Legislative Activity

GOP Sets Out Timeline for Tax Reform

Last week, Republican lawmakers traveled to Philadelphia for a retreat to discuss their priorities for the 115th Congress. Among the top priorities for the GOP: tax reform. According to House Speaker Paul Ryan (R-WI), the House will turn its full time and attention to tax reform beginning in April (once lawmakers have addressed repealing and replacing the Affordable Care Act), with the goal of passing a comprehensive tax reform bill by August.

Among many issues that will need to be resolved in that process: whether the package will be revenue neutral and how to proceed with border adjustability. First, with regard to revenue neutrality, the Trump Administration appears to be questioning whether tax reform does, in fact, need to be revenue neutral. In his remarks in Philadelphia, however, Speaker Ryan made clear that tax reform will be revenue neutral and not add to the deficit.

With regard to border adjustability, and as we have previously reported, there appears to be a growing concern by a wide array of players on the border adjustability provisions that are expected to be included in the House’s tax reform bill. However, as the largest revenue raiser, it would be hard to pay for tax reform without border adjustability – or an alternative that is likely to be just as disfavored. As such, it is no surprise that last week, House Ways and Means Committee Chairman Kevin Brady (R-TX) confirmed border adjustability “will stay in” and urged business leaders to back the proposal.

This Week’s Hearings:

  • On Monday, January 30, the Senate Finance Committee will hold an organizational meeting and consider the nomination of Mr. Steven Mnuchin to be Secretary of the Treasury.

Regulatory Activity

Clarity Needed for Dividend Equivalents and Partnership Regulations

On January 24, the Department of Treasury and Internal Revenue Service (IRS) published final regulations in the Federal Register related to dividend equivalents and publicly traded partnerships (PTP). However, the regulations were published following a memorandum from the Office of Management and Budget (OMB) issuing a 60-day “freeze” on additional regulations. It is presently unclear whether the regulations were issued in accordance with (or pursuant to an exception permitted by) the memorandum.