Joint Statement on Tax Reform Released: Today, House Speaker Paul Ryan (R-WI), Senate Majority Leader Mitch McConnell (R-KY), Treasury Secretary Steven Mnuchin, National Economic Council Director Gary Cohn, Senate Finance Committee Chairman Orrin Hatch (R-UT), and House Ways and Means Committee Chairman Kevin Brady (R-TX) issued a joint statement promising comprehensive tax reform. The statement, while high-level, indicates that the controversial border adjustment provision has been dropped from the Republican tax reform plan. The statement plans for the two tax-writing committees to develop and draft legislation that will move through the committees this fall.
Tax Court Rules Cancelled APAs Were an Abuse of Discretion: Yesterday, the US Tax Court ruled that the IRS’s decision to cancel two advance pricing agreements (APAs) entered into by Eaton Corporation was an abuse of discretion. The opinion in Eaton Corp. v. Commissioner, T.C. Memo. 2017-147 held that Eaton’s omission of some facts during APA negotiations and its inadvertent calculation errors did not meet the standards for cancellation of an APA under Revenue Procedure 96-53. The court also ruled that Eaton did not transfer intangible property to controlled foreign affiliates subject to section 367(d). The Tax Court initially ruled for the IRS in a June 2013 decision, but granted a motion for reconsideration after the presiding judge in the decision, Diane Kroupa, was indicted on criminal tax evasion charges.
LIBOR to be Replaced in 2021: Today, the UK Financial Conduct Authority (FCA) announced that the London Interbank Offered Rate (LIBOR) will be phased out and replaced by the end of 2021 with an alternative reference rate. The FCA explained the move by stating that the benchmark LIBOR seeks to measure, the market for unsecured wholesale term lending to banks, is no longer sufficiently active.