April 8, 2015 | John Gimigliano, principal in charge of the Federal Legislative and Regulatory group in KPMG LLP's Washington National Tax practice, discusses the tax legislative outlook for 2015 with a special focus on tax reform in this three-minute video.
John Gimigliano: As former Senior Tax Counsel to the Ways & Means Committee, I always appreciated hearing the perspective from outside the beltway. Congress tries very hard not to legislate from a vacuum, but the reality is that travel and gift rules prohibit policymakers from getting outside the Washington bubble as much as they would like. That leaves it to many of you to do the outreach, to give your perspective on what is working, what is not, and how the tax Code could and should be changed.
This is especially true this year, as Congress and the President wrestle with a number of important tax issues. Let me just run down a few of those worth watching.
First, Congress would like to make a number of the extenders permanent law. That includes the research credit, section 179 expensing levels, and S Corporation rules. Last year, the President vowed to veto such legislation, so that is shaping up to be an important issue to be watched.
Second, is, and always seems to be, tax reform. Again, Congress is likely to make another run at tax reform this year, and the President has expressed some willingness to entertain it.
The Senate Finance Committee has designated several working groups to tackle various aspects of tax reform and report their findings back to the full committee by the end of May. That could put the Senate Finance Committee on course to markup a tax reform bill before they leave for the August recess, but many issues remain to be negotiated, including whether to do business-only reform as the President wants or to do comprehensive reform as the Republicans prefer. If it is to be business-only reform, then the parties must decide how best to accommodate noncorporate businesses, such as partnerships and sole proprietors, to ensure they are not left behind in a deal that reduces the corporate tax rate. Furthermore, Congress and the President will need to negotiate how to account for the tax-law changes of tax reform. Should reform be revenue neutral or should it be revenue positive? Will it be scored over 10 years or over a 30-year window as the President has proposed? Will the scorekeepers use traditional scoring conventions or dynamic scoring of tax law changes? These are all matters to be negotiated on the tax reform front and ones that I and my colleagues in KPMG’s legislative group are closely monitoring.
On that point, I encourage you to contact me or any member of my team with any questions you have about pending or proposed tax legislation. We are happy to discuss why, how or when proposals may, or may not, become law.
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