NUMBER OF THE WEEK: 4

As in the 4th of July. Surely there is no more important number in tax policy than the number that gave rise to the birth of our great nation … to which we pay our federal taxes. Also, tax wonks everywhere could use a nice vacation. Have a happy and safe 4th!  

LEGISLATIVE LANDSCAPE

Senate: Highway Bill Markup Hangin’ at Rest Stop. Senate Finance Committee Chairman Ron Wyden (D-OR) unveiled a $7.6 billion modified Chairman’s Mark of a short-term highway funding bill during what was supposed to be a markup of the legislation. The markup was postponed after Wyden announced more bipartisan negotiations were needed and would continue during the July 4th recess. The Highway Trust Fund is expected to become insolvent before the end of summer, and Wyden said he will also work with House Ways & Means Chairman Dave Camp (R-MI) to construct a bill that is viable in both houses of Congress and ready for the president’s signature before the trust fund runs dry.

The modified Mark resulted from late-night negotiations between Wyden and Ranking Member Orrin Hatch (R-UT) and their staffs after Hatch and other Republicans decried Wyden’s original mark for lacking any spending cuts. Wyden said the modification showed the two sides were moving closer to agreement on how to pay for the bill.

Notably, the modified Mark struck a proposed increase to the heavy vehicle use tax from Wyden’s original Mark and retained a provision that would accelerate distribution requirements — and therefore tax obligations — for inherited retirement accounts. This permanent change to so-called “stretch IRAs” raises $3.7 billion over 10 years, according to the Joint Committee on Taxation, in order to help offset the six-month refill of the Highway Trust Fund.

The House has proposed cutting Saturday postal service as a possible offset and has also floated “pension smoothing” as a pay-for.

House: Ways & Means Advances Education Tax Breaks, Child Tax Credit Bills. The House Ways and Means Committee on June 25 approved a $96.5 billion expansion and simplification of tax breaks for education and a $115 billion increase in the child tax credit — policies that most if not all of the panel’s Democratic members agree with in substance, but voted against because the legislation is not paid for. All of the markup materials, including the results, are available here.

REGULATORY WORLD

FATCA Fires Up. Starting today, July 1, 2014, the U.S. government will start imposing a 30 percent tax on many overseas payments to financial institutions that don’t share information with the IRS as part of the Foreign Account Tax Compliance Act of 2010. Bloomberg has more here.

Treasury Opens Door for Longevity Annuities in Retirement Plans . The Treasury Department issued final rules today, July 1, that will help make longevity annuities available as part of qualified retirement plans, like 401(k)s and IRAs. Longevity annuities help ensure lifetime income for retirees.

COURTS & LEISURE

High Court Limits ACA’s Contraception Mandate. A major feature of the Affordable Care Act took a hit on June 29 as the U.S. Supreme Court handed down its 5-4 decision in Burwell v. Hobby Lobby, Inc. The case challenged the ACA’s requirement that for-profit companies offer contraception to female workers under their employee health insurance plans. The court, divided along the familiar conservative-liberal fault line, ruled that for-profit, “closely held” companies — meaning those that do not have public shareholders — can be exempt from the mandate based on religious beliefs protected under the Religious Freedom and Restoration Act. The full opinion can be accessed here.

LOOKING AHEAD

The Senate and House are in recess and return the week of July 7, 2014. There are no hearings or relevant agency events this week.