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Online Home | Site Search | Tax News & Views |IRS Reform Probably Will Be Enacted During SummerFriday, April 3, 1998 OnLine The Internal Revenue Service restructuring bill probably will not be enacted until after the week-long congressional Memorial Day recess, scheduled to begin May 23, a Senate aide said April 2. When asked whether a House-Senate agreement on the IRS bill would be passed by Memorial Day, the aide responded, "that would be pushing it." The House passed its version of IRS reform last fall (H.R. 2676), and the Senate Finance Committee passed its version earlier this week. The Senate is scheduled to consider the measure in May and a House-Senate conference then will work out the differences. The date of enactment is important because the Senate Finance Committee's proposals to reverse the Schmidt Baking decision, curtail the foreign tax credit, freeze the grandfathered status of paired-share real estate investment trusts, and make trade receivables ineligible for mark-to-market treatment would be effective for taxable years ending after the date of enactment. Most of the Senate Finance Committee’s revenue offsets are not in the House version of the IRS restructuring bill, except for the proposed reversal of the Schmidt Baking decision that would be effective for taxable years ending after Oct. 8. |
Senate Approves Budget Resolution: The tax cut in the fiscal 1999 budget resolution approved 57 to 41 by the Senate late April 2 formally calls for a gross $30 billion tax cut, but Senate leaders have agreed with tax-cut hawks to accept the House’s tax-cut figure, which is expected to be higher than the Senate’s. To ensure that the promises to accept the House’s higher tax-cut number and to make marriage penalty relief a top priority will be kept, Senate leaders agreed that Sen. Rod Grams, R-Minn., will be a conferee to represent the views of the conservatives when the House-Senate conference ultimately meets. The House has not yet formally begun work on the resolution, but a House task force is expected to recommend a gross cut in the $60 billion range. President Clinton April 3 expressed concern about the Senate’s version of the budget resolution, saying "it will squeeze out critical investments for children." In his fiscal 1999 budget proposal, the President proposed using proceeds from an anticipated settlement with tobacco companies to pay for various child care and education incentives. Once the House and Senate agree on a budget resolution, they use it as a guide as they negotiate with the President about appropriations and tax legislation for the upcoming year. The House also will consider recommending that Congress follow the budget reconciliation process to pass the tax cut. Under reconciliation, congressional committees are instructed to make policy law changes recommended by the budget resolution. This process contains special procedures, such as limiting floor debate in the Senate, that simplify passage of the proposed changes. The Senate also approved non-binding amendments calling for the repeal of the Internal Revenue Code and for a change in the Senate procedure to require that tax increases be approved by an unspecified super-majority in the House and Senate. Moratorium on Internet Taxation Proposed: Bipartisan legislation that would place a three-year moratorium on Internet taxes, while preserving some state and local taxing authority, was introduced March 31 by Sens. Judd Gregg, R-N.H., and Joseph Lieberman, D-Conn. "Our bill puts the focus on limiting taxation," said Gregg in a press release, contrasting his bill to other proposals that "seem to lean toward a national Internet sales tax." The Gregg-Lieberman legislation differs from Rep. Christopher Cox’s, R-Calif., three-year Internet moratorium bill because it preserves state and local Internet taxing authority after the moratorium only for broad-based taxes. Cox’s bill grandfathered existing state and local Internet taxing authority. In addition to the Cox and Gregg-Lieberman bills, Sen. Ron Wyden, D-Ore., has proposed a six-year moratorium on Internet taxes. The National Governors’ Association supports Cox’s approach of limiting the moratorium on Internet taxes, but national retailers who want to do business on the Internet support the total moratorium as a means to encourage electronic commerce. The Gregg and Lieberman bill also would allow time for a formally created commission to
research and develop proposals for model legislation regarding Internet commerce, said the
senators, whose legislation also calls on the President to negotiate international
treaties prohibiting tariffs on Internet commerce. |
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