House votes 277-130 to extend tax breaks for charitable giving
By a vote of 277-130, the House on Thursday passed legislation to extend tax breaks for charitable giving that expired at the end of last year. The bill is the latest salvo in the fight between House Republicans and Democrats, including the White House, on extending tax breaks indefinitely, Cristina Marcos and Bernie Becker of The Hillreported.
Republicans said extending the tax credits would boost Americans’ charitable giving. But Democrats, while generally supportive of the provisions, said the cost of an extension should be offset.
Thursday’s measure combined five separate proposals related to charitable giving into one bill. The bill would, for instance, extend and expand the charitable deduction for food donations and restore indefinitely a provision allowing tax-free contributions from certain retirement accounts, Marcos and Becker wrote. It would also allow taxpayers to claim donations made until April 15 on their previous year’s tax return, extend a tax break for landowners that conserve their property, and reduce taxes for certain private foundations’ investment income.
Three of the proposals are among the collection of breaks, commonly known as tax “extenders,” that expired at the end of 2013. The other two are new proposals. In all, the measure would cost roughly $16 billion over a decade, according to the article.
The White House threatened to veto the measure earlier this week, calling it the latest sign of a GOP “double standard.” Democrats have argued that Republicans demanded offsets for a renewal of unemployment insurance, but not for tax breaks.
GOP skeptical of Justice IRS probe
Deputy Attorney General James Cole told the House Oversight and Government Reform Committee on Thursday that the US Justice Department learned about ex-IRS official Lois Lerner’s lost emails through press reports and would like to know why the IRS waited at least two months to tell investigators, Rachael Bade of Politicoreported.
Cole took the hot seat to answer GOP questions about the department’s ongoing probe of the IRS Tea Party controversy, which will also encompass the circumstances of the missing emails. He noted that his department learned of the 2011 hard drive crash that erased two years of Lerner’s emails from the media around the same time the IRS told lawmakers in June.
Republicans have blasted the department for leading what they call a sham investigation infiltrated by politics; Democrats defended the department as an independent entity above Washington bickering, Bade wrote.
“Does it not concern you that your exhaustive investigation didn’t uncover the missing emails?” asked Representative Mark Meadows (R-NC) – a line of questioning that came up several times in the hearing, according to the article. “Should we be concerned that your investigation is not exhaustive? … It concerns me.”
Cole said the department was “looking at many different forms and sources and it didn’t become apparent there were missing emails” before then. “There was not a gaping hole. … These emails come from various sources,” he said, later adding: “I would have preferred to have learned earlier.”
Cole told lawmakers that charges against IRS officials could still come up depending on what they find, Bade wrote. And he said the May House GOP contempt charge against Lerner for not answering questions, which has been referred to the District Court of the District of Columbia, was being reviewed.
Republicans separate in IRS probe
Bade wrote on Friday for Politico that two House Republican chairman leading the charge against Lerner – Darrell Issa (R-CA) of the House Oversight and Government Reform Committee and Dave Camp (R-MI) of the House Ways and Means Committee – used to interview witnesses together, but now they’re calling in the IRS workers separately.
Republicans say the shift is meaningless. But Democrats are seizing it, calling it another reminder that the scandal is more about politics than substance.
Throughout much of their probes, the two panels had been jointly conducting transcribed interviews with IRS employees and other witnesses but are now questioning the same employees separately, according to Democratic and Republican sources on those panels.
While Democrats on both committees say there’s some bad blood brewing between the two panels and that Issa didn’t want Camp to be part of these interviews, GOP Oversight spokesman Frederick Hill said that’s simply not the case: “While both committees have conducted some targeting investigation interviews jointly and some separately, the committees discussed and came to a shared view that combining a schedule of the most recent requests was not in the best interest of the investigation at this time,” according to the article.
Camp’s spokeswoman, Sarah Swinehart, did not deny the accusations explicitly but said: “Sometimes we have interviews together; sometimes we do not. Sometimes that is a scheduling issue; sometimes it is a 6103 issue,” she said, referring to the fact that the tax panel has the authority to look at sensitive taxpayer information that Oversight does not, Bade wrote.
AbbVie to buy Shire for $54 billion
Hester Plumridge of the Wall Street Journalreported that US drug maker AbbVie Inc. said on Friday it reached a deal to buy Shire PLC for about $54 billion, one of the largest deals to date where a US company seeks to lower its tax rate by buying a foreign rival.
The board of Dublin-based Shire recommended the offer – which comprises £24.44 ($41.78) in cash and 0.8960 AbbVie shares per Shire share – just hours ahead of a deadline set by the UK takeover panel. Shire had resisted AbbVie's advances for more than two months and rejected four previous offers as too low.
If successful, Shire shareholders would end up owning around 25 percent of the new combined company – above the 20 percent threshold needed to pursue an “inversion,” where a company changes its tax residence through an acquisition.
Although AbbVie said it believes a deal is “highly executable,” the agreement includes a chunky breakup fee of around $1.6 billion, or 3 percent of the value of the transaction, payable to Shire should AbbVie withdraw its offer or be unable to complete the deal, Plumridge wrote. A fee of around $500 million applies if AbbVie shareholders vote down a deal.
North Chicago, Illinois-based AbbVie plans to base the combined company – also to be called AbbVie—in the United Kingdom to bring its tax rate down to 13 percent by 2016, from 22 percent at present.
Hatch open to some near-term steps addressing tax inversions
Richard Rubin of Bloombergwrote on Thursday that Senator Orrin Hatch (R-UT), the top Republican on the Senate Finance Committee, said he is willing to consider short-term measures to deal with the trend of companies moving their legal addresses outside the United States for tax reasons.
In a letter to Treasury Secretary Jacob Lew, Hatch said he opposes policies like those urged by the administration that he said would involve “constructing a wall” around US companies.
“There may be steps Congress can take, short of comprehensive tax reform, to address corporate inversions and related issues,” Hatch wrote in the letter, according to the article. “I’m certain we can find alternatives that could easily be enacted and are less punitive and restrictive to businesses” than administration proposals.
But Hatch didn’t specify in his letter what those steps might be.
Still, Rubin noted, it represents the first signal from a senior Republican that there is the potential for a bipartisan, short-term change to the tax laws that would affect inversions. Most Republicans, including Hatch, have argued for waiting to address the issue as part of a broader revamp of the US tax code that won’t occur until next year at the earliest.
The administration has proposed making it effectively impossible for US companies to buy smaller foreign businesses and move their addresses for tax purposes. Companies such as Medtronic Inc. and Mylan Inc. are doing so.
Taxman, won’t you please spare the Internet?
Senator John Thune (R-SD) and Ajit Pai, a member of the Federal Communications Commission (FCC), wrote an op-ed for the Wall Street Journal on how the Senate must take action immediately to permanently extend a moratorium on Internet access taxes.
Earlier this week, the House passed the Permanent Internet Tax Freedom Act to make sure consumers and businesses don’t see a spike in their monthly bills for Internet access.
They wrote that the Senate needs to follow suit by November 1, when the Internet Tax Freedom Act expires.
“The moratorium has been an unqualified success,” Thune and Pai said. “It has made broadband more affordable for consumers and businesses nationwide and has laid the foundation for a powerful platform for economic prosperity and consumer choice.”
They continued: “We can't let the government burden American families and businesses with new taxes and fees on Internet access. Higher taxes would only hurt demand for Internet access and discourage service providers from investing in next-generation infrastructure. It would also frustrate the FCC's efforts to expand broadband deployment, particularly in rural America.”
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About Jason Bramwell
Jason Bramwell is a staff writer and editor for AccountingWEB. He has nearly 20 years of experience in print and online media as a journalist and editor.