-SC) to serve on the Senate Finance Committee in the 114th Congress. The announcement ends months of speculation about which Republican members would be chosen to join the prestigious committee.

Could Warner Keep His Seat on Finance? The rumor mill is churning with news that Sen. Mitch McConnell (R-KY), the next Senate Majority Leader, is willing to expand the number of seats on the Senate Finance Committee, which would allow Sen. Mark Warner, the most junior Democrat on the committee, to retain his seat in the new year. Without such an expansion, Democrats would lose two seats due to the new ratios of Republicans to Democrats in the Senate. One seat, being vacated by the retiring Sen. Jay Rockefeller (D-W.V.), will not be filled.

REGULATORY WORLD

Treasury Officials May Revisit “Skinny-Down” Anti-Inversion Rules. Daniel McCall, special counsel in the IRS’s Office of Associate Chief Counsel (International), said last week that the agency has received many questions about the so-called skinny-down provisions since it issued Notice 2014-52 in September to rein in the growing number of corporate inversions. The provision seeks to curb manipulation of dividends a company might use to avoid current anti-inversion law, which says that an inversion has occurred if a company re-domiciles into a new foreign parent company and its previous shareholders own 80 percent or more of the shares of the new company. McCall, speaking on an international tax panel, said that the agency may issue a de minimis rule to ensure that cross-border mergers that are not intended to be inversions are not inadvertently caught in the regulatory crosshairs.

COURTS & LEISURE

Report: Transfer Pricing is Elephant in the Inversion Room. Anti-corporate inversion proposals are overlooking one of the chief reasons inversions are a valuable option for U.S.-based corporations, according to a new Bloomberg report based on reviews of Internal Revenue Service tax court filings. The filings show that many companies involved in recent inversion deals are in court battles with the IRS over income credited to units in low-tax jurisdictions such as the Cayman Islands, Luxembourg and Bermuda. Shifting their legal address abroad makes it easier for them to tap the cash without paying taxes on it, according to the story, available in its entirety here.

LOOKING AHEAD

Tax Extenders, TRIA and Ta Ta For Now. Look for the Senate to pass the one-year retroactive tax extenders bill by mid-week. Less certain is the fate of a bill to extend the Terrorism Risk Insurance Act (TRIA), a federal backstop to private insurance coverage in the event of a terrorist attack.

The TRIA, which passed in the House two weeks ago, along with a rider rolling back Dodd-Frank margin and capital requirements for farmers and other commodity producers, may be too controversial to make it through the Senate this week and could be put off until 2015.

Either way, the Senate is now expected to adjourn for the year at some point this week, barring a partisan showdown over the remaining executive and judicial nominations that Reid wants to push through before the Democrats lose control over the Senate.

Programming note: There will be no Tax Policy Update for the remainder of 2014. We will return when the new Congress does, the week of Jan. 5th. Happy Holidays!