Tax Update (December 7)
This week, Washington, D.C. took time to honor the life of former President George H.W. Bush, who died last Friday night at the age of 94. From Monday until Wednesday morning, the former president laid in state in the U.S. Capitol Rotunda, and thousands of Americans came to pay their respects. On Wednesday morning, a motorcade took President Bush’s body to the National Cathedral, where former colleagues, family, and friends held a memorial service which included a eulogy from his son, former President George W. Bush. On Wednesday evening, President George H.W. Bush’s casket was flown to Texas, and a funeral service was held in Houston, Texas before a train took his remains to its final resting place at the Bush Presidential Library in College Station.
A tax extenders package is looking less likely as the 115th Congress nears its end. House Ways and Means Committee Chairman Kevin Brady (R-TX-08) is working on a revised draft to his Internal Revenue Service (IRS) Reform, Extenders, Retirement, and Technical package that could be released as soon as Monday. House Democrats continue to signal they are not open to a deal, especially on any technical fixes to Tax Cuts and Job Act (TCJA). On the Republican side, attendance is a major problem in the House and it is making the whip count extra tight. At this point, the only hope is that the Retirement Enhancement and Savings Act of 2018 (RESA) – the retirement savings package that is a legacy item for retiring Senate Finance Chairman Orrin Hatch (R-UT) – can serve as the vehicle for the tax extenders package. However, a bipartisan list of third party groups released a letter criticizing the extenders. On top of this, the specter of a Christmas federal government shutdown is looming if Congress doesn’t pass a government spending bill for FY 2019 by December 21.
At the beginning of this week, it was expected that base erosion and antiabuse tax (BEAT) regulations would be released Friday, December 7. At the moment, it appears they will be released next week, likely due to the national day of mourning in honor of the late President George H.W. Bush.
The European Union (EU) has released a report on the proposal for a common system of a digital services tax on revenues resulting from the provision of certain digital services. It’s likely the proposal as it is written will enact a double tax on American technology companies. France and Germany announced they want to modify the original 3% gross excise tax proposal with an advertising tax, but it bears a strong resemblance to the former proposal in terms of targets, which would be US tech companies.