NUMBER OF THE WEEK: $37 billion

The predicted reduction in corporate income tax revenues for fiscal year 2014 compared to an earlier projection by the Congressional Budget Office. The reason for the reduced revenues? CBO says companies are deferring tax payments until extenders are renewed.

LEGISLATIVE LANDSCAPE

The House and Senate remained in recess last week and will return next Monday, Sept. 8, 2014. We expect a short and busy work period when lawmakers reconvene next week, with pressure on Congress to pass a continuing budget resolution that would keep the government funded beyond Sept. 30, 2014.

There is also growing speculation about whether Republicans, specifically Senate Finance Committee Ranking Member Orrin Hatch, may introduce a bill addressing corporate inversions — the growing practice of U.S.-based companies’ moving their tax domiciles abroad via mergers with foreign firms.

CBO Reports Lower Corporate Revenues Than Expected. The Congressional Budget Office (CBO) released an updated budget outlook on Aug. 27 forecasting a $37 billion drop in corporate income tax for the current fiscal year compared to its earlier projections in April. CBO Director Douglas Elmendorf told reporters the decline is largely due to companies’ putting off tax payments until the currently expired tax extenders are renewed — which many expect or hope may happen after November’s midterm elections.

According to Bloomberg BNA, Elmendorf also told reporters that corporate receipts will continue to decline due to an eroding tax base, which he said can be attributed to both corporate inversions and a continuing trend in companies shifting from C corporations to pass-through structures.

REGULATORY WORLD

IRS Releases Draft Instructions For Employee Health Coverage Forms. The Internal Revenue Service issued several key draft instructions on Aug. 28, 2014, for forms related to information returns required of employers, health insurers and health exchange marketplaces under the Affordable Care Act.

The agency is seeking comments on the draft instructions, which provide guidance for Form 1095-A, Health Insurance Marketplace Statement; Forms 1094-B and 1095-B; and Forms 1094-C and 1095-C.

Form 1095-C is the form that will be required for large employers to report to the IRS on healthcare coverage offered to full-time employees, which, for ACA purposes, means an average of 30 hours per week.

COURTS & LEISURE

A Whopper of Tax Move. Amid growing political and public attention on corporate inversions, U.S. fast food icon Burger King announced last week that it was in talks to buy Canadian-based coffee-and-donut chain Tim Horton’s and move its tax domicile across our northern border. Read more here.

Hollywood Gets Tax Credit Boost. California Governor Jerry Brown reached a deal with state lawmakers on Aug. 27 to triple the state’s film and TV tax credits — boosting the subsidy to $300 million over five years — as the state fights to keep entertainment industry productions from fleeing to other states. Read more here.

LOOKING AHEAD

The House and Senate do not return to Capitol Hill until next Monday, Sep. 8, 2014.

The following agency activity is scheduled for this week:

Department of the Treasury  On Thursday, Sept. 4, 2014, the FSOC (Financial Stability Oversight Council) will hold a closed meeting to discuss nonbank systemically important financial firms, the council’s work on asset management, and an update on the FED’s and FDIC’s recent review of resolution plans submitted by big banks. Read more.